In a transaction of around $270 million, Nordstrom Inc. is purchasing HauteLook Inc.—a top website that hosts private, limited-time sales of top brands—making Nordstrom the first retailer to acquire a private sale site.
While this marketplace is worth around $1 billion of sales, Nordstrom’s competitors, such as Neiman Marcus and Saks Fifth Avenue, have so far not committed to establishing a private, flash-sale system.
“It’s clearly one of the fastest growing ways of shopping,” said Jamie Nordstrom, president of Nordstrom Direct, in an interview, according to WWD. “… We have to do a better job of responding to customers. They are really changing the way they shop.”
He hopes HauteLook will make his company become “nimbler.”
Founded in 2007, HauteLook helped to pioneer the private sale format online, topping $100 million in volume during 2010 alone. The way it works is sales of top brand name items are open for around 48 hours, and shoppers can save from 50 to 75 percent off in 11 different categories, such as beauty, home and travel, and women’s. Those interested can see which sales are to be released up to three days in advance.
With 4 million members and about 1,000 brands participating, it seems to be an equation that is working. As a start-up, however, it is still not clear whether the site will turn out to be a big moneymaker, as these things can apparently take a few years, and executives wouldn’t say whether the site is currently profitable.
The agreement involves an up-front payment of $180 million in stock and an additional $90 million in stock over the next three years. Under the deal, HauteLook will continue to operate independently.
“It’s a no-brainer. We are going to learn from this amazing retailer,” Adam Bernhard, HauteLook’s founder and chief executive officer, said to WWD.