On the heels of announcing strong fourth-quarter results, Nordstrom is jumping into the online private sales business, scooping up HauteLook. In a deal that may go as high as $270 million, it will buy the three-year-old HauteLook, based in Los Angeles, which offers limited-time sale events on fashion and lifestyle brands, often with discounts of between 50 and 75%.
Such sites -- including Gilt, Ideeli, Rue La La and Woot -- soared in popularity during the recession, as consumers scoured the net for extreme bargains and luxury retailers struggled to dump high-end inventory. The equivalent of online sample sales, these member-only sites sell small quantities of products in very compressed time periods.
And while growth continues to be brisk, "I think there was an understanding that the model was interesting but that it was difficult to scale," Forrester VP/principal analyst Sucharita Mulpuru emails Marketing Daily. "The biggest challenge with this model is access to inventory -- allying with a retailer gives them a bit more of an advantage than they would have had otherwise."
Last summer, Amazon acquired Woot. And in 2009, Rue La La was acquired by GSI Commerce. Saks has experimented with such sales on its own site.
"We believe this acquisition further enhances our focus on serving customers online in new and compelling ways," Blake Nordstrom, president of the Seattle-based chain, says in a release. "While our focus on providing a superior in-store shopping experience is our roots, continuing to find ways to use technology to serve customers the way they want to be served is critical. This partnership gives Nordstrom and HauteLook shared growth opportunities as online shopping evolves."
According to Experian's Hitwise, HauteLook was the second-most visited flash sale and private shopping site last month, with 3.1 million visits. Woot, with 3.6 million visits, was the most popular, while ideeli, zulilly, Gilt, eBay Fashion Vault, Rue La La, and Beyond The Rack all had more than 2 million visits.
Nordstrom also operates Nordstrom's Rack, a chain that serves as clearance centers for items that don't sell fast enough in its flagship stores.
Separately, Nordstrom reported that its earnings jumped 35% to $232 million in the fourth quarter, compared with $172 million for the same quarter last year. Sales gained 10.9% to $2.54 billion, with same-store sales increasing 6.7%. Multichannel same-store sales increased 7.2% compared with the same period in fiscal 2009. Top-performing multichannel merchandise categories included jewelry, dresses and shoes. And for the full fiscal year, sales topped $9.3 billion, a record for the chain.