The Internet has been abuzz lately over the partnering of Target and Gilt (starting August 20). Knowing how much I love fashion, getting a good deal, and Target, the news of the partnership made perfect sense to me. Some, like my friend Pam, wondered about the dilution of Gilt's luxury presence. Some wondered why Target? Why now? I look at it from a purely business and consumer perspective and it makes perfect sense to me: Gilt is a invitation only outlet for premium and luxury brands at a discount. Gilt deals in numbers. Gilt purchases luxury goods from the designers (or through a middle man) for a set price, it must then sell those items for a slightly higher price in order to make money. Unlike a store, Gilt can not afford to have large quantities of inventory remaining after the sale time period has passed. Unlike a store, Gilt does not have the benefit of having a constant flow of people in a brick and mortar location where they can showcase their inventory and mark it down in order to make room for new inventory. Gilt requires a certain number of people to log on and look at an item before a high enough percentage will purchase the item, creating profit for Gilt. It's the same theory as selling your house, you want as many people coming in the door as possible. While you only need one sale, the more people who look, the increased chance you have of selling the house. So, Gilt needs people. Lots and lots of people. People with discretionary income. Enter Target. Yes, Target.
Target sells necessities (toilet paper, diapers) and the extras (shoes, rugs, wall art). Target offers low prices, but in an upscale manner. Think about it, Target's stores are clean, nicely laid out, and offer a brand higher than its competitors. Target offers Noxema face wash, but also Kiehl's. It offers Clorox cleaners as well as Ms. Meyer's. Target brand sheets or sheets from Dwell Studio. Target is a lifestyle brand. For this, Target's customers pay more. Maybe not noticeably more. But, more. Targets customers enter for items A, B, and C and exit with an additional 20 items-but all were under $9. How many times have you gotten out if Target for under $60? Exactly. Target and Gilt are betting that you join Gilt to access the Target luxury collections, but stay to peruse the other Gilt offerings. They aren't betting that you'll buy lots of items, what they're betting on is that e-mail coming across your inbox every day will eventually tempt you. Frankly, I've been a member of Gilt for at least a year and have yet to purchase a single item. You can bet though that I will be logging on to look at the Target offerings. The John Derian home collection has been offered in stores before and is a good bet. Target's luxury partner lines have almost always been sell-out hits- think Orla Kiely and Liberty of London. The list of the partners reads like a New York fashion show including Zac Posen, Alexander McQueen, Eugenia Kim (hats), Rodarte, Gaultier, Cynthia Rowley (diapers), and Cynthia Vincent.
Clearly Gilt will benefit from increased membership and traffic, leading to increased sales. What will Target get out of the partnership? Target cements its status as the premium store. It continues to set itself apart from its nearest competitor (Wa**art). Target extends its commitment to partnering with luxury and higher-end lines in a manner that works for its customers. Hopefully this will result in more premium labels and designers continuing to work with Target in the future. Additionally, Target may appeal to those Gilt members who don't normally shop for their home decor or casual wear at Target. In one fell swoop, it reaches an entirely new market. Perhaps Target gets an added benefit of appealing more to online shoppers who may not have viewed Target online.
I think the Target-Gilt partnership is a win-win-win. Win for Gilt, win for Target, win for us.
If you want to join Gilt, leave a comment and I will invite you! What are your thoughts on the partnership? Like it? Love it? Shop it?!