Integrating Gilt and Saks Off 5th Into a ‘Power Couple’

Gilt Group
By David Moin. Source: WWD.

The Hudson Bay Co. has combined the leadership of Gilt and Saks Off 5th as it seeks to bolster the merchandising and marketing of the two value-oriented divisions and transform the Gilt flash sale site into an all-channel business.

Gilt’s first shops-in-shop launched inside the Saks Off 5th that opened in March on 57th Street between Lexington and Park Avenues in Manhattan. HBC purchased the $550 million Gilt Groupe Holdings Inc. for $250 million last February and is considering additional Gilt shops inside Saks Off 5th units.

“By pairing Gilt with Saks Off 5th we can strengthen both and leverage the Gilt brand into the physical space. That’s been the vision from the beginning,” said Jerry Storch, HBC’s chief executive officer. “The key to success is to create this ‘power couple’ partnership between the two teams,” Storch added, referencing the current ad campaign themed “the power couple” to promote Gilt at Saks Off 5th.

Integrating the leadership of Gilt and Saks Off 5th “will lead to increased merchandise authority, purchasing power, shared inventories and a stronger value position,” said Jonathan Greller, president of HBC outlets, who also oversees Gilt. “We’ll have greater access to more brands.”

Among the executive changes are:

  • Kristen Sosa, formerly chief merchant of Saks Off 5th, has become chief merchant for Gilt and Saks Off 5th.
  • Aaron Shockey has been appointed senior vice president of marketing for Saks Off 5th and Gilt, as well as Gilt City which offers deals in several cities at restaurants, spas, concerts and other experiences. Shockey was senior vice president of HBC digital marketing and customer insights.
  • Steve Jacobs has become senior vice president of digital technology for all of HBC. He was senior vice president of digital technology and demand marketing for Gilt.

In addition, general merchandise managers and divisional merchandise managers are now working for both Gilt and Saks Off 5th. So, for example, one divisional merchandise manager who oversaw shoes, handbags, soft accessories, jewelry and beauty at one division will now oversee shoes, handbags and soft accessories for both divisions, and another would oversee jewelry and beauty for both divisions.

However, Gilt and Saks Off 5th continue to operate with separate buyers. The organizational model now seen at Gilt and Saks Off 5th is similar to how the North American department stores of HBC — Lord & Taylor and Hudson’s Bay — are structured with separate buyer teams and divisional merchandise managers and general merchandise managers working across banners.

“Many leaders will be taking on larger roles, but no jobs have been displaced” as a result of the integrations, Greller said. “We’re actually creating some additional jobs that will be filled over the next couple of months.” However, two key Gilt employees, chief executive officer Michelle Peluso and chief merchant Keith George are soon leaving the company after transition periods.

The crossover of brands sold at Saks Off 5th and Gilt could get higher with the integration, though according to Greller, “We will have a point of view in every single channel and where it is appropriate, there will be crossover from one channel to the next.”

Off 5th and Gilt share many of the same customers, though the extent of that is not entirely clear yet. “We’re still working through the data,” Greller said.

He also said the performance of the Gilt shop inside Saks Off 5th is being closely monitored. Asked when additional Gilt shops might open, he responded, “It could be sooner or later, but our goal is to really learn from the customer. It’s all about the experience. Shopping is very emotional.”

At the 47,333-square-foot Saks Off 5th store on 57th Street, Gilt has a 1,000-square-foot shop at the landing of the escalator to the first below-ground selling floor. There is a “Gilt by Appointment” station so customers can work with stylists and a video wall showing fashion, editorial content and a calendar of sales. Events on Gilt.com are replicated at the shop and customers can buy Gilt products displayed, walk out with Gilt shopping bags which were introduced for the shop and customers can shop Gilt.com in the store with sales associates who have iPads. Gilt has new sales every 36 hours, generally at up to 70 percent off. Customers can return Gilt products bought online to the bricks-and-mortar site.

The integration strategy also involves leveraging Gilt’s technology, particularly the mobile and personalization capabilities, across all HBC banners.

HBC hopes to improve the performance of the once high-flying Gilt. It’s been under pressure because its flash-sale format has been widely copied and luxury sales generally have been tough.

HBC, which last year generated $8.56 billion in revenues, and 11.2 billion Canadian dollars, sees digital and off-price as its two primary growth vehicles, although it has set a string of Saks Fifth Avenue openings this year, including a replacement store in the Houston Galleria next week and, later this year, in Hawaii, lower Manhattan’s Brookfield Place and Brickell City Centre in Miami. In February the first two Saks Fifth Avenues opened in Canada, and in March four Saks Off 5th units opened in Canada.

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