DEATH OF PUREPLAY RETAIL

INTELLIGENCE REPORT DEATH OF PUREPLAY RETAIL RETURN ON INVESTMENT

Pureplays: Losers in a Winner-Take-All E-Commerce Economy (Cont’d) Gilt Groupe, which has hinted at an IPO for years, 38 has also been unable to maintain its unicorn valuation. After experiencing triple-digit sales growth in 2009 and 2010, the pureplay e-tailer earned a $1 billion valuation in May 2011, even as the company posted negative sales growth in the same year. Billed a “brand in limbo” by tech reporters, Gilt’s most recent funding round in February 2015 valued it at $600 million, well below its 2011 value. 39 In September 2015, the e-tailer looked to brick-and-mortar retail as part of its turnaround strategy, launching “Gilt by Appointment,” its first-ever curated showroom. Customers were invited to book appointments at the showroom where they could “enjoy the thrill of taking items home the same day.” In January 2016, Hudson’s Bay Company announced it would acquire Gilt for $250 million, well below its $600 million valuation from a year earlier. Hudson’s Bay announced that customers would be able to return Gilt purchases at Saks Off Fifth stores, and that Saks Off Fifth stores would eventually feature Gilt “concept stores.” 40

Death of Pureplay Retail: Gilt Valuation Millions of Dollars 2008—2015

$1,200

$1,000

$800

Dollars (In Millions)

$600

$400

$200

$0

2008

2009

2010

2011

2012

2013

2014

2015

Source: VC Experts, 2015.

1

1. Gilt hired a dedicated personal shopper for its September launch of “Gilt by Appointment” at a curated showroom in the brand’s Manhattan headquarters.

38. “ With IPO on Hold, Gilt Groupe Raises $50 Million Investment ,” Re/code, February 16, 2015. 39. Ibid. 40. “Hudson’s Bay Confirms $250 Million Acquisition of Gilt Groupe,” Re/code, January 7, 2016.

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January 12, 2016