01 Mar 2012
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Shop Talk, Different Avenues

Marvin Traub, Alexis Maybank, & Alexandra Wilkis Wilson / Retail
by Julia Hanna

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Marvin Traub (MBA 1949) joined Bloomingdale’s in 1950, became its president in 1969, and served as chairman and CEO from 1978 to 1991. Today, as chairman of Marvin Traub Associates, he continues to keep his finger on the pulse of retailing through consulting and marketing work for a roster of global clients. Traub recently sat down with Gilt Groupe cofounders Alexis Maybank and Alexandra Wilkis Wilson (both MBA 2004) to discuss retailing trends and the challenges facing their company. Gilt Groupe was founded in 2007, on a disruptive business model: an online site that requires customers to register, featuring flash sales of discounted luxury goods for men and women in categories including designer clothing, accessories, home goods, food and wine, and travel (a weeklong stay at a villa in the Bahamas recently sold for $205,000). By Invitation Only, a book detailing their entrepreneurial journey, will be published in April.

AW: Marvin, you spend a lot of time traveling abroad. Are there any innovative retail concepts that you see outside the United States that might work here?

MT: One of our clients, Value Retail, has nine outlet villages located throughout Europe. The company sees itself as not purely a landlord but as a partner that will work with tenants on product offering and assortment. Those who do well get more space; those who don’t get less space, or move out.

Gilt’s timing was certainly perfect. You launched in 2007, and 2008 was one of the worst years ever for retail, so you had a good deal of unsold inventory to offer customers. How did you adapt as the business environment became healthier and you saw a decrease in what was available?

AM: Essentially, we went upstream and created our own supply. In 2009 we started shaping the kind of inventory we needed and partnered with brands in the same way department stores do to make sure that we’re not left empty-handed when we have surges in demand.

MT: How are you responding to the general trend toward international expansion?

AW: We launched in Japan in 2009, and last November we started shipping from the United States to over 90 different countries.

MT: So your site translates into the local currency?

AM: Yes. There are also duties, taxes, and a flat rate for shipping.

MT: This development creates issues for many of the brands that have different pricing for different markets.

AM: One of our biggest growth areas is Koreans coming to shop on Gilt. The price of a good can be almost 100 percent more in certain markets. Do you think this will force businesses to adjust pricing more quickly?

MT: Yes, I think e-commerce will flatten out pricing as the number of people shopping on international sites grows. Gilt shipping to over 90 countries can certainly change the character and potential of the business. I think it’s interesting that Gilt created a new form of retailing through the concept of flash sales taking place at a particular time and the fact that you have to join.

AM: The registration process, which was considered such a no-no when we launched, has meant that we’ve captured every moment of a customer’s experience on our site. Over time we expect Gilt to look more customized, with the right products for you. The challenge we’ll have to address is how to set up logistics so that we can service a luxury shopping experience in any location without losing that sense of excitement that comes with having what you ordered arrive quickly.

MT: E-commerce is the fastest-growing channel of retailing. But people still want a shopping experience—the Abercrombie & Fitch store on Fifth Avenue does over $100 million annually. One doesn’t exclude the other.

AW: Marvin, any advice for us?

MT: I’m sure you already recognize you can’t do everything. I’m proud of the fact that if I wasn’t in the room, the people who worked with me at Bloomingdale’s would come to the same decision because we all believed in the same things. It’s true—companies are all about people.

—JH

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