March Madness for Women—The Race for Luxury Goods

Every weekday around 10:50 am, Tessa Rola's BlackBerry flickers.

Close up of someone typing on a laptop.
Close up of someone typing on a laptop.

She immediately grabs her cellphone, pulls open her inbox and scrolls straight to her newest e-mail: a reminder from members-only shopping Web site HauteLook.

Today's sale boasts some big-name brands she likes: BCBG handbags, Tom Ford sunglasses and Biotherm skincare products—all of which will go on sale in 10 minutes for discounts of up to 75 percent.

Then, right at 11 am New York time, the graphic designer drops what she's doing for a few quick minutes to log onto the Web site from her Toronto, Ontario, office.

"I might not necessarily have the intention of buying something, but I'll always look," Rola said.

Think of it as the feminine version of college basketball's March Madness—members-only sites such as HauteLook, Rue La La and Gilt Groupe have quickly become the new workplace distraction among women.

Because the timed sales start at either 11 am or noon, depending on the site, and offer limited quantities of each item, many women feel the need to rush to the Web to snatch their favorite brands before they sell out.

As such, about half of HauteLook and Rue La La's daily purchases occur between the hours of 11 am and 1 pm New York time—the first two hours of each sale—while 50 percent of Gilt's sales occur between noon and 1 pm—the first hour it's open.

"People are just, they're on there, and they're just waiting for it," Rola said.

Although entire events rarely sell out, missing out on a particular item or size is common, said Greg Bettinelli, HauteLook's senior vice president, marketing. There isn't any average number of individual items the site receives per sale, but products from smaller designers tend to have less inventory.

"If you come on at 8:05 [Pacific time] your experience may be different than if you come on in the afternoon," Bettinelli said.

Though some experts doubt the sites have such limited inventory—saying they may just advertise in such a manner to create a frenzy—for Rola, the buzz appears to be true. She recently missed out on a second pair of Marc Jacobs sunglasses while she was dragging the first pair into her shopping cart, she said.

"It's like there's two hanging off the cliff—which one do I save?"

Even when a work deadline forces her to miss a sale's kickoff, Rola logs onto the site as soon as she gets a free second, in what she described as a sort of compulsion. Though she typically visits HauteLook three or four times a day, she said it nicks at her all day when she arrives late to the initial launch.

"Before I even click on it to see the products [I know] there's going to be something there that's sold out that I wish that I had gotten," she said.

But Sucharita Mulpuru, vice president and principal analyst at Forrester Research, said this sort of addiction will only last as long as the sites have strong merchandise to offer.

Mulpuru said she's always doubted the long-term viability of independent members-only discount Web sites, because as retailers learn to better control their inventories, standalone sites may have fewer—and lower-quality—products to choose from.

What's more, there isn't much need for these pages at all, as each store or brand could operate its own timed sales at no cost, she said. Though luxury retailers often tend to shy away from massive markdowns to maintain their premium image, Mulpuru pointed to Nordstrom Rack and Saks Fifth Avenue Off 5th discount stores to show that at some point, every retailer marks down its merchandise.

"They're all part of the business," she said.

Regardless, these sites continue to grow. According to Hitwise data tracker, HauteLook's online marketshare grew 750 percent in February compared with the same month last year, while Gilt Groupe and Rue La La grew their shares by 200 percent and 160 percent, respectively.

Bettinelli argued HauteLook is hosting twice as many events this March as it did last year, and although the brands regularly shift, the product quality has not been diluted. He added that the excitement that surrounds the sales offers customers something different than a traditional online store, and said demand is only growing.

"People don't stop [what they're doing] to go to ; they go to when they have the chance," he said. "People kind of stop what they're doing when the sale starts."

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