Gilt Groupe Launches Gilt City Brand Extension

Gilt Groupe, the discount luxury e-retailer, is trying to capitalize on the current Groupon-inspired “collective buying craze coming to a city near you” with a brand extension called Gilt City, currently in Beta.  Similar to their other branded channels (Gilt, Gilt Man, Jetstter), Gilt City caters to the fashion-conscious socialite on a budget, but this time focuses on a wide variety of high-end products, from discounts on four-star restaurants to exclusive Broadway tickets. (Gilt City is currently only available in New York City, I know, bummer…)

The presentation of Gilt City mimics the look and feel of its sister sites, offering a “sophisticated alternative” to the daily deal sites such as Groupon and LivingSocial. This unique selling proposition allows Gilt City to play in the “collective buying” space without the fear of becoming a “Groupon-clone,” as is this case with the seemingly hundreds of daily deal competitors who have popped up over the past year.

Gilt City also gives businesses the assurance that, even when offering a deep discount, their brand equity will not be diminished. The concept would seem to be a difficult sell to brand-conscious businesses, but Gilt has been able to walk this fine line with ease, giving enough comfort to even some of the biggest brands in the world (ie. Polo Ralph Lauren, Calvin Klein, Armani, etc.) Because Gilt Groupe has built such a strong reputation among its users for quality goods and services, Gilt City should still be able to attract luxury clientele from other industries beyond just fashion and travel. Where many businesses, restaurants, and events who would possibly benefit from promoting their services on sites like Groupon simply don’t take the gamble because of the potential degradation of their brand, Gilt City offers a way of being a discounter without discounting their brand’s equity.

My one concern about Gilt City is scalability. Sure, it is easy to find five-star restaurants or swanky clubs in New York City along with a target market enthusiastic about cheap luxury goods, but would Gilt City be scalable in Nashville?  How about Kansas City or Boise?  And unlike Gilt and Jetsetter, who feature brands that are highly-visible and well-documented and thus whose “luxuriousness” can easily be assessed, Gilt City, when scaled beyond New York, must rely on local salespeople to do that sort of “luxury vetting.” Will Gilt Groupe be able to identify local brands in new markets that are worthy to be included under the Gilt brand?

If Sharp Dressed Brand had to place a bet, we’d put our money on YES, they sure can, and that Gilt City will be another profitable revenue channel for Gilt Groupe.  The business model is obviously attractive (Groupon was recently valued at over a billion dollars), and the Gilt brand offers a unique identifier in the online sea of discounts and coupons. Gilt Groupe also seems to have very competent and visionary management team in place. Started by a pair of Harvard graduates, the luxury discounter has quickly grown the once-startup into a thriving e-retailer with hundreds of millions in annual revenues and a slew of wannabe competitors. If Gilt City can maintain the “Gilt” reputation of offering great value for luxury items, it will not only survive, but thrive. Sharp Dressed Brand will stay on the case.