The big question for designers, though, is whether a site like Gilt Groupe will permanently reduce the market’s expectation of value. For example, a consumer who’s gotten used to buying Marc Jacobs at sale prices might never want to pay full price again. The issue of reduced expectation of value has raised many questions about Gilt’s ability to maintain its discrete appeal in the long term.
This is especially so in light of Gilt CEO Susan Lyne’s comparisons to the American bargain basement, T.J. Maxx, as well as analysts’ predictions that in order to survive, Gilt must diversify beyond the luxury market (it has with spinoffs like Gilt Fuse and JetSetter). As Andrew Rice put it, “Gilt Groupe’s brand identity is tethered to the very thing it undermines: perceptions of intrinsic value… A discount is like a shadow—it only exists in relation to an object of actual worth.”