Rue La La eyes TJ Maxx more than Saks

April 23, 2010

HANDBAGA few weeks ago at an investor conference, Saks CEO Stephen Sadove admitted that some online sites like Rue La La and Gilt Groupe, which sell excessive inventory of luxury products at steep online discounts, were worthy competitors.

But an executive at GSI Commerce, which bought Rue La La last fall, says off-price chains like TJX have more to fear.

Many vendors have relied on off price stores such as TJ Maxx and Marshalls to help sell extra merchandise, but Rue La La has taken that concept online and is growing quickly.

“I think the wave we’re riding is a $50 billion offline, off-price industry,” GSI executive vice-president Fiona Dias told Reuters. “If you’re TJX this is not good — because people have invented a better mouse trap online.”

Dias said Rue La La is betting that shoppers looking for steep discounts on designer brands will prefer its sleek online service to what she said can be unwieldy off-price stores.

Dias said Rue La La was differentiating itself from Gilt by focusing on luxuryitems, but not those at the very highest end.

“Gilt is the Neiman Marcus and Saks sort of world, and Rue La La is more the Nordstrom end of the world — upscale but not crazy,” she said. Nordstrom has been doing well and stolen market share from Saks and other luxury chains.

Still, TJX, which operates the Marshalls and TJ Maxx chains, is posting some of the biggest growth in retail, regularly outpacing rivals in sales increases. What’s more, TJX has attracted more and more luxury brands and even gotten some to make product specifically for them.

TJX had sales of $20.3 billion last year, compared to about $100 million for Rue La La. So this may just be a case of a mouse trash-talking an elephant. On the other hand, online shopping sites have been known to bleed large retailers.

(Reuters photo)

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