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Who Says No One is Shopping? In just three years, entrepreneurs like Adam Bernhard have created a new retail niche--private sample-sale websites--that has grown into a $1 billion business and changed the way America shops.

By Booth Moore

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Adam Bernhard still has the secondhand sofa he was sleeping on when he started his company three years ago--it's right across from his desk in the downtown Los Angeles offices of HauteLook. Downstairs, in a maze of studios, photographers and stylists are shooting the high-end skinny jeans and slouchy handbags that are making Bernhard a fortune.

Improbably, that fortune is in retail. It's no secret that during the past three years, the retail category has tanked--and no part of it more so than luxury. But during this time frame, a new breed of entrepreneurs has sprung up and seized the opportunity: They took the glut of luxury goods and created membership-only, sample-sale websites that bring the excitement of a door-buster sale online, with prices as much as 80 percent off.

To say that these sites have become the hottest area in retail is almost a ridiculous understatement: While second-quarter sales at brick-and-mortar luxury and department stores increased a disappointing 4.5 percent over the year before, HauteLook's sales zoomed up 275 percent. The online private sample-sale category generated $1 billion in revenue last year, and some say it could grow to $8 billion in the next five years.

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