Update: On January 7, Hudson's Bay Company agreed to acquire Gilt Group Holdings for $250 million. 

The day of reckoning for flash-sales businesses is upon us ... again.

On Tuesday, news spread that Gilt Groupe, the luxury flash-sales pioneer once valued at a lofty $1.1 billion, is reportedly nearing a sale to Canadian retail giant, Hudson's Bay Co., for a fraction of its former valuation, just $250 million. While sobering for so-called unicorn companies in general, the prospective sale is particularly striking as a temperature gauge for the retail industry. At the very least, it once again calls into question the sustainability of the flash-sales model.

Named for the quick duration of sales--typically 24 to 36 hours--the flash-sales business model first caught fire in the U.S. about eight years ago, with the emergence of sites like Groupon and LivingSocial. In the fashion world, Gilt Groupe, HauteLook, and Rue La La are largely credited with this distinction.

These sites, whose models are generally premised on being able to liquidate the unsold inventory of brands, rose to prominence during the last recession, as consumers seeking greater savings looked to off-price retailers.

That was then. Today, the flash-sales arena has lost much of its swagger. While consumers are still interested in discounts and discounted merchandise, the proliferation of flash-sale sites has watered down much of the market's vigor.

"In the beginning, brands had proprietary relationships. Helmut Lang, for instance, would only sell to Gilt," says Mark Walker, the CEO of JackThreads, which launched as an off-price, flash-sales site for men's fashions in 2008 but pivoted away from the model in 2014. He adds that as more sites joined the fray, brands untethered their off-price distribution. "Now there's this regurgitation of sameness everywhere," he says.

That's partly the reason JackThreads moved away from flash sales. The company additionally added its own branded line of menswear last year. "What makes you win today? You can have a conversation about shipping, site experience, and price. But the reality is you need to be selling something you can't get anywhere else," says Walker.

Vanessa Merit Nornberg, owner of Metal Mafia, a wholesale body and costume jewelry company in New York City, breaks it down further. "Flash-sale sites are losing traction for two reasons: they are often selling merchandise at regular retail prices and they are running the same brands routinely. Consumers have gotten wise to both tactics and no longer feel an urgent impulse to buy."

Indeed, the numbers bear this out. IBISWorld still projects the market for flash sales to grow 12.4 percent annually--reaching $4 billion by 2020. However, the research firm expects more subdued growth as competition from traditional retailers heats up.

That could prompt even more fallout among flash-sale sites, suggests Walker, who served as a general manager of Rue La La's men's department for two years before joining JackThreads in November of last year. "There will be a culling of the pack," he says. "It has to become edited down."

Of course, the writing has been on the wall for flash sales for some time. Not only did Groupon slash its staff, restructure its struggling international operations, and show its former CEO and founder Andrew Mason the door, but also its share price is a mere $3, down from its initial IPO price of $20. LivingSocial is similarly operating as just a shell of its former self. Then, of course, there's the very public implosion of design-oriented flash-sale site Fab.com.

While some consider this latest news about Gilt Groupe just one more nail in the coffin for flash sales, others are more sanguine--saying the fallout presents opportunities for off-price retailers.

Rachel Shechtman, the retail consultant and owner of Story, a small concept shop in New York City, has this view. If anything, the original flash-sales model--which she deems a "2.0 innovative version of outlet malls"--will likely get a reboot in the hands of fewer parties, she says.

"We have gone from an industry that offered assortments driven by merchants like Dawn Mello (the former president of Bergdorf Goodman), Marvin Traub (the former president and CEO of Bloomingdale's), Rose Marie Bravo (vice chairman at Burberry), etc., to the past couple decades, where much of merchandising has evolved into 70 percent pure planning." She adds that consumers crave customization and diversity. "Now, more than ever, I think what retailers need are old-school merchants."

In other words, off-price retailers will start to resemble their traditional retail counterparts, says Shechtman. "I think we will start to see both new models and experiences in discount driven stores. Consumers are ready for a 3.0 off-price model."