Bluemercury’s search for exceptionalism

Sephora and Ulta are successful retailers in their own right, but Bluemercury founder Barry Beck wants to chart a different growth path for the company Macy’s acquired earlier this year.



When Macy’s announced in February it was buying beauty retailer Bluemercury, a lot of watchers wondered what the little-known niche retailer could offer the nation’s second largest department store chain. The answer to that question lies in something the founder of Bluemercury calls “exceptionalism.”



In remarks to attendees at a retailing conference in Dallas, Bluemercury founder and COO Barry Beck told an audience of about 300 that Macy’s intends to make Bluemercury’s “exceptional” business model a platform for growth and innovation. Beck says Bluemercury offers Macy’s a chance to understand the customer who wants a highly customized and personalized beauty shopping experience, like those offered at competitors Sephora and Ulta.



But Bluemercury isn’t interested in being like Sephora or Ulta, Beck said.



“We have a unique and exceptional business model that competitors have been unable to replicate,” Beck said. “Everything that we do is focused on being the friendly, neighborhood store where you can get expert honest advice. We see retail as personal and emotional and pick products and brands that strike a chord with our customers. We don’t focus on competitors, we focus on our customers.”



Beck spoke at the 30th annual Retailing Summit organized by the Texas A&M Center for Retailing Studies at Mays Business School. He outlined several key innovations that have allowed Bluemercury to grow to nearly 70 locations in 16 years with annual revenue of about $100 million:



People: Stores are staffed by well-paid full-time “real-life beauty junkies” with friendly personalities. “If our people solve problems for clients, they will be customers for life,” Beck said.



Product: Curation and development of beauty products is key. “Newness is important. Launching new products drives traffic,” Beck said.



Place: Targeting busy streets and lifestyle centers. Small and highly adaptable store formats can be clustered in a given market and clients come in frequently. “We have built a mote of convenience for our customers and had no cannibalization of sales,” Beck said.



Macy’s paid $210 million for Bluemercury in March. Macy’s plans to open Bluemercury shops within Macy’s stores, as J.C. Penney has done with Sephora and Kohl’s has done with Bliss beauty products. Beck said he sees the potential for 300 Bluemercury stores nationwide and Bluemercury shops in many of Macy’s 800 stores.



Beck described an ideal future in which a customer walks into a Bluemercury shop and the store alerts the customer via his or her smartphone of any tips or promotions. The store will know who the customer is and a beauty expert will have access to the customer’s shopping history and preferences. The customer will also have the option to check out via mobile and take a product home, or check out in-store and have a product delivered. This is the kind of innovative thinking that Macy’s may be looking to harness.



“As the fastest growing luxury products retail chain, we are pioneers and innovators. We have a very strong culture of avant-garde experimentation and trailblazing. We don’t listen to how everyone else does things. We want to do them in our own way for our own clients,” Beck said. “I believe that ultimately over time you’re going to have to have retail stores. Because with the continued innovation of the Internet, clients are going to demand more service, more information and more ways to shop.”