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10/04/2018

Walgreens takes minority stake in online beauty retailer

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Walgreens Boots Alliance is looking to give its beauty department a high-end, experiential makeover by partnering with an innovative makeup upstart.

The drug store retailer is teaming up with digital beauty subscription company Birchbox to open in-store Birchbox “experiences” in select Walgreens locations. As part of the agreement, Walgreens will acquire a minority equity interest in the beauty company.

The partnership will kick off with an initial pilot in 11 Walgreens locations across major U.S. cities, including Chicago, Dallas and New York City, rolling out from December through early 2019. The in-store Birchbox shops will range from 400 sq. ft. to 1,000 sq. ft., with branding, elevated design and a curated product assortment of full-sized skincare, hair and makeup products from more than 40 prestige brands that include up-and-coming lines and cult favorites. Birchbox-trained beauty consultants will be on hand to assist customers. (See the related video here.)

Additionally, in the pilot stores, Birchbox will offer subscriptions to its monthly delivery services of personalized samples and a change for customers to build their own “Build Your Own Birchbox,” which is a signature element of the company’s two brick-and-mortar stores (in New York City and Paris.) The partnership will expand online, with Walgreens adding a Birchbox section to its website.

Walgreens’ deal with Birchbox is in line with the drug store chain’s ongoing efforts to upgrade its beauty department and make its stores more of a beauty destination. The retailer has been updating its assortment with new brands, added a beauty loyalty program. It also launched a beauty loyalty program, and has trained some 3,500 employees as beauty “consultants.

“Our customers want to shop the most sought-after brands in a welcoming and accessible environment, and the addition of Birchbox to our growing beauty offering is a big step in delivering on our promise to differentiate and elevate the beauty experience at Walgreens,” said Richard Ashworth, president of operations, Walgreens, which operates approximately 9,800 drugstores. “This collaboration will help enable Walgreens to continue to strengthen our beauty offering and build our prestige portfolio.”

Birchbox was founded in 2010, offering customers a monthly subscription of personalized samples with relevant content and a curated e-commerce shop. The company operates in six countries, with more than 2.5 million active customers and a portfolio of 500 brand partners.

“In Walgreens, we have found an exciting partner that supports our mission of reaching an underserved customer who doesn’t prioritize beauty,” said Katia Beauchamp, CEO and co-founder of Birchbox. “Birchbox has effectively changed the relationship that this customer, who represents 70% of the market, has with beauty and increased her spend in the category. Walgreens is deeply committed to beauty and shares our vision for a different type of retail experience – one that is holistic, seamless and designed to help shoppers make informed, confident decisions. Together we will continue to evolve the integration of our physical and digital shopping experiences.”