Barry Beck runs one of the largest and fastest growth luxury beauty products and retail spa chain in the U.S., Bluemercury, Inc. The company launched in 1999 and got a big lift in 2015 when it was acquired by Macy's in 2015. Now, the brand boasts 159 specialty stores, including 19 within Macy's locations, and 30 more stores will open in 2018. Today, Macy’s operates Bluemercury primarily as a separate freestanding business, with co-founders Barry Beck as COO and Marla Beck as CEO.
But in spite of the tough retail atmosphere of the last 20 years, Beck has been able to expand Bluemercury's online and offline retail presence by capitalizing on several trends including M&A, millennial marketing and male product offerings. In addition, Bluemercury has been honing in on the trend for retailers to appeal to consumers shopping locally and supporting their immediate community.
FierceRetail sat down with Beck to learn more about what makes Bluemercury shine so bright in 2018 and what will keep it relevant and growing in the future to come.
FierceRetail: What is Bluemercury's niche in the luxury beauty product chain?
Barry Beck: The secret to our success can be distilled down to two strategies that are unique to Bluemercury: the expertise of our teams and our laser-focused real estate model. Our radically different people strategy has become Bluemercury’s enduring secret weapon. We only hire beauty fanatics who are real-life beauty “junkies,” selected based on their passion for prestige products. Also, early on we realized that while our real estate siting strategy was one of the most difficult things to master, it could also be the most impactful. I always looked for wonderful real estate at fair prices, rather than fair real estate at wonderful prices.
FierceRetail: Can you tell me how the Macy's acquisition, its first in more than a decade, changed what you are doing?
Beck: The sale to Macy’s, a tier-one department store, is an irony that isn’t lost on me. Yet, when we looked at the whole landscape, Macy’s was the obvious choice because it was so strong in its core retail and omnichannel capabilities. Many people don’t realize that Macy’s is the fifth largest e-commerce company in the United States, and one out of every two Americans shopped at a Macy’s last year. Macy’s has allowed us to remain entrepreneurial, swimming in our lane while we continue to learn from each other.
FierceRetail: How has the partnership benefited both businesses?
Beck: In a trend that's emerging, founders of prominent startups are finding ways to sell their cake and have it, too. They can run their brands on their own terms inside larger corporations while at the same time providing a spark to the parent company. The partnership benefited Macy’s by introducing their customer to a new way to shop, giving them access to luxury brands in a friendly neighborhood setting. We provide Macy’s with this new and innovative approach along with a unique merchandising point of view. For Bluemercury, Macy’s gave us access to resources we never could have imagined as standalone venture.
FierceRetail: How do you continue to expand in 2018 when so many retailers are closing physical locations?
Beck: Location is still everything. The more neighborhood stores we open, the more opportunities we find and don’t see cannibalization. Bluemercury’s clustered store approach benefits from established brand awareness and we actually see a lift to the overall business. We’ve created a moat of convenience around our clients by imbedding our stores near where they live and work. We can almost act as a substitute upscale drug store for our clients where they can pop in for a luxury lipstick after grabbing their groceries.
FierceRetail: How important is e-commerce and how do you tie it into the physical store?
Beck: I’m looking at a total upgrade and reinvention of the Bluemercury model through a digital lens. I’m intensely focused on a new generation of digital natives who grew up with the information superhighway right in the palm of their hand. The smart retailers will realize that stores combined with e-commerce is the key to success. Even according to Google themselves, while 8 out of 10 customers research online prior to purchasing, 51% of those same customers still purchase in-store.
FierceRetail: As more and more customers look for buying locally and giving back to the community, how has Bluemercury aimed to integrate this sense of community into its brand?
Beck: Community is part of Bluemercury’s foundation. We are a family run business and my wife and I have been at the helm of the company for 19 years. In fact, each of my children has their own store number. My first daughter, now 14, was born while we were opening store #5, my second daughter, now 12, was born when we opened store #8, and my 10-year-old son during stores 12 to 20. Our Bluemercury team is like family to us and we have employees who have been with us since the very beginning.
Additionally, we have built our brand around the support of local communities. With almost 200 stores nationwide, I like to say the bigger we get, the smaller we need to think. For me, it’s all about local, local, local.
FierceRetail: What does creating a "local" store look like for Bluemercury?
Beck: We are always armed with legions of demographic and psychographic data, but our secret sauce is my anthropologist approach. We study all aspects of client behavior prior to selecting a new location which makes us unique among luxury retailers. The approach requires a two-day total immersion in every neighborhood where we look to site a Bluemercury. We seek to understand how people live their lives, their favorite coffee place, where they buy their groceries and what routes they take to the gym on the way home from work.
FierceRetail: How is the physical store different now than in 1999?
Beck: The structure of the industry has changed and customers are increasingly shopping in specialty channels in small format neighborhood stores. In the last 10 years, the number of retailers has grown by 11.6%, while retail square footage has actually dropped by 3.7%. Statistically, there are simply more small footprint stores and we have spearheaded this trend.
We’ve started to weave major aspects of technology into our stores, such as our artificial intelligence mirror BluemercuryConnect, which offers social media shopping, bag-less shopping and on-the-go delivery of beauty products anywhere in Manhattan in under an hour. The aesthetics of the store environment has also changed since 1999. At Bluemercury, we are in the process of rethinking our store design with a clean, white look and a streamlined shopping experience.
FierceRetail: How have millennials contributed to how you shape the store?
Beck: For the first time in history, there are more than 70 million Americans under the age of 18. Interestingly, we are seeing an increased focus on youth, beauty and all things glamorous due to the internet of things. Instagram, Snapchat, and Facebook—you always have to be ON and your image is forever. This is one reason why the beauty space is performing better than any other category.
FierceRetail: What other trends do you think are having a positive effect on your business?
Beck: Bluemercury is continuing to vertically integrate by creating an incredible house of proprietary brands. My wife Marla and I created two natural and vegan proprietary brands, M-61 and Lune+Aster, and each has become a runaway success.
Also, we were the first to identify the emerging trend of men purchasing in the beauty category. Three years ago, men were buying shaving cream, shower gel and shampoo. After closely scrutinizing the data, we realized that our male customers are now purchasing concealers, bronzers and tinted moisturizers. This has now become an important part of our business and we intend to continue to capitalize upon it.
FierceRetail: What do you say when someone mentions the threat of Amazon?
Beck: We have already beaten Amazon at their game—last-mile convenience. Everything we do is focused on being the friendly, neighborhood store where you can get expert honest advice. When it comes to beauty, people prefer a neighborhood store experience because the beauty buying journey can be complex and very personal. Also, with massive product proliferation, our customers rely heavily upon our knowledgeable experts to make sense of it all. Lastly, we have in-store spas, rated by Oprah as the best in America, where our aestheticians are always available to provide stepped-up advice or teach a new tip or trick.
FierceRetail: Moving forward, what will Bluemercury do to stay relevant?
Beck: We have been at the forefront of every major beauty innovation since our inception. Although we operate in a glamorous business, we are data driven and are always able to quickly connect the dots to see the trends and what’s next. We are widely recognized as the pioneer of main street beauty shopping, we created the first and most powerful natural cosmeceutical brands in the industry, and were the first to identify the new trend of men purchasing in the beauty category. We know we will continue to find the white space in beauty and will not only survive, but thrive, during this disruptive time in retail history.