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Bluemercury’s search for exceptionalism in beauty

BY Gina Acosta

WASHINGTON — Sephora and Ulta are successful retailers in their own right, but Bluemercury founder and COO 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, 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 JCPenney 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.”

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Survey: Retailers, suppliers with sustainability focus see greater growth

BY Michael Johnsen

NEW YORK — Committing to sustainability might just pay off for consumer brands, according to the 2015 Nielsen Global Corporate Sustainability Report. In the past year alone, sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally, while those without grew less than 1%.
 
"Sustainability is a worldwide concern that continues to gain momentum — especially in countries where growing populations are putting additional stress on the environment," stated Grace Farraj, SVP public development and sustainability, Nielsen. "An increasing number of consumers in developed regions consider sustainability actions more of an imperative than a value-add."
 
Topping the list of sustainability factors that influence purchasing for nearly two-of-three (62%) consumers globally: brand trust.
 
"This indicates an opportunity for consumer goods brands that have already built a high level of trust with consumers to evaluate where best to introduce sustainable products into the market to drive growth," said Carol Gstalder, SVP reputation and public relations solutions, Nielsen. "On the flip side, large global consumer goods brands that ignore sustainability increase reputational and business risk. This may give competitors of all sizes, the opportunity to build trust with the predominantly young, socially- conscious consumer looking for products that align with their values."
 
And consumers are looking for products that are both good for them and good for society. A product's health and wellness benefits are influential purchase decision drivers for more than half of survey respondents (59%). Products made with fresh, natural, and/or organic ingredients carry similar weight with consumers (57%). Finding opportunities to bridge the two is a powerful and impactful way to connect with consumers.
 
As many as 66% of global respondents say they are willing to pay more for sustainable goods, up from 55% in 2014 (and 50% in 2013). And it's no longer just wealthy suburbanites in major markets willing to open their wallets for sustainable offerings. Consumers across regions, income levels and categories are willing to pay more, if doing so ensures they remain loyal to their values. Sustainability sentiment is particularly consistent across income levels. Those earning $20,000 or less are actually 5% more willing than those with incomes greater than $50,000 to pay more for products and services that come from companies who are committed to positive social and environmental impact (68% vs. 63%).
 
"Consumer brands that haven't embraced sustainability are at risk on many fronts," Gstalder said. "Social responsibility is a critical part of proactive reputation management. And companies with strong reputations outperform others when it comes to attracting top talent, investors, community partners, and importantly, consumers."
 
Despite the fact that millennials are coming of age in one of the most difficult economic climates in the past 100 years, they continue to be most willing to pay extra for sustainable offerings—almost three-out-of-four respondents (73%) in the latest findings, up from approximately half in 2014. The rise in the percentage of respondents under 20, also known as generation Z, who are willing to pay more was equally strong — from 55% of total respondents in 2014 to 72% in 2015.
 
"Brands that establish a reputation for social responsibility and environmental stewardship among today's youngest consumers have an opportunity to not only grow market share but build loyalty among the power-spending Millennials of tomorrow, too," Farraj said.
 
When it comes to sales intent, commitment to the environment has the power to sway product purchase for 45% of consumers surveyed. Commitment to either social value or the consumer's community are also important (each influencing 43% and 41% of respondents, respectively). Retail data backs up the importance of these influencers. In 2014, 65% of total sales of consumer goods measured globally were generated by brands whose marketing conveyed commitment to social and/or environmental value.
 
"The hierarchy among drivers of consumer loyalty and brand performance is changing," Farraj said. "Commitment to social and environmental responsibility is surpassing some of the more traditional influences for many consumers. Consumer goods brands that fail to take this into account will likely fall behind."
 
TV ads highlighting a company's commitment to positive social and/or environmental impact are influential in the path to purchase for 34% of global respondents. Brands that actively reinforce societal commitment must amplify and socialize their message using multiple sources and distribution channels.
 
"While marketing good deeds is encouraged and expected by consumers, authenticity and credibility are essential," Gstalder said. "Using multiple communication methods is important to demonstrate good deeds, such as third-party validation (news coverage), annual reports, affiliation with a respected non-profit or civic organization, employee volunteerism, advertising or reporting actual work in the community on a web site.  A balanced approach is key for brand communicators, with the emphasis on demonstrating good deeds versus self-serving promotion. "
 
Nielsen polled 30,000 consumers in 60 countries across the globe, asking consumers how much influence factors such as the environment, packaging, price, marketing and organic or health and wellness claims had on their consumer goods purchase decisions.
 
 
 
 
 
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2015 holiday sales to reach $630.5 billion, NRF says

BY Michael Johnsen

WASHINGTON – Expect holiday sales in November and Decemer to be up 3.7% in 2015, the National Retail Federation announced Thursday, reaching $630.5 billion. And while that holiday sales peak is coming off of much stronger growth than the prior 10-year average of 2.5% increase in holiday sales, it won't be as good as last year. 
 
Additionally, NRF is forecasting online sales to increase between 6% and 8% to as much as $105 billion.
 
“With several months of solid retail sales behind us, we’re heading into the all-important holiday season fully expecting to see healthy growth,” said NRF president and CEO Matthew Shay. “However, while economic indicators have improved in several areas, Americans remain somewhat torn between their desire and their ability to spend; the fact remains consumers still have the weight of the economy on their minds, further explaining the complex retail spending environment we are seeing right now. We expect families to spend prudently and deliberately, though still less constrained than what we saw even two years ago.”
 
But if you're looking to capture more than your fair share of that 3.7% growth, act fast, as several factors may impede spending decisions as the holiday season approaches. 
 
“Potential disruptions from yet another government shutdown in mid-December and a slower pace of job creation and income growth are just a few key factors that will impact holiday shoppers’ spending this year,” Shay said. “Price, value and even timing will all play a role in how, when, where and why people shop over the holiday season. Retailers will be competitive not only on price, but on digital initiatives, store hours, product offerings and much more.”
 
Holiday sales in 2014 increased 4.1% over the previous year.
 
"Similar to last year in the sense we’re coming off a rather disappointing first half, this holiday season brings to light several crosscurrents that still exist for American households,” said NRF chief economist Jack Kleinhenz. “While confidence data is encouraging, slower job growth in 2015, deflationary retail prices and the mix of consumer spending somewhat shifting toward big ticket items and services, as well as the wild card in our government spending debates, will all contribute to the slower growth rate of sales expected for the holiday season.”
 
Holiday sales represent 19% of the retail industry’s annual sales of $3.2 trillion, NRF reported. 
 
“All said, there’s no reason to doubt that we will see solid retail sales growth in the final two months of the year,” continued Kleinhenz.
 
NRF’s holiday sales forecast is based on an economic model using several indicators including, consumer credit, disposable personal income and previous monthly retail sales releases. It also includes the non-store category (direct-to-consumer, kiosks and online sales).
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