Macy’s Inc. is betting on the booming beauty industry to help it return to growth.
The department store may be shrinking its eponymous store offering across the U.S., but it’s doubling down on Bluemercury, the luxe beauty retailer it has owned since 2015.
On deck: A significant number of store openings as well as upgrades to existing doors, plus a renewed emphasis on differentiated brands, upscale locations and the service element that has set Bluemercury apart since its inception. The goal: To make Bluemercury a viable competitor in the North American specialty channel sector, currently dominated by Sephora and Ulta Beauty.
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“We’re going to do 30 new stores and 30 remodels at least over the next three years,” said Bluemercury CEO Maly Bernstein on a recent Monday at its newly remodeled store in Bronxville, an affluent commuter suburb north of New York City. “We’re creating a self care escape in the most coveted neighborhoods and we’re carefully curating beauty rooted in efficacy, craftsmanship, service and education. With our strategy, we’re planning to be the leading luxury beauty retailer.”
Currently, the retailer operates 159 freestanding locations and 19 inside Macy’s department stores, almost triple the number it had when it was acquired by Macy’s for $210 million — in cash — from founders Marla and Barry Beck. Comparatively, Sephora has 565 freestanding doors in the U.S., while Ulta operates 1,374 freestanding locations.
The Bronxville store is one of two recently opened prototypes that presage what the remodeled and new stores will look like. The other is located in New Caanan, Conn. It reopened in October 2023 and early results are positive.
“Our latest remodels have been well-received and will serve as the foundation,” said Tony Spring, who took the reins as CEO of Macy’s Inc. in February. His remarks came during an analyst’s call when he was discussing fourth-quarter 2023 earnings and unveiling his new strategy, called “A Bold New Chapter.”
The plan entails accelerating luxury growth, via Bloomingdale’s and Bluemercury, as well as shuttering approximately 150 underproductive locations including most likely its San Francisco flagship through 2026. The plan was largely applauded by investors. “We think beauty will be the easiest part of this,” said Neil Saunders, managing director of GlobalData, “mainly because it is a fast-growing market where Bluemercury has traditionally underperformed.”
Spring has high hopes that the investments Macy’s is making will further fuel sales growth at Bluemercury, after the beauty retailer posted its 12th consecutive quarter of comparable sales growth. Net sales were up 7.8 percent, while comparable sales increased 2.3 percent and its loyalty program, Blue Rewards, grew 19 percent. In comparison, Macy’s Inc.’s net sales were down 1.7 percent and comparable sales 5.4 percent lower.
The Bronxville and New Canaan stores embody Bluemercury’s strategy, referred to by executives as New Blue. Firstly, the fact that both are in leafy, wealthy suburbs signals the future of Bluemercury’s location plans. “For us what works best is when we are in suburban neighborhoods,” said Bernstein, the first outside CEO to take the reins of the store. She added Sonoma County has been earmarked for new stores but declined to share other potential locations.
This suburban approach is what many brands like about Bluemercury. Elana Drell Szyfer, the CEO at ReVive Skincare, which has been at Bluemercury since the beginning, said: “The important role that it plays is it’s more local for a local consumer. It’s located in important luxury environments and neighborhoods and it provides a more personalized feel of a local neighborhood store with a high emphasis on tailoring the shopping experience to what the customer is looking for.”
Bernstein also favors freestanding stores. So while Sephora and Ulta continue apace with respective partnerships with Kohl’s and Target Corp., don’t expect to see a push by Macy’s to house more Bluemercury locations inside its department stores anytime soon. “The focus is on the core,” said Bernstein. “As a result we’re going to be building out our freestanding stores.”
In terms of look and feel, the new format was designed to emphasize the high-touch service element.
The center bar, which Bernstein had designed to mimic a chef’s table, is where clients will be offered consultations, tutorials, new offerings and the chance to discover brands with Bluemercury’s in-store beauty experts.
The area of discovery on the center bar is called The Cache, Bluemercury’s initiative that launched in October 2022 to bring in up-and-coming brands on the cutting edge of innovation. It refreshes every four months, with the February drop including skin care brands Clark’s Botanicals and Viktor Michael and wellness supplements from Biocol Lab.
“Ever since they redid it, we’ve now sold out three Saturdays in a row,” said Francesco Clark, the founder and CEO of Clark’s Botanicals and a longtime Bronxville resident, whose bestselling product at Bluemercury is Retinol Rescue Overnight Cream, $150.
“What I love about working with Bluemercury is that they welcome the fact that I go in store every day,” he continued. “They actually encourage me to go in because it helps me to train the staff, and establish an emotional connection with the people who are working in store and also establish your customer base very quickly.”
In addition to The Cache, Bluemercury has shifted its merchandising matrix. This includes a bigger-than-ever focus on fragrance, with brands like D.S. & Durga, Baobob, Trudon, Creed and Maison Francis Kurkdjian.
“Fragrance is a runaway for us because this was not just an expansion, but really an entry into personal fragrances, as well as more uber luxe home,” said Bernstein. “We’ve also seen a lot of excitement for professional skin care.”
Indeed, Bluemercury has brought in an enhanced selection of dermatological skin care solutions from brands including SkinMedica and Obagi, catering to increased consumer demand in this area. In body care, Aesop and Cerulean 6° have joined them mix. And in color cosmetics, Tom Ford, Ogee, Pat McGrath Labs and Sisley joined the retailer.
“As we expand our professional skin care and luxury fragrance categories, our average unit retail is naturally increasing,” said Bernstein, on the pricing strategy. “We’re finding that our clients are prioritizing efficacious products and sophisticated packaging, coupled with our high-touch approach to service.”
Her personal favorites include Vintner’s Daughter Botanical Serum, $195; M61 PowerGlow Peel Extra Strength 20%, $38-$72; U Beauty The Plasma Lip Compound, $68; Sisley-Paris Le Phyto-Rouge Shine in shade Rouge Hollywood, $70; Jan Marini Transformation Face Cream, $125, and Jan Marini C-ESTA Face Serum, $129.
As well as increasing product offerings, the retailer is using technology to appeal to customers. Magic Touch, for example, allows customers to hold up mobile phones to blue stickers affixed to products throughout the store. Like a QR code, that triggers a pop-up, where customer can get more education on the product, then decide whether they want to pick it up in store or have it delivered to their homes. (This comes in particularly handy for puchases like supersized candles from Trudon and Baobab, which cost upward of $650 and weigh a whopping 23 pounds.)
“Our New Blue vision is all about the evolution of our omnichannel client experience for the modern luxury consumer,” said Bernstein. “We want our clients to experience our high-touch service and curation for efficacy IRL and URL, as they choose. E-commerce is a part of our full brand immersion, whether to tailor your samples, book a spa service or access more product education.”
Then there’s skin care services, which Bluemercury has offered since its inception and will continue to do so. Redesigned spas feature HigherDose Full Spectrum Infrared Sauna, and offerings in the treatment rooms will include signature facials from M-61 Skincare, Bluemercury’s house brand, and partners such as Obagi, ReVive, SkinCeuticals and SkinMedica.
“Our plan is to open spas with one room in most locations, while makeup services and beauty events — which include on-the-floor facials — will be offered across all stores,” said Bernstein.
While she declined to share what percentage of customers receiving services buy products, she said that clients who engage in services are Bluemercury’s most engaged clients.
Altogether, this approach has been designed so services integrate into the full brand immersion experience, beginning with a consultation at the front, a makeover in the middle and the option to extend the experience with a spa trip at the back of the store.
“When we think about what Bluemercury offers we think about the fact that we take beauty personally,” said Bernstein.