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Thanks to a cult-classic roster of brands and a liberal sample policy, the business soon became a destination favorite. Over 16 years, Bluemercury bloomed from one storefront in Washington, D.C. to more than 60 stores in 18 different states.
Last month, Bluemercury was sold to Macy’s for a reported $210 million. The acquisition signals just how competitive the beauty market has become. In addition to giant beauty corporations battling to acquire indie beauty brands—both L'Oréal and Estée Lauder went on buying binges last year—companies are also now competing with startups like Birchbox and Glossier.
Racked caught up with Beck to talk about how she got her start, her company’s new direction under Macy’s, and what she wishes she could change about the industry.
What were you doing before you started Bluemercury?
I grew up in California and went to Berkeley. Right out of college, I worked at McKinsey & Company as a business analyst before I moved east to go to Harvard Business School and Harvard Kennedy School. I was working at a job in private equity finance. My husband and I tried to buy companies and he kept saying to me, "Why don’t you start your own company? Why are you working for someone else?"
I’ve always been a beauty junky. I had facials in high school before anyone knew what facials were. When I lived in Boston, I used to drive 45 minutes to get MAC lipstick because there was no freestanding store. By 1999, I was really enthralled by the Internet and wanted to get involved with the tech game. We launched Bluemercury.com to bring beauty products to the Internet because back then, you could only buy cosmetics at drugstores or department stores. We were a little early [to online shopping] and very quickly we realized we needed retail stores, too. We opened one and I realized that we could be a freestanding beauty store chain. Just like Circuit City and Best Buy had carved electronics out of department stores, why couldn’t we do beauty products?
What was shopping for beauty like at the time?
When I started Bluemercury, I was in my late twenties and when I would shop at department stores, the person behind the counter would decide whether or not to help me, whether or not I was worth it. It was uncomfortable. Plus, each counter sold one brand; so if you went to the Clinique counter, they would only sell you Clinique, even if two steps away Trish McEvoy had a better mascara. At the time, Sephora wasn’t in the country yet, and you didn’t have stores like M.A.C. and Kiehl’s. I really thought there had to be a better way.
What were you looking to do differently?
The whole idea was really problem-solving the process of purchasing beauty. Our mission was—and is— to be the best at giving beauty advice. Shopping for beauty is a really complicated and personal process. If you have acne and you want to find the best product for you, for example, that’s a really personal thing. Bluemercury is for discovery, expertise, tips and tricks. I’ve always said, I don’t know what products we’ll be carrying ten to fifteen years from now, but we’ll always be the best at giving beauty advice.
How did you get the company off the ground?
We raised a million dollars in funding in two weeks [at first]. We had friends of angel investors, two managing directors of the Carlisle Group, that were involved. We also got money from friends of family. It was a crazy time to raise money— it was around the last time NASDAQ was at 5,000.
Was it hard to sell your concept?
We pitched our vision nonstop, over and over again, but they were so used to the department stores, and didn’t understand the concept of a freestanding beauty store. We dialed and dialed until our fingers were white to get brands on board. Eventually, there were pivotal moments. Trish McEvoy took us on very early, as did Kiehl’s and NARS. They were the brands that said ‘yes, we want to be creative and try something new with you.’
How are your stores different than, say, a Sephora?
First of all, Bluemercury is more relaxing; it’s not an overwhelming store experience. Second, the brand mix is elevated and cultivated. Our brands are cultivated so that we are picking the best out of the industry. We actually don’t overlap that much with Sephora from the brand mix.
How do you decide what to stock?
We look for brands that have a distinctive point of view; they have to have a plan to really innovate. They also have to have amazing quality and packaging. For us, partnering with brands is a long-term relationship. We’re not looking for the latest trend that’s hot this year and gone. We want lasting, sustained quality. We want our customers to know we did the hard work and picked out the best ones, we don’t sell them something that’s hot right now but has okay quality.
What are your favorite beauty brands?
I have a million favorites. My favorite lipstick is NARS. I love the French spa line Darphin. They’re known for their oils but they have beautiful anti-aging skin care creams. I love Kiehl’s, it’s the most universal brand in skincare. I also love R+Co, a new brand we launched a few weeks ago that I’m really excited about. I call them the Coachella of beauty.
What trends are you loving right now?
Some of the categories people are buying is so fascinating. Today, everyone wants face oil. We’ve always carried face oils because they were so big in France but for the first 15 years, they just sat on the shelf. Now, everybody loves face oils. Masks are hot now too. It’s a huge category that didn’t do anything for years but is going crazy now.
Also, the quality of natural beauty has really come out. You can get more and more natural makeup than you ever could before. And quality packaging, quality color, not too sheer
The beauty market today is so saturated. How do you stand apart?
First, our real estate strategy: we’re located near where our customers live and work. So that means they are using us as their drug store for all their beauty needs. The second thing is our expertise. We continue to invest in it to make sure we have the best experts in the industry in our stores that can help you with skincare and makeup. Yes, everybody is upping their game but so are we. It’s hard to find a multi-branded store where you can really get amazing advice. There’s also continued emphasis on our services; we do makeup, spa services, brow styling. We did 100,000 services last year alone. That’s a big piece of it. And then our sampling is phenomenal. If you’re going to come in, we not just going to give you one eye cream, we’re going to give you three different ones to try.
What one thing do you wish you could change about the beauty industry?
I wish everyone were honest about ingredients in products. The ingredients are on every package, but if you’re a consumer, it’s hard to which know which impact the skin and which you don’t really need. These days, we have consumers coming in and just like with food, they tell us what they don’t want in their products. The honesty, I think, is still missing in the industry but it’s what we excel at.
Tell us how the deal with Macy's came about.
We got a lot of calls from people who were interested in investing in Bluemercury last year. We were growing aggressively and needed additional resources, so we started entertaining ideas and offers and we met them. We had a lot of different options and we chose them because of the resources they had that we wanted. They’re the number seven e-commerce brand in the country, behind Amazon and a couple of other big players. They have an innovation lab in in San Francisco where they can get an app done in eight weeks. So all of these dreams that I have, they can help me fulfill.
What can shoppers expect from this deal?
The plan is for Bluemercury to expand as a stand-alone business, continuing on its existing strategy but with more stores, more e-commerce, more mobile commerce investments, and more investment in apps and technology that benefits consumers. Investments will go into programs like mobile commerce, pick-up in-store, last mile delivery, and same-day delivery. So better service, better access and just an even greater experience. They’ve also asked me and my team to really think about what would be a revolutionary concept for the future. There’s no plan around that yet, I don’t know what that is, but it’s exciting to figure out.
Do you have any helpful mantras you used while building the business?
It’s important to remember that it is a marathon and not a sprint. I talk to a lot of entrepreneurs now and I see that they’re always thinking about exit. They think, "if I do this, I can exit in two years." Life never works like that. You have recessions. We’ve been through two recessions since we started Bluemercury. Things are always changing and so you have to be prepared for the marathon.
Any other pieces of advice?
Don’t run out of money! When we started Bluemercury in 1999, The NASDAQ crashed one year after, and there was no more venture capital money for a year and a half—not just us, for anybody! We had to figure out how to build a real business with revenue and cash flow. So many businesses raise private equity and then start doing things like decorating their offices. You have to save money so that you can focus and build your business.