An outside view of a Bluemercury retail store.
Bluemercury has generated a loyal following of consumers in an ultracompetitive space who are willing to pay for the retailer's curated offering of luxury beauty products. — Bluemercury

Why it matters:

  • Not everyone can be the biggest, but among beauty giants like Ulta and Sephora, Bluemercury carved out its space with loyal shoppers who prefer its curated approach to beauty.
  • The company pioneered a client-first service model emphasizing hyper-personalized beauty interactions.
  • Most Bluemercury stores are in convenient neighborhood locations that attract loyal shoppers versus sprawling shopping centers, offering a robust mix of both legacy names and emerging, founder-led brands.

The beauty business is booming. Prestige beauty sales rose 15% for the first half of 2023, according to Circana.

The allure of the category unleashed a bevy of new brands entering an already crowded marketplace. Compounding that, everyone from dollar stores to apparel retailers are expanding into beauty to get a more significant portion of the profitable category.

“Beauty has become such an exciting category, but it also comes with a feeling of being overwhelmed,” said Tracy Kline, Head of Merchandising and Spa, for Bluemercury, the Macy’s-owned boutique beauty retailer. “When I started here 7 1/2 years ago, there were about five go-to skin care brands.”

Now, consumers are bombarded with a flood of new products, especially in skincare. “What differentiates us, and it is something we really pride ourselves on, is curation. We want our clients to know we’ve done the work for them,” she said.

Bluemercury’s goal is to bring the best of the best — the top brands and the powerful items within those brands. “You will see us become even more curated within the brands we carry and within the SKUs we feature because we want clients to know we’ve vetted them,” Kline said.

Kline shared advice for brands seeking distribution at Bluemercury. “You don’t want to get ahead of yourself. You get one shot, so make sure you can deliver in education, samples, and your supply chain.

Bluemercury Head of Merchandising: Leaning into niche, founder-led skin care brands

Skin care represents the largest portion of Bluemercury’s sales. The assortment exemplifies its curated approach with a mix of luxury staples like La Mer, Augustinus Bader, and Dr. Sturm to relative prestige beauty newcomers.

Dovetailing with its spa services, which include facials and brow treatments, Bluemercury has access to professional-grade brands typically sold in physicians' offices, including Skinceuticals, iS Clinical, and PCA Skin.

“We are seeing more niche brands in skin care. We just launched Tronque, a body care brand with an amazing story around the founder, who created a line for repairing scarring after she had a cesarean section. We are about to expand it from 22 stores to a great number more,” said Kline.

Tronque exemplifies Bluemercury's approach to adding new lines — the team looks for strong founder stories, better-for-you formulas (Bluemercury has a Conscious Beauty seal of approval), sustainability, and ingredient stories, among other attributes.

"We like to have early discovery brands — we are almost like an incubator. We are passionate about adding brands that are additive to our portfolio,” Kline said.

Her goal is for Bluemercury to offer a balance. "We are a beautiful mix of authority brands and newly discovered brands that make you think of fashion. Beauty has become like fashion."

[Read: Inside How 3 Scaling Startups Cracked Walmart, Target, and Ulta]

 Headshot of Tracy Kline, Head of Merchandising, Spa and Supply Chain, for Bluemercury.
Tracy Kline, Head of Merchandising and Spa, for Bluemercury. — Bluemercury

Discovery platform ‘The Cache’ spotlights emerging beauty brands

To spotlight emerging brands, Kline created a discovery platform last year called The Cache, which rotates every three months. "It is a go-to section for brands we hear our clients want, along with amazing early discovery brands.”

One of the brands selected for The Cache last summer was Le Domaine, a collaboration between Brad Pitt and winemakers Famille Perrin. Bluemercury was the first retail partner for the vegan, gender-neutral skin care line priced from $77 to $275.

The Cache has been skin care-focused until now. In September, Bluemercury kicked off a focus on fragrances. "Fragrance is a category where we have a lot of runway,” Kline said. The retailer plans to onboard 10 brands, fusing legacy names and up-and-comers. “It will be a place where clients can play and develop their own fragrance wardrobe.”

Small stores play a big part in Bluemercury’s business model

Beyond its curated approach, Bluemercury's footprint is smaller than its specialty competitors — under 2,000 square feet on average — versus 10,000 square feet for an Ulta Beauty. The format fits snugly into neighborhood locations like Princeton, New Jersey, or Austin, Texas.

Macy’s realized the power of Bluemercury’s approach and purchased the retailer for $210 million in 2015. Like most physical merchants, Bluemercury ramped up its online offering during the pandemic. The omnichannel approach is a good choice for replenishment, said Kline, but the action remains in stores.

[Read: How To Turn Deinfluencing Into a Marketing Opportunity]

The service factor: ‘We have a client who is willing to spend more for high performance’

Bluemercury’s associates receive intensive training and are armed with a boatload of samples that, together, nurture trust, said Kline. Bluemercury’s loyalty program, BlueRewards, is climbing toward 1 million members. The retailer’s consumers span all ages but skew heavily to older millennials. “We have a client who is willing to spend more for high performance,” Kline explained.

To fortify its high level of service, Bluemercury created a beauty council — a roster of authorities who serve as advisers. Elyse Love, a New York City board-certified dermatologist is on board to assist with skin care. “Her role is to help us educate our beauty experts and serve as a sounding board when we review skin care brands,” said Kline. Fragrance expert Roger Schmid was selected to leverage his strength and expertise as Bluemercury dives deeper into scents.

Kline shared advice for brands seeking distribution at Bluemercury. “You don’t want to get ahead of yourself. You get one shot, so make sure you can deliver in education, samples, and your supply chain. It’s not about going fast. We normally launch brands in five stores to 10 stores,” she said. “Do it right and stay true to who you are.”

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Applications are open for the CO—100! Now is your chance to join an exclusive group of outstanding small businesses. Share your story with us — apply today.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.

CO— Exclusives: Insider Strategies

How the buzziest brands and hottest startups are solving today's biggest business challenges. CO— brings you advice from startup founders and top executives for thriving in a new world.