By  on June 22, 2007

Amid the clamor of department store consolidation, the emerging beauty apothecary Bluemercury Inc. has drafted a blueprint for aggressive expansion in a bid to establish itself as a national purveyor of luxury beauty and spa services.

The plan calls for the 17-store chain to open 12 more locations this year, and another 24 to 30 shops in 2008. The firm plans to maintain that 30-store per year pace and reach 300 stores by 2010, said Marla Malcolm Beck, founder and chief executive officer of Bluemercury.

The expansion will push the Northeast-based chain — which opened its first location nearly eight years ago in Washington, where the company is based — into new markets, including Massachusetts, Georgia, Florida, Texas, Arizona and California. Its territory includes Philadelphia, Chicago, Princeton, N.J., the outskirts of Manhattan and, as of June 14, a boutique in Los Angeles. "California is an important market for us. It plays to our strength in skin care expertise," Beck said, adding that Bluemercury plans to dot the Golden State with 40 to 50 stores in the next five years.

Referring to sales displaced by Macy's Inc. (formerly Federated Department Stores) unit closures, Beck said, "When there is consolidation, it shows that a segment is mature and that there's an opportunity for new channels."

Bluemercury's growth rate would have it nipping at the heels of Sephora in the next five years. Industry sources forecast that Bluemercury will have nearly 360 stores by 2012, and Sephora is on track to grow into a 380-unit chain of stand-alone locations.

However, Beck draws a firm distinction between the two. "We are a smaller, neighborhood store, so we can put stores close to one another like Starbucks does," said Beck. She noted that the retailer has taken this approach in Washington, with a store in Georgetown and another location a mile away in Dupont Circle, where there is a greater men's clientele.

Bluemercury's average footprint is 2,000 square feet. Each store is stocked with about 50 brands — which include Nars Cosmetics, Molton Brown, L'Artisan Parfumeur and T. LeClerc — and generates roughly $1,000 to $2,000 sales per square foot, according to the company. As a point of comparison, Sephora carries 250 brands. Beck would not comment on the size of the business, but industry sources estimate the firm generates $68 million in revenue.Last year, the firm linked arms with The Invus Group, a New York-based private equity fund with a portfolio that also includes Weight Watchers. "Invus is a brand builder," said Beck. "Its investment just supercharges what we do. Our plans have not changed, we just have more fire power."

Part of that strategy includes growing its Web business, which Beck said accounts for a small percentage of company sales. A relaunch designed to spotlight education and beauty expertise is planned for August.

Bluemercury's emphasis on spa services may give the company an edge, particularly as competing outposts experiment with services. "We have spas in every location," said Beck, noting that Bluemercury has developed signature treatments backed by strict protocols. "It's the business we are in and we made the commitment to it from the beginning." In Beck's view, if Bluemercury solves a client's problem, the retailer has a customer for life.

Melisse Shaban, ceo of Frédéric Fekkai, commented, "[Bluemercury] is one of the few concepts that has been successful at integrating a service component for added value to the end user. And by doing all of that, it's in the enviable position of having created a beauty destination that also allows for discovery and impulse purchasing."

Bluemercury also offers a haven for luxury brands bent on limited distribution, said Beck. The Estée Lauder Cos. Inc. brands Darphin, Bumble and bumble and Bobbi Brown have all aligned themselves with the chain. Maggie Jackson, marketing manager for Darphin, said the French spa brand plans to expand to all of Bluemercury's new doors, and increase its marketing and training efforts there, as well.

Peter Lichtenthal, president of Bumble and bumble, said the chain complements the brand's primary salon distribution channel. "Bluemercury provides Bumble and bumble with great exposure where we're in good company with other leading niche brands," said Lichtenthal.

Bobbi Brown entered three Bluemercury stores in March after exiting from selected Sephora doors. Rita Mangan, senior vice president of Sales and Education, North America for Bobbi Brown, said Bluemercury's emphasis on training meshes with the brand's approach. "Marla places high priority on the education of her sales associates so they can offer the best customer service....We place high priority on teaching our artists to teach our customers how to be their own makeup artists. Service is what truly resonates with our customers," said Mangan.Fellow makeup artist brand Nars Cosmetics is also found in the mix. Kim Thomas, vice president, North American sales for Nars Cosmetics, said, "Bluemercury offers a soothing shopping experience. It's a spa, an apothecary and a specialty cosmetics retailer." She added,z"You're going to see a lot of retailers trying [to enter the specialty realm] but only the best will succeed."

Each brand in the assortment must make it to Beck's vanity first. A smattering of her favorite items include Therapy Systems Perfect Skin SPF 15, Dr. Sebagh Serum Repair and hand cream from Lola Kelly, a line formulated by a French botanist.

Beck said, "Our clients shop everywhere, but find a home with us."

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