By  on July 25, 2008

NEW YORK — In a potentially mold-breaking move in American beauty retailing, Bloomingdale’s has signed an exclusive deal to open in-store shops with British high-end apothecary Space NK.

The Space NK boutiques will open in nine Bloomingdale’s units, including the 59th Street flagship, beginning in November. Nine more Bloomingdale’s stores will unveil Space NK shops next year, and the remaining 15 Bloomingdale’s locations will open Space NKs in 2010. The boutiques will range in size from 750 to 1,000 square feet and carry about 60 brands in skin care, cosmetics, fragrance and related products.

“Considering what Space NK is, it takes our beauty business to a whole other level,” said Michael Gould, chairman and chief executive officer of Bloomingdale’s. “The opening of Bloomingdale’s in SoHo was a seminal moment. We proved that a department store could think outside the box. This has the potential to be a seminal moment.”

Both Gould and Nicky Kinnaird, Space NK’s founder, declined to discuss volume projections, but the Bloomingdale’s ceo said the goal is for the boutiques to be among the top three beauty brands in the chain. “That’s a pretty lofty goal,” he said.

“One thing that’s so unique about this is that retailers have arrangements with individual resources, but this is an arrangement with a brand,” Gould said. “Space NK is a brand and Bloomingdale’s is a brand.”

Industry sources estimated the chain did more than $75 million annually in sales in 2006. With an average store measuring about 1,000 square feet, the sales productivity computes to more than $1,500 a square foot.

Space NK has “63 brands,” Gould said, referring to the number of different lines sold by the British company. Since the in-store shops will be leased departments, Space NK will be responsible for hiring, training and paying sales associates’ salaries. That’s fine with Kinnaird, who said the shops’ staff has to be paid by Space NK so the advice staffers give is completely unbiased.

In addition to the New York flagship, Space NK shops are slated for Bloomingdale’s locations in SoHo and White Plains, N.Y.; Chestnut Hill, Mass.; Sherman Oaks, Newport Beach, Costa Mesa, Century City and San Francisco, Calif. Space NK’s product assortment also will be featured on Bloomingdale’s Web site.

“A couple of locations have the opportunity for treatment rooms,” Kinnaird said.

The allure of Space NK is clearly its product assortment, which is hand-picked by Kinnaird using a methodology that blends research, intuition and love-at-first-sight chemistry. “It’s constantly searching for that incredible product,” she said. “People want to be surprised and delighted. We have innovation every two to three weeks. We’re a small footprint. It forces the constant edit. Whatever is in Space NK is there for a reason.”

Another selling point for Gould was Kinnaird herself. “One of the most important things is Nicky visiting our stores over as we open Space NK shops and to make personal appearances. We have a very specific amount of time that she will spend in the stores written into the agreement.”

It’s Kinnaird’s ability to find new, developing brands that will be a major plus for Bloomingdale’s. Asked if Bloomingdale’s couldn’t have simply gone out and sourced some of the lines Space NK carries, the ceo bluntly replied, “No, to be 100 percent honest. I don’t believe so. What Nicky has shown is one of her great strengths is taste and putting brands together and her ability to nurture emerging brands. We at Bloomingdale’s have a lot of strengths but I don’t think large department stores do a great job of nurturing emerging brands from their infancy.”

The deal between Bloomingdale’s and Space NK draws some comparisons to J.C. Penney’s introduction in October 2006 of Sephora in-store shops. While the price points of Penney’s apparel and home assortments are lower than Bloomingdale’s and the two chains appeal to different customers, Penney’s move was seen as bold when it installed 1,500- to-1,800-square-foot Sephora boutiques, which have proven to be extremely successful.

Among the brands Space NK carries, in addition to its own label, are Eve Lom skincare, which Kinnaird says is the retailer’s best-selling line in all its stores and which Space NK owns; Nars color cosmetics; Dr. Brandt; Natura Bisse; Laura Mercier; Erborian; Dr. Hauschka; Jurlique; Zelens; ar457; Christopher Robin; Chantecaille; By Terry; Acqua di Parma; Aromatherapy Associates; Art of Shaving and MD Skincare.

An example of the lengths Kinnaird goes to find new products is a candle from Belle Fleur, a downtown florist. She received a bouquet and was so impressed with the arrangement, she said, “I have to meet the florist.” Off she went to the shop, where she discovered a candle that’s now sold in her stores. “It’s an eye that sees something differently,” Gould said.

The ceo said he discovered Space NK in 1997 when he saw an outpost at Harvey Nichols. He saw the store again several years ago when he was walking through Covent Garden with his son. He said the concept is important to Bloomingdale’s. “We know that 50 percent of the customers who walk into a department store don’t walk into a specific department unless they see newness.”

Bloomingdale’s is embarking on what Gould called “the largest renovation project of the beauty area in the 59th Street flagship in 50 years.” While beauty will gain space — it will take over both sides of the Bway area on the main floor — there still won’t be enough space. “We have six new lines coming into the store. We had to make some hard decisions about our assortment.”

Nonetheless, Space NK will have the same footprint as its stand-alone stores. “I didn’t want some junior version,” Gould said. “I wanted the concept as I saw it in the U.K. Space NK will have a terrific temporary location and a terrific location on the redesigned floor.”

Kinnaird said the appeal of putting Space NK shops into Bloomingdale’s is “it gives us great exposure to many people very quickly. We have relationships with innovators and experts. It could be 2-and-a-half years before a product comes to market. It’s exciting for us to bring them to greater exposure than we would with stand-alone stores.”

Also, Kinnaird said she likes the risks Bloomingdale’s has taken in the last few years. “Look at what they’ve done with [chef] Charlie Palmer at the South Coast Plaza store, and the SoHo store itself,” she said. “Michael is doing things in a radical way at Bloomingdale’s.”

Kinnaird opened her first store in London in 1993 as a 250-square-foot fashion boutique, including apparel, accessories and a small apothecary. The 250-square-foot beginning gradually grew to 1,000, completely devoted to beauty, but it took two-and-a-half years to exhaust the obvious possibilities in London with 16 to 17 stores before the chain spread to the rest of the country.

There are now 58 Space NK stores in the U.K., including three concessions at Harvey Nichols. Kinnaird said she plans to open six new stand-alone stores in the U.K. in the next six months and continues to look for freestanding locations in the U.S. Space NK’s first U.S. store, a flagship on Greene Street in SoHo, opened in June 2007. Other stores have since opened on Columbus Avenue, here, downtown Scarsdale, N.Y. And at the Short Hills Mall in Short Hills, N.J.

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