Paying attention to their bottom lines, retailers are hedging their beauty brand bets.
“A lot of times we launch new brands in five or 10 stores. So, to even be able to fulfill those stores and to be able to educate our beauty experts, you need to have the foundational pieces set in order to do that,” said Tracy Kline, head of merchandising and spa at the Macy’s-owned beauty specialty retailer, during a recent Beauty Independent In Conversation webinar. “What you don’t want to do is be dialing back with a brand six months later after you’ve launched them.”
Registering 13 consecutive quarters of same-store sales growth, Bluemercury has 165 freestanding stores and 13 shop-in-shop installations at Macy’s locations. It’s aiming to add 30 locations to its fleet over the next three years. When onboarding beauty brands, Kline said, “We don’t make rash decisions at Bluemercury. You don’t see us as, we want to be first. Sure, it’s always fun to be first, but we also want to make sure it’s authentic and that we benefit.”
Kline was joined for the webinar by Kandice Hansen, senior buyer for beauty at Moda Operandi. An e-commerce destination for luxury fashion, beauty, accessories and home decor, Moda Operandi isn’t as concerned with brands’ scalability as it is with their marketing budgets. Hansen said, “We’ve had conversations with brands where we’ve had to hold off because their funding isn’t ready to be able to support the marketing needed to make the brand a success.”
Hot Categories
Bluemercury carries around 200 brands, and Moda Operandi carries around 100 brands. Demand for doctor- and expert-backed skincare is running high at both of them. Brands like professional skincare brand SkinCeuticals at Bluemercury and celebrity facialist Ivan Pol’s skincare brand The Beauty Sandwich at Moda Operandi are outperforming their skincare competitors.
Since introducing a revamped store format late last year, Bluemercury has deepened its commitment to professional skincare by inserting brands like SkinMedica and Obagi into its selection. It’s invested in fragrance, too. It recently brought on Roger Schmid, a fragrance expert who previously held management positions at fragrance ingredient suppliers Givaudan, Firmenich and Symrise, as an advisor to it for the category. With his guidance, the retailer has picked up fragrance brands Maison Francis Kurkijan, Parfums De Marly, BDK Parfums and Boy Smells.
Kline, who mentioned Bluemercury prioritizes brands with cross-category offerings such as Sisley, said, “I’m really excited about fragrance. I feel like fragrance is kind of where skincare was many years ago with niche players surfacing.”
Second to skincare, makeup sales are ramping up at Moda Operandi. Lip and eye products are leading the makeup charge. Hansen shared that the category notched double-digit year-over-year growth in the first quarter of the year. Nail care is the e-tailer’s second-highest performing sub-category within color.
Since entering beauty in early 2023, Moda Operandi’s beauty selection has gained traction with the e-tailer’s loyal fashion customers as well as new customers, according to Hansen. “Being predominantly fashion, we are at a higher price point,” she said. “We also have a pretty big social footprint, roughly 3 million followers. So, some of those fans who haven’t been able to commit to some of those larger ticket items can now come on and shop beauty.”
Top-Performing Brands
SkinMedica, which broke into Bluemercury’s assortment last fall, has been received warmly by the retailer’s 35- to 55-year-old core customers. Kline believes efficacy and skincare authority underpin its early success at Bluemercury. She highlighted the brand’s ability to train in-store staff as another significant factor in its traction and underscores that education is critical for all Bluemercury’s brand partners.
“It’s important to have that digestible training,” she said. “What are the parts that you pull out that are most important for the client? As much as a founder can deliver training and then having the staff experience the product, that’s the most important, then recycling that over the course of the year.”
Launched last year on Moda Operandi, The Beauty Sandwich became an instant hit due in part to Pol’s social media following and the uniqueness of his products. Secret Sauce, The Beauty Sandwich’s bestselling product designed to be between a serum and a moisturizer, sold out within two hours of its listing on Moda Operandi’s website. For a 30-ml. size, the product is priced at $300, and a limited-edition 100-ml. size is priced at $800.
“What he has created is so special,” said Hansen. “The Secret Sauce was sort of this new step in your routine, and when we launched, there was just clear synergy between him and Moda. We were really able to support one another with a campaign across both of our platforms that really helped drive a lot of sales.”
Exclusivity ARRANGEMENTS
At Bluemercury, exclusive product drops from key brand partners is a tool the retailer wields to distinguish its assortment from rivals’ assortments. However, exclusive launches are only sought when the retailer and brand are aligned on expectations. “What we don’t want to say is, ‘We really want you exclusive,’ and we don’t think that we can deliver on their expectations from a partnership or a revenue standpoint,” explained Kline. “So, that is very deliberate when we have exclusive partnerships.”
Moda Operandi seeks out exclusivity whenever possible to maintain its position in the luxury market, whether with products or experiences it co-creates with brands like virtual masterclasses or weekend retreats. “When I was at Revolve as a beauty buyer, I would be looking at Moda to see what they were doing,” said Hansen, a beauty buyer for six years at Revolve prior to joining Moda Operandi in 2022. “It’s really an industry leader. So, I think there’s a credibility that we’re able to bring to the products.”
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