Will the Birchbox/Walgreens pilot deliver beautiful results?

Discussion
Rendering: Birchbox/Walgreens
Oct 08, 2018
Tom Ryan

Walgreens has secured a minority investment in Birchbox and plans to pilot the monthly beauty subscription service in 11 of its stores.

Founded in 2010, Birchbox sends four or five samples of prestige and niche beauty and grooming brands to subscribers for $10 a month. Subscribers can then purchase full-size versions of the samples. A loyalty program offering $1 in points for every $10 spent helps drive the program.

The 11 in-store shops, ranging from 400 to 1,000 square feet, will open in major U.S. cities starting this December through early 2019. They will showcase Birchbox branding and full-sized skincare, hair and makeup products from more than 40 prestige brands. Birchbox-trained Walgreens beauty consultants will be available to assist customers.

Birchbox will also offer subscriptions to monthly samples and a “Build Your Own Birchbox” experience (BYOB), a signature element of the service’s flagship stores in New York City and Paris. A curated Birchbox shop will also be introduced online.

Birchbox was the first subscription service to open a store, but has faced challenges from similar subscription upstarts, including Ipsy, Julep and Glossy Box as well as from Sephora, Walmart, Target and Allure magazine.

Rendering: Birchbox/Walgreens

“In Walgreens, we have found an exciting partner that supports our mission of reaching an underserved customer who doesn’t prioritize beauty,” said Katia Beauchamp, Birchbox’s CEO in a statement.

For Walgreens, Birchbox secures additional high-end cosmetic brands, promises to help reach more Millennial women, adds an experiential element to the in-store experience and builds on recent efforts to elevate its beauty category.

Over the last two years, Walgreens has invested in remodels while adding new brands, in-store consultants and a beauty rewards programs to boost its beauty positioning. Along with pharmacy, beauty is seen as a major traffic driver for drug stores.

“Our customers want to shop the most sought-after brands in a welcoming and accessible environment, and the addition of Birchbox to our growing beauty offering is a big step in delivering on our promise to differentiate and elevate the beauty experience at Walgreens,” said Richard Ashworth, president of operations, Walgreens.

DISCUSSION QUESTIONS: Does the Walgreens/Birchbox partnership make sense for both companies? Will the in-store Birchbox experience likely work in most Walgreens locations?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"There may be a better win if a diffusion line or exclusive Walgreens line was created but maybe that is in the works already."
"I don’t see Walgreens customers doing the extra legwork to sell these (more) expensive beauty products."
"This feels like [Birchbox is] reaching for the low end when clearly that was not their original market segment."

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16 Comments on "Will the Birchbox/Walgreens pilot deliver beautiful results?"


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Neil Saunders
BrainTrust

Anything that elevates the beauty experience in Walgreens is welcome; and this concept does. That said, the specific nature of the service means it is likely to work best in big urban markets where there are plenty of younger and more fashion-focused shoppers.

Walgreens has to recognize, however, that there is lot more work to do in improving all parts of the store and shopping experience. Sticking in a few good branded areas does not solve all of the issues.

David Weinand
BrainTrust

Beauty, as we know, is big business and if this helps Walgreens to improve merchandise and offer something unique in their stores, it’s a win. While Birchbox was an early player in beauty subscription services, they haven’t kept up with their competition (my wife and daughters have done both Birchbox and Sephora and Sephora is hand’s down a better offering) so perhaps this will give Birchbox some extra capital to improve their service.

Shelley E. Kohan
BrainTrust

The big winner here is Walgreens by immediately increasing their beauty assortment to a better mix of highly coveted brands. However, to deliver in the goal of providing these brands to an underserved market, the training of sales consultants in Walgreens would need to be executed well. Typical associates would be hard pressed to answer any type of beauty-related questions.

The customized experience of “build your Birchbox” is an excellent idea provided the product assortment will be at price accepted by the Walgreens beauty shopper. The newly launched Beauty Enthusiast Club will certainly resonate with the Walgreens customer and having Birchbox would add nicely to the rewards program. The question that remains unclear is if the current Walgreens target market would be willing to pay the price of the current assortment of Birchbox products. There may be a better win if a diffusion line or exclusive Walgreens line was created but maybe that is in the works already.

Jasmine Glasheen
BrainTrust

I think Shelley hit the nail on the head here when she said that Walgreens associates need to be well-trained enough to sell customers on Birchbox’s high-end cosmetics. If Walgreens employees are able to convey some of the excitement that comes with Birchbox’s product sampling program, then I imagine the merger will be quite successful; if Birchbox offerings are just another shelf and cardboard sign in a chain store’s already saturated cosmetics department, however, I don’t see Walgreens customers doing the extra legwork to sell these (more) expensive beauty products.

Nikki Baird
BrainTrust

My answer: No. What is Birchbox thinking? “Our mission of reaching an underserved customer who doesn’t prioritize beauty”? How is that a desirable customer for Birchbox? I can see the angle for Walgreens, but for Birchbox, things must be more desperate than they seem. It’s very easy to go down-market, and moving from a position of selling $30-$50 mascara to sitting inside a store that sells $8 mascara is definitely going down-market. But once you’re there, it’s nearly impossible to reclaim the high ground.

For the low-end shopper, there’s no way they’re going to spend at a level that is going to be profitable for Birchbox. For the high-end shopper, if she’s going to drop $40 on mascara, you really think she’s going to seek out Walgreens for that experience?

Lee Kent
BrainTrust

Yes, Nikki, just what I was thinking. At first I thought well, hmm, maybe Birchbox will be able to reach a new customer base. But wait a minute, what about their price points? I could almost see the Walgreens customer going for the $10 sample boxes only. I think that part is the most fun anyway. And that’s my 2 cents.

Jennifer McDermott
Guest

I think this would only work, as Neil has already pointed out, in large urban areas. This is a crowd who are probably less likely to be Birchbox subscribers as they already have easy access to these brands so it may work as growth opportunity.

Ricardo Belmar
BrainTrust

The beauty segment certainly seems on fire these days and it makes sense for Walgreens to introduce a new concept in certain urban areas to try and upsell their current customers and also bring in new customers. I can definitely see a win for Walgreens here, but I’m not so sure about Birchbox. This feels like they are reaching for the low end when clearly that was not their original market segment. Perhaps they will be bringing in specific Walgreens-exclusive brands to help distinguish the experience from Birchbox’s regular offerings. I agree with Nikki that this feels like they are more desperate than anything else. This just doesn’t feel the same as a Sephora inside a J.C. Penney.

Georganne Bender
BrainTrust

Drug store cosmetics and the brands carried by Birchbox are are the opposite end of the price spectrum. This partnership seems better suited for say, Birchbox and Sephora. Perception-wise it’s a smart move for Walgreens – smart if it can get customers to buy upscale goods at Birchbox prices on its sales floor.

I used to subscribe to Birchbox but stopped when the samples sent were not equal to the $10 a month investment. The “Build Your Own Birchbox” experience on the sales floor of Walgreens flagship store in New York could be fun as long as the items are not the same as the samples one can get for free at any department store counter. I am dubious but I have to give it to Walgreens for trying new things to engage shoppers. The retailer is on a roll.

Phil Rubin
BrainTrust
1 year 1 month ago
It’s interesting to consider this partnership in the context of a report by GPShopper just featured in eMarketer that found just 9 percent of customers changed their behavior after signing up for a subscription service. Notwithstanding the data point above, it’s clear that this partnership will: Further erode the value of department stores in the consumer supply chain relative to smaller box footprints and other venues, both digital and physical. Consumers place a high value on time, with 83 percent of consumers saying it’s very/extremely important that a brand makes their experience more convenient. This kind of distribution does just that for Birchbox and the brands it delivers. Help Birchbox reach new prospects. Walgreens is a high traffic and high frequency retailer with a very large footprint. Especially relative to paid digital media, this partnership is going to be a successful acquisition strategy for them. Reinforce Walgreens as a merchant working to provide more value for customers and, even incrementally, improve its own customer experience. This raises the bar for Walgreens to do so and… Read more »
Larry Negrich
BrainTrust

This can assist Walgreens to become a destination shopping experience and gives Birch Box reach it could never get on its own. It likely will also save Birch Box shipping costs. So, good all around.

Patricia Vekich Waldron
Staff

I think there could be great synergy and cross-over between Birchbox and Boots No 7 customers and products.

Cate Trotter
BrainTrust

It’s an interesting pairing. I’d say Walgreens is getting the most out of the arrangement — it gets to leverage the Birchbox brand to hopefully attract a younger, more beauty-focused crowd into its spaces and access to higher end brands. Birchbox is clearly hoping to reach a new audience, but I wonder how much crossover there actually is with the normal Walgreens shopper. Although let’s not forget that Birchbox will have benefitted financially from Walgreens’ investment. I think this type of brand partnership can be quite effective, but that this may not be the dream pairing.

Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
1 year 1 month ago

In theory, I understand what Walgreens is trying to do: spur incremental subscriptions for Birchbox by capitalizing on foot traffic in the stores and also drive impulse purchases at Walgreens from Birchbox customers that visit the store. In reality, from a beauty customer perspective, they are two totally different demographics.

I will be very surprised if this pilot is a success, but it doesn’t hurt to try. The more concepts you test and measure, the greater chance you will find a winning concept.

Jeff Miller
Guest

This does make sense for both companies, but I don’t think it will be a game-changer for either of them. The new product lines and cool store within the store concept are positives for Walgreens and anything they do to up the knowledge base and skills of the retail employees is a plus. I also like the build a box concept which is the most compelling part of the current Birchbox stores. I am not sure it will bring in any new shoppers to Walgreens, but may convert existing shoppers or level them up for higher priced products in the beauty category.

For Birchbox, this can be a good branding opportunity and a way to go a bit more “mass”. I would have liked them to try this out with a retailer like Urban Outfitters (and maybe they did) as I think the core customer has more overlap while still providing scale.

Jeff Sward
BrainTrust

Just what department stores needed, another bite out of one of their primary draws. Might be just a nibble at first, but it’s another battlefront for market share. The evolution of brick & mortar retail continues, and gets more interesting all the time. I say “phooey” on apocalypse!

wpDiscuz
Braintrust
"There may be a better win if a diffusion line or exclusive Walgreens line was created but maybe that is in the works already."
"I don’t see Walgreens customers doing the extra legwork to sell these (more) expensive beauty products."
"This feels like [Birchbox is] reaching for the low end when clearly that was not their original market segment."

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