Walgreens has taken a minority stake in Birchbox that extends to a strategic relationship, which will include piloting a series of "Birchbox retail experiences" inside 11 Walgreens stores and the sale of subscriptions via Walgreens digital properties.

WHO: Birchbox was founded in 2010 by Harvard Business alums Hayley Barna and Katia Beauchamp. The start-up was a pioneer in subscription commerce. The business redefined the way people discover and shop for beauty and grooming by pairing a monthly subscription of personalized samples with relevant content and a curated e-commerce shop. Birchbox operates in six countries, reaching more than 2.5 million active customers with a portfolio of 500 best-in-class prestige brand partners and flagship stores in New York City and Paris.

Walgreens is one of the nation's largest drugstore chains and is included in the Retail Pharmacy USA Division of Walgreens Boots Alliance, Inc., the first global pharmacy-led health, and well-being enterprise. Approximately 8 million customers interact with Walgreens in stores and online each day. As of June 28, 2018, Walgreens operates approximately 9,800 drugstores with a presence in all 50 states, the District of Columbia, Puerto Rico, and the US Virgin Islands, along with its omnichannel business, Walgreens.com.

WHY: This investment allows Walgreens to tap into a multichannel prestige beauty opportunity, creating interactive spaces within some of its locations. The deal will help Birchbox reach new customers by allowing it to establish an expanded brick-and-mortar presence.

IN THEIR OWN WORDS: “This is an exciting time for beauty at Walgreens,” Richard Ashworth, president of operations, Walgreens, said in a statement. “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. This collaboration will help enable Walgreens to continue to strengthen our beauty offering and build our prestige portfolio.”

“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, CEO and co-founder of Birchbox. “Birchbox has effectively changed the relationship that this customer, who represents 70% of the market, has with beauty and increased her spend in the category. Walgreens is deeply committed to beauty and shares our vision for a different type of retail experience—one that is holistic, seamless, and designed to help shoppers make informed, confident decisions. Together we will continue to evolve the integration of our physical and digital shopping experiences.”

DETAILS:

• Walgreens has taken a minority stake in Birchbox that extends to a strategic relationship.
• The financial terms of the transaction are not available.
• The deal follows a change to Birchbox’s ownership structure earlier this year where Birchbox investor Viking Global took a majority stake. The deal wiped out Birchbox’s other VC investors’ stakes, including Accel Partners and First Round Capital.
• The initial pilot will include 11 Walgreens locations across major US cities.
• The in-store Birchbox experiences within Walgreens will have dedicated space with Birchbox branding, elevated design, and a curated product assortment featuring full-sized skincare, hair, and makeup products from more than 40 prestige brands. Birchbox-trained Walgreens Beauty Consultants will be available to offer advice and guide the customer through the experience.
• Online, Birchbox will offer subscriptions via Walgreens digital properties to its monthly delivery services of personalized samples, as well as a “Build Your Own Birchbox” experience (BYOB) in-store.