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Blue Nile: Online retailer gets physical with New York store

Aaron Task
Editor in Chief

Blue Nile, a pioneer in the online jewelry business, is getting physical. This week, the company will open its first brick and mortar outlet in Roosevelt Field Mall on Long Island. Blue Nile is calling it a "webroom" but a store by any other name would still have four walls.

The Roosevelt Field's outlet is "a test to see if conversion can grow measurably," following a successful 'shop-in-shop' effort at a Nordstrom's in the same location, says Blue Nile CEO Harvey Kanter. "We're doing a test with a belief that at some point we'll expand but...we'll see where it goes."

Blue Nile isn't the first online retailer to make the leap from the Web to a physical location -- Bonobos, Warby Parker and Rent the Runway have all done it. But the jeweler has been around since 1999 and, along with Amazon, is one of the first established virtual retailers to make the shift. Just as physical retailers are rushing to improve their Web experience, the 'omnichannel' challenge is coming to traditional Web retailers too.
"It's all about carrying on tradition of what made Blue Nile really successful...which is the experience," Kanter says. "Millennials want to be in the driver's seat whether it's on a PC, phone or tablet or now in New York, in-store...it's all about the experience."

How the 'webroom' experience pans out remains to be seen but being a Blue Nile shareholder hasn't be a great experience lately. The stock is down more than 20% year-to-date and has badly lagged the SPDR S&P Retail ETF in recent years. The company's first-quarter earnings beat analysts expectations but revenue and its guidance were light.

During the company's conference call, Kanter talked about "overall challenges" in the retail industry and said "the high end of our business struggled," referring to sales of items of priced at $50,000 and up.

The high end is "traditionally a volatile business," Kanter tells me in the accompanying video, suggesting the overall state of U.S. consumers is "moderately oriented toward optimism."

Kanter is hoping for something more definitely positive for Blue Nile shareholders, suggesting the company has "great upward momentum," particularly in China which grew over 50% in the first quarter and is now Blue Nile's second-largest market. "We really believe that what we're bringing to consumers is so unique and disruptive...we continue to believe there's a growth story here."

Whether or not a 'webroom' can fulfill that promises remains to be seen, but Blue Nile shares were up 2% in recent trading.

Aaron Task is Editor-at-Large of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at atask@yahoo-inc.com.