For some, tis the season when Starbucks’ holiday cups officially hit the counter. For others, it only truly feels like the holiday season when they can actually smell it. Bath & Body Works, the purveyor of scented products, has figured this out.
Global research, the development of a core cult of repeat buyers and scents crafted to evoke food flavors, nostalgia or luxury are strategies the company has used to capture $7 billion of annual sales.
In other words, sales blockbuster “Vanilla Bean Noel” is no accident.
Every year, just in time for the holidays, Bath & Body Works brings out its holiday collection of candles, soaps, creams and room fragrances priced from to $1.95 to $26.95 per product. The year-end quarter that covers the runup to Christmas also happens to be the most crucial sales period for the retailer.
“The holiday period makes up 38% to 40% of annual sales for Bath & Body Works, so it is a very big quarter for them also because their products are highly giftable,” said Lorraine Hutchinson, analyst with Bank of America Securities.
That means the retailer has to keep delivering a fresh sensory take on the holidays year after year.
“We actually never stop thinking about the holidays,” Julie Rosen, president of retail at Bath & Body Works, said in an interview with CNN. “We have customers who come to us for our heritage scents that have become part of their family traditions, like ‘Fresh Balsam,’ ‘Tis the Season’ or ‘Vanilla Bean Noel.’”
But just how many different ways are there to keep bottling up the festive “scents” of winter? You’d be surprised, said Rosen.
“Just to give you a gauge, we launched 65 new fragrances this holiday. It’s usually the period when we launch the most fragrances. So you’ve got to start the process a year out,” she said. It’s an undertaking that involves Rosen and her team traveling the world for information and inspiration.
That’s a lot of frequent-flier miles for a relatively young company.
Modest beginnings
Bath & Body Works first started out as a line of skincare products that sold at fashion clothing chain Express. From there, a first Bath & Body Works concept store opened in Boston in September of 1990.
By the following year, it had expanded to 50 stores.
Just six years later, the fledgling chain had ballooned to 500 stores with $1 billion in sales. It doubled sales to $2 billion by 2004.
As the business grew, so did its mostly female fanbase, some of whom developed an emotional attachment to the products. It’s not uncommon to find plenty of fan pages on TikTok or YouTube dedicated to a favorite soap or cream or the popularity of the brand’s three-wick candles, or users discussing their “haul” from the retailer’s semi-annual sale.
Bath & Body Works became a publicly traded company in 2021 with over $7 billion in revenue.
The key to its fast growth, said Hutchinson, is that “the company knows its core products very well and does a good job ensuring newness by innovating.”
Today, Bath & Body Works operates over 1,800 stores in the United States and Canada and has more than 450 franchised locations in international markets.
Storybooks, cookie butter & bourbon
The genesis of their holiday products begins with what Rosen describes as “patterning.” It involves a group of people from different units — merchandising, design and product teams — who travel to various countries to spot trends.
She said the ah-ha moment could “literally come from a flavor we taste, a note we smell or a macro trend,” she said. The retailer then develops new scents by utilizing the expertise of fragrance houses such as Switzerland-based Firmenich and Givaudan.
Then comes the fun part: “Fragrance houses have a flavor division. Oftentimes we tap into the flavorist as we develop scent,” said Rosen.
The intent is to have a scent create a visceral moment for the user: “We have a Merry Cookie candle this year with notes of freshly baked cookies, vanilla and sparkling sugar. It really makes your mouth water when you smell it,” she said.
Another challenge of the fragrance formulation is creating a scent that’s versatile and can work as a body spray, a hand soap, body cream and also a home fragrance.
For Bath & Body Works’ 2023 holiday collection, which launched in October, Rosen and her team traveled to London, Paris, Amsterdam, Montreal, Japan and to multiple places around the United States both for mapping trends and to ensure that what they did come up with would have global appeal.
The popularity of storybooks was one trend that jumped out early.
“Our holiday theme this year is rooted in what we saw in Europe and Japan with storybooks. We were in Japan in January and said, ‘Oh my God, there is something happening with storybooks,’” said Rosen. “We took the idea and threaded it throughout our stores and online with marketing that looks like big story books. Even our gift sets look like storybooks.”
The Storybook Collection has body sprays and creams named “Bright Christmas Morning,” “Frosted Coconut Snowball” and “Gingerbread Bakery.”
The popularity of cookie butter was another find. “We saw this trend at every turn. So what were we going to do with cookie butter?” said Rosen.
The team held a tasting session for a variety of cookie butter interpretations. That led to the launch of the holiday Cookie Butter Truffle soap.
Then there’s “Cozy Vanilla Bourbon.” Vanilla scented products are perennial topsellers for the retailer.
“Vanilla-based ingredients were definitely trending in the market this year,” Rosen said. “At the same time we saw trends centered around dark liquors and speakeasies popping up everywhere.”
So the innovation team combined both ideas to create Cozy Vanilla Bourbon-scented body wash.
“We had success with our Sweet Whiskey products, which was a vanilla-infused Whiskey scent. We wanted to push the boozy speakeasy and vanilla idea by combining the familiar with the less familiar,” said Rosen.
With Christmas fast approaching followed by the countdown to the New Year, Rosen said the focus has already jumped ahead to the new scents of 2024 all the way through to next Christmas.
Under its new CEO Gina Boswell, who took the helm in December 2022, Bath & Body Works is pushing the brand into newer categories such as men’s skin, hair and body care and even laundry detergent.
It’s a necessary move at a time when the retailer is facing slowing demand overall for discretionary purchases and declining sales after enjoying robust pandemic-time demand from home-bound households for products such as soaps and sanitizers, candles and home fresheners.
Boswell said in a recent earnings call with analysts in November that men’s and laundry are growth areas for the business.
“We’re quite excited about the men’s opportunity. It is still a small percentage of our business today … While (men’s) has been growing double-digit, we’re leaning in to fuel that growth,” Boswell said.
