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Photo: Shutterstock
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How Bath & Body Works Became America's Biggest Mall Beauty Brand

Founded in 1990, the suburban favorite is still pulling in $1.6 billion every year.

On the third floor of the Bridgewater Commons Mall in New Jersey, there's a stretch of retail space that's frozen in time—specifically, 1997. Walk past Delia's, Aéropostale, and Express, and you end up at a Bath & Body Works. It's nearly impossible to distinguish one particular scent when you step inside; conflicting notes of various versions of vanilla and the company's longstanding tween-y hit Sweet Pea compete for air space. Women rip open three-wick candles, on sale for $22.50 for two, at a feverish pace. Sale associates in country-plaid aprons demo new perfumes for all of them.

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Bath & Body Works has been in business since 1990. The first store opened in Cambridge, Massachusetts, though the company prefers to play up its heritage as "straight from the heartland." It's headquartered in Ohio, and currently there are over 1,600 stores in North America alone—most of them in malls—as well as outposts in the Middle East, Latin America, Russia, Turkey, and Singapore. Even if you haven't visited one in well over a decade, there's a good chance you can perfectly envision the neatly arranged shelves if you close your eyes and think hard about the days you shopped with allowance money. Scent is a powerful memory trigger, and it's downright uncanny when you're talking about bottles of Plumeria body splash and Juniper Breeze shower gel: whiffs of eighth grade dances literally come flooding back.

Banking on nostalgia as a business strategy, however, doesn't always work. For every success story (Pendleton, DKNY) there are tales of dangerously falling profits (Abercrombie & Fitch). While Bath & Body Works has undergone several iterations of itself since it was founded nearly 25 years ago, it's never depended on things like advertisements in major fashion magazines or the approval of so-called influencers to succeed.

Who, then, is still shopping there?

On average, Bath & Body Works stores have pulled in $1.6 billion in sales per year for the past four years; as a whole, L Brands' net revenue for 2013 was $11 billion. According to Forbes, "L Brands is among the very few specialty retailers in the U.S. who have performed exceedingly well amid the retail market slump. The company's shares are trading at an all-time high of $71, and have increased by more than 20% in the last three months." The article adds, "The parent company of Victoria's Secret and Bath & Body Works is consistently performing better than market expectations, thanks to its dominion in the intimates and personal care markets."

Currently, Bath & Body Works stores pull in an average of $1.6 billion in sales per year.

If that's not enough, a quick search on YouTube proves there's indeed an intense demand for the America's sweetheart of beauty brands. Endless haul videos (and one viral rant) are dedicated to bags of soap and Wallflowers, and there are several fan sites that document the brand's every move.

One of them is a personal blog called See It Love It Buy It that's run by Cia Arielle, a preschool teacher in the Midwest, that covers old favorites and new releases alike. Cia has been following the company for so long that, at this point, she can very nearly predict when they'll release new scents. "Their launches are always on Mondays, unless they change something with corporate," she tells me over the phone. She's planning on stopping by her local store the following week to see if she correctly predicted the debut of the seasonal holiday collection, and, of course, to review it on her site.

Cia explains that when she started blogging in 2011, "the company was really open about telling us about their new products. They would tell us what they were going to come out with six months out." She was fortunate to live near a test store, which meant she could get her hands on new products before the rest of the country. Bath & Body Works doesn't need fancy magazines to sell their story when they have people like Cia.

What that story is, though, is up for debate. The fan Tumblr From the Heartland: Vintage Bath & Body Works has obsessively profiled the company's history, even sprinkling in folklore passed down from store managers to their employees.

Bath & Body began as a beauty line sold at Express, which was previously owned by L Brands. "This origin story didn't fit in with BBW's down-home style," the blog explains, "so the company created a fictional founder named 'Kate' who embodied everything that BBW stood for. Though most customers never heard of her, her story was told to employees so they could always stay 'on brand' in their work. Each BBW store was seen as Kate's home, and employees were asked to treat customers as if they were guests in her home."

Kate became part of emotional branding canon, though she was probably in for a shock when the company underwent a major rebranding in 2008 that included a new look for the signature collections and updated packaging. Third-party beauty brands like Caudalie, Murad, and Frederic Fekkai were incorporated into stores, though most were later removed, leaving behind just a small selection of non-Bath & Body Works brands, like True Blue Spa and C.O. Bigelow. (Now, all those other brands can be found at Sephora.)

"The company created a fictional founder named 'Kate' who embodied everything that BBW stood for."

Tom Knotek, a fragrance, flavor, and sensory executive who's introduced to me as a former Bath & Body Works "scent master," explains that one of the company's biggest revamps during his eight-year tenure involved the home fragrance category. Knotek says that when he started in 2005, "home was not at the point where it should have been with the rest of the shop."

His strategy was to give the customer something more sophisticated, but to do it gradually, lest it be a shock to her system. "We took her on a fragrance journey that went really slowly, that went from Strawberry Shortcake, which is still very important, all the way up to the very sophisticated fragrances that are still seen in the store today."

Cut to 2014 and you'll see shelves of candles from White Barn, a home fragrance brand that L Brands owns the distribution rights to. The packaging here is as sophisticated as it gets at Bath & Body; candles with scents like Eucalyptus Mint, Mahogany Teawood, and Bergamot Woods wouldn't look out of place in a Pottery Barn or Anthropologie.

Currently, Bath & Body Works carries over 200 different private label scents, the oldest of which is Sweet Pea. "We have fragrances that are 15 years old that are still a very big part of our portfolio, and there are a lot of customers who have worn those fragrances for 15 years," says Soyoung Kang, Bath & Body's vice president of brand development. Some old favorites, like Japanese Cherry Blossom, are still available, but other signature products have been discontinued, creating a frenzy among diehard fans and a vibrant eBay community of vintage resellers. The demand for scents like Plumeria will never be fully satiated until it's back on the shelves.

"I know a lot of people who were very attached to Cucumber Melon and were devastated when it was discontinued," Cia says. "I was one of them, and I think I bought five bottles of the lotion when it discontinued. I actually only ended up using one and then selling the rest because I was able to move onto new scents."

Among those new scents are Bath & Body's true scene stealers, ones so seasonally specific that you can't help but get into the fall (or winter or spring) spirit. Enter a Bath & Body Works store during September, October, or November, and you're bombarded by labels shellacked with words like "comfort" and "harvest." Scents that don't make any olfactory sense (Cashmere Glow, for example) spell out the seasonal connotations retailers promote once the weather drops below 70 degrees. And, of course, it's impossible not to encounter something with a hint—or heaping—of pumpkin.

Why push seasonal goods that have such a limited shelf-life? "It has to do with emotional connections and rituals," says Knotek. "That's the biggest thing with fragrances, attaching that emotional connection for the consumer." (Not convinced? Go to any Starbucks in early September.)

"That's the biggest thing with fragrances, attaching that emotional connection for the consumer."

This year's Christmas collection, which dropped before Thanksgiving, includes a new scent (the abstractly named "A Thousand Wishes"), but, more importantly, features the reintroduction of signature scents like Vanilla Bean Noel and Twisted Peppermint. For some, this is what signals the true beginning of the holiday season.

"Those are fragrances that have been around for quite a while, and yet every year when they come out during that time frame, it's like a frenzy," says Kang. "Customers come in, and they literally buy armfuls."

Cia tells me that two fall seasonal fragrances from the Body Care line—Leaves and Ginger Vanilla—are what got her blogging about Bath & Body Works in the first place: "When I bought them in 2009, I didn't understand they wouldn't come out with them the following fall. I do have a backstock of those, and I use them very sparingly."

Now, though, her favorite scent is Cashmere Glow. "It's such a cozy soft fragrance," she says. "It's really feminine. On a cold fall day, I'll do the bubble bath and the cream. I'll put on leggings and a sweater and it just makes me feel comfy, but I also feel really pretty when I wear it." She chose to wore Amber Blush on her wedding day. It's now connected—forever—to a major milestone in her life.

Kang explains that's part of the brand's business strategy, but it's far from the only thing contributing to its impressive sales. Creating scents that a customer can develop a strong emotional tie with is great for the bottom line, but so is introducing new fragrances all year round so that she has alternatives. "Our success is in bringing our customer things over time that she engages with," says Kang. "Some fragrances are a long-term love affair and some are a fling, and it's okay to have both."

Unlike Victoria's Secret, Bath and Body has shied away from traditional advertising, with the exception of paid placement on social media sites like Facebook. A representative from the company even went so far as to say they're the "polar opposite" of Victoria's Secret in this arena.

But what it lacks in major media presence, it makes up for in direct-to-consumer marketing. At checkout, you're asked for your home phone number (for mailed coupons) and your email address (for electronic ones). During one week in mid-November, Bath & Body Works sent out no fewer than four emails in a three-day span, advertising everything from $3 lotions to the new Christmas collection in the subject lines.

"Some fragrances are a long-term love affair and some are a fling, and it's okay to have both."

Kosha Gada, a digital marketing expert and principal at global management and strategy consulting firm A.T. Kearney, chalks a lot of that up to the company's ability to know its shopper: "I think the big reason is they've really carved out their niche of who their target customer is, and they've been able to serve that well without a lot of other competitors."

"Their target is what we call the mastige segment," she continues. "It's not prestige and it's not mass—it's really about figuring out this niche of very American-centric shoppers that wants a notch above drugstore brands, but are still quite conscious. They don't want the prestige segment, which is where the Estée Lauders and the L'Oreals of the world play."

A compelling factor here is the price point. The largest size room spray (5.3 ounces) is only $9.50; foam soaps are $5.50; fragrance mists are $14. You can buy one item from every major category and barely spend $100.

Kang confirms that's a huge part of the appeal. She says the diehard fan "is someone who just absolutely loves fragrances, and sees fragrance as an essential part of her lifestyle." She adds, "A lot of our customers actually own multiple fragrances, and they engage in fragrance the way that they do other fashion items in their life. It's a way to accessorize their style. It's not this sort of serious, deep-commitment kind of purchase that you see with a more traditional model in a department store."

The shopping experience is also integral to Bath & Body's success. Inside every Bath & Body Works store, you're greeted almost immediately by an employee in one of those plaid aprons, who will no doubt tell you about whatever two-for-one or four-for-three the company is pushing that week. Testers are everywhere. You're invited, and expected, to "play."

When it comes to competitors, the company Bath & Body Works gets compared to most is the Body Shop (in the previously-referenced New Jersey mall, these two sit diagonally across from one another, and, though on different floors, you can see one from the other). The similar name and once-similar packaging were enough to prompt a lawsuit filed by the Body Shop in 1991. Bath & Body Works quickly ditched its original green earthy logo and debuted a new look. The Heartland Era—which, according to Vintage Bath & Body Works, lasted through 2001—became the company's signature style for the next decade.

Testers are everywhere. You're invited, and expected, to "play."

"People compare them to Avon and some of the more mass drugstore brands that L'Oreal has," Koshun says. "From a business standpoint, sure, they are—they're playing in the same industry—but from a branding and marketing standpoint, one of the secrets of their success is that they are a little bit unique with homegrown fragrances. They don't do celebrity licenses or things like that. It's definitely very American. Eighty percent of their revenue is in the US—that's what they know and that's what they're targeting."

As of now, online shipping is only available in the US, Canada, and Puerto Rico, despite physical stores in more than a dozen other countries. According to Nasdaq, such a heavy focus on the US market and a "limited international presence" may hinder the brand down the road: "Bath & Body Works faces a risk of slower revenue growth if the retailer doesn't expand aggressively in international markets." But can that Middle America aesthetic translate to shoppers in Brazil or Japan?

For now, the focus is on expansion at home, and not just in terms of store openings. Columbus Business First reports that next year, L Brands plans to open more than 60 new stores for Victoria's Secret, Pink, and Bath & Body Works, but it plans to remodel 163: "The company tends to refer to square footage in the U.S. as opposed to store count since it has been remodeling and expanding so many of its stores over the past several years. Those expansions have generated more than $250 million in additional sales for the business."

Considering that store experience is one of Bath & Body's hallmarks, that seems like the perfect next move. The company has yet to express any interest in going wholesale, a strategy that's no doubt tied to keeping the brand image—the story of Kate, the seasonal themes, those aprons—close to home and controlled in-house. And with a constant carousel of new product, there's always a way to keep customers engaged. As Knotek explains, with so many stores and incentivized, eager sales associates, "You can really test different shopping patterns and fragrances, and you can really deliver the best shopping experience possible for your consumer."

Editor: Julia Rubin


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