June 10, 2024
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Will Accenture’s AI Support Help Bath & Body Works Stabilize?
Bath & Body Works, a retailer of personal care and home fragrance products, has embarked on a multi-year partnership with Accenture to overhaul and streamline its digital and technology platforms. This strategic move aims to elevate the brand by integrating the latest advancements in digital technology, marketing technology (MarTech), artificial intelligence (AI), and generative AI (GenAI) to stimulate growth and enhance customer experiences for Bath & Body Works.
The timing of this partnership is crucial as shares of Bath & Body Works fell after the company issued disappointing second-quarter guidance last week, projecting flat to a 2% decline in net sales and diluted earnings per share between $0.31 and $0.36. Despite exceeding first-quarter earnings estimates and aligning revenue with market expectations, the conservative forecast unsettled investors, leading to a 7% drop in pre-market trading on June 4.
The company’s cautious outlook reflects broader consumer spending shifts, as people become more selective about discretionary purchases like luxury body care items. This trend contrasts with some retail segments that continue to perform well. Bath & Body Works has narrowed its full-year guidance range, slightly raising the midpoint for earnings, indicating some optimism for the future. However, the immediate concern is maintaining momentum amid changing consumer behaviors.
Bath & Body Works plans to leverage its core strengths in fragrance, augmented by cutting-edge technology and AI experiences. These include native mobile applications, headless commerce, MarTech, and transformer-based neural networks, according to Thilina Gunasinghe, chief digital and technology officer at Bath & Body Works. The goal is to deliver hyper-relevant and immersive experiences with greater precision to enhance customer satisfaction and loyalty.
The collaboration is designed to establish a robust technological foundation for Bath & Body Works, enabling the company to scale its digital capabilities and harness the power of data and AI. Per Gina Boswell, CEO of Bath & Body Works, “This will help us accelerate profitable growth by enhancing our operations, elevating our brand and engaging our customers differently through personalized and seamless experiences that keep them coming back.”
Central to this transformation is the development of innovative capabilities, such as a digital Fragrance Finder. This GenAI-powered conversational tool will assist customers in discovering the perfect fragrance tailored to their unique preferences. According to Accenture’s Consumer Pulse 2024 research, 51% of consumers are open to using conversational AI solutions, indicating a strong potential for customer engagement with this new feature.
In support of this initiative, Accenture Song recently published a report titled “Generative AI for Customer Growth.” The report highlights that companies applying GenAI to customer-related initiatives can anticipate a 25% higher revenue increase over five years compared to those concentrating solely on productivity enhancements. This underscores the potential financial benefits of Bath & Body Works’ strategic focus on AI-driven customer engagement.
“Our collaboration with Bath & Body Works on its continuous reinvention will help this beloved brand continue to raise the bar on the retail customer experience,” said Julie Sweet, chair and CEO of Accenture. By building a strong digital core encompassing cloud, data, and AI, the companies aim to create value, foster growth, and continually delight customers in new and engaging ways, according to Sweet.
Through this partnership with Accenture, Bath & Body Works is poised to set new standards in the retail customer experience, combining technological innovation with its established expertise in personal care and home fragrances.
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Brian Cluster
Insights Consultant
John Lietsch
CEO/Founder, Align Business Consulting
Georges Mirza
VP Product Management & Advisory, ComTask
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Discussion Questions
How might Bath & Body Works navigate integrating AI and MarTech into its customer experience strategy in the personal care and home fragrance retail sector?
How can Bath & Body Works balance digital initiatives with brand identity and customer trust?
How might the partnership between Bath & Body Works and Accenture impact broader retail trends, particularly in adopting AI for enhancing customer engagement and operational efficiency?
Poll
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One of the key things here is utilizing AI to recommend fragrances people might like in home scents and personal care. This is vital online where people cannot smell new fragrances for themselves. Bath & Body Works is a good business, but it has lost out online to more niche and upcoming brands – so this kind of digital improvement along with more personalization is vital to regain some ground.
Bath & Body Works is a good brand with good retail leadership. Accenture understands the science behind personalization, marketing, AI, etc. These are all things the modern retailer must grasp to compete in certain markets. I think collaboration is B&BW’s best opportunity to keep the brand alive and thriving in the future.
The timing of this partnership is crucial as shares of Bath & Body Works fell after the company issued disappointing second-quarter guidance last week
Crucial…really? I think there are two stories here; the partnership – which may or may not “work”, but seems sensible (I’m no expert so I won’t venture further) – and the all-too-predictble overaction to short-term events. As always, I hestiate to describe as “investors” those who will unload a stock based on a single quarter (‘s guidance).
Sounds like BBW has been resting on its brand reputation and relationships, and now need to put digital capabilities ie: Fragrance Finder that other companies have had for some time.
Bath & Body Works might benefit from Accenture’s AI support. A fragrance finder powered by AI will excite customers for a while, provided it delivers on what it promises, which is to provide a seamless experience.
In addition to improving operational efficiency, the technology should also boost brand engagement. According to Accenture research, revenue growth will increase by 25%, but it is hard to see how they can be so sure.
A technology solution utilizing AI and advanced AI could result in very high costs. Db
BBW has enjoyed success for some time based on being the category killer in a retail segment where margins have been very high compared to other product areas. They could afford some assortment and product misses as long as other elements picked up the slack. With more consumers shopping around in the recent inflationary economy, as well as shopping less frequently in malls, its not a surprise that BBW has struggled. They may indeed need need a digital and IT overhaul, but the effort, complexity, time, and investment required for a full IT platform and related business transformation cannot be fully masked by short-term AI promises. It would be poor judgement to re-architect the business without including AI enhancements where appropriate, and there will assuredly be benefits of a new focus in marketing and digital capabilities, but any provider’s guesstimates on the magnitude of AI benefits are just that, with a dash of hype and a sprinkle of hope.
Per Ms Boswell, “This will help us accelerate profitable growth by enhancing our operations, elevating our brand and engaging our customers differently…”
AI is a tool. Like any other tool, the success of that tool will depend on how it is used and implemented. If they beleive AI is the savior that will bring all the answers they need, they will fail miserably. Hopefully, the BBW team and Ms Boswell are up for it.
My great concern with all the AI initiatives I am familiar with is that too much is expected from AI. AI has to be guided and taught. It is not a tool where management steps back and assumes everything will be OK now.
Too many people think AI is a black box without thinking about the root issues they’re actually trying to solve!
Stuck in LA traffic so I asked a genie for help and he converted my car into a Ferrari…I had the fastest car going 1 mile per hour but I was COOL!
The only thing that gives me hope is that the talented teams at Accenture have determined that the problems facing BBW can be solved by a digital transformation led by AI. However, if people aren’t finding your product because they’re no longer interested or because of other, fundamental problems to your business then improving search capabilities won’t help. Digital transformations are valuable and necessary but sometimes all they do is cure the headache; the tumor remains.
This is encouraging to see because not only is Accenture mentioning the wonderful new AI driven innovations, but they have also commented on the focus of data. The higher the sophistication of the technological solution, the higher the need to review the core business data. The quote, ” By building a strong digital core encompassing cloud, data, and AI, the companies aim to create value…….” demonstrates their understanding of the importance of core data.
Like others have said, Bath & Body Works is a good business. They have many loyal customers that trust their high-quality fragrance items. It’s important to deliver on this project and make this digital Fragrance Finder dialed in to be user friendly, personalized and accurate to build more trust in their digital strategies.
They’re overstocked and the stores are so cluttered it is difficult to find product. However they’re also very well staffed and it is easy to find someone who can help you quickly find a specific item IF you can name that item. And this is where the problem lies. Too many items, too difficult to try them all… so this solution may have legs.
AI alone is not sufficient. It will all depend on the type of marketing, shopper, and social data they use to make better recommendations, help shoppers find the right product, and drive sales.
All retailers – and businesses in general – are trying to figure out how to apply generative AI and other technologies to deliver better results. Since many retailers simply do not have a depth of expertise in-house, it makes sense to hire firms that do. And while the successful implementation of these types of technologies can have an material impact, they’re not a panacea that will automatically deliver positive comp sales. Accenture’s report claiming that companies applying GenAI can anticipate a 25% higher revenue increase compared to those concentrating solely on productivity enhances is based on surveys they conducted, not actual outcomes from work that they completed. I question this claim and it’s a good reminder that these types of “reports” are often merely marketing devices for these firms. Notwithstanding their recent results, BBWs is a still a successful retail operation with a solid track record. In FY 2023, they generated $7.4B in revenue and adjusted net earnings of $747M. To BBW management I say, go ahead and get some good advice – that’s smart – but also don’t forget that no one knows your business better than you do.
The 25% is truly hard to believe, with way too many qualifications around it the number is all but meaningless.
I guess I still don’t really know what AI is going to be leveraged for, or what is actually meant by “hyper-relevant and immersive experiences”. The only tangible thing I understood from this is the fragrance finder, which let’s be honest, do we seriously need AI for this? BBW doesn’t need a rocket ship it just needs something with a touch more sophistication than a Buzzfeed quiz…
What’s the actual problem BBW is trying to solve here? What’s the root cause of sales declines? Isn’t its chief strength the fact that it drives a ton of traffic by being in malls, can constantly churn out new products people actually like, converts super well and builds big baskets with BOGO? Mall traffic being down definitely hurts, but I’m curious what else is driving the decline.
Bath and Body works should look in the mirror and start to fix its operational problems, starting with the ridiculous over reach of misstating pronouns being an item to report to management about, indeed a fireable offense.
I am highly doubtful of this initiative succeeding, for the following reasons: most of BBW’s customers are recurring, viewing the beauty products as consumables used in their daily lives. This initiative will not help them spend more.
For new customers, I’m dubious that an AI tool will convince anyone to spend money at a store, that despite being around for 30 years, they’ve never shopped at. We don’t need AI telling us the difference between Vanilla or Rose Petals from a scent perspective, and it likely won’t drive significant new growth.
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One of the key things here is utilizing AI to recommend fragrances people might like in home scents and personal care. This is vital online where people cannot smell new fragrances for themselves. Bath & Body Works is a good business, but it has lost out online to more niche and upcoming brands – so this kind of digital improvement along with more personalization is vital to regain some ground.
Bath & Body Works is a good brand with good retail leadership. Accenture understands the science behind personalization, marketing, AI, etc. These are all things the modern retailer must grasp to compete in certain markets. I think collaboration is B&BW’s best opportunity to keep the brand alive and thriving in the future.
The timing of this partnership is crucial as shares of Bath & Body Works fell after the company issued disappointing second-quarter guidance last week
Crucial…really? I think there are two stories here; the partnership – which may or may not “work”, but seems sensible (I’m no expert so I won’t venture further) – and the all-too-predictble overaction to short-term events. As always, I hestiate to describe as “investors” those who will unload a stock based on a single quarter (‘s guidance).
Sounds like BBW has been resting on its brand reputation and relationships, and now need to put digital capabilities ie: Fragrance Finder that other companies have had for some time.
Bath & Body Works might benefit from Accenture’s AI support. A fragrance finder powered by AI will excite customers for a while, provided it delivers on what it promises, which is to provide a seamless experience.
In addition to improving operational efficiency, the technology should also boost brand engagement. According to Accenture research, revenue growth will increase by 25%, but it is hard to see how they can be so sure.
A technology solution utilizing AI and advanced AI could result in very high costs. Db
BBW has enjoyed success for some time based on being the category killer in a retail segment where margins have been very high compared to other product areas. They could afford some assortment and product misses as long as other elements picked up the slack. With more consumers shopping around in the recent inflationary economy, as well as shopping less frequently in malls, its not a surprise that BBW has struggled. They may indeed need need a digital and IT overhaul, but the effort, complexity, time, and investment required for a full IT platform and related business transformation cannot be fully masked by short-term AI promises. It would be poor judgement to re-architect the business without including AI enhancements where appropriate, and there will assuredly be benefits of a new focus in marketing and digital capabilities, but any provider’s guesstimates on the magnitude of AI benefits are just that, with a dash of hype and a sprinkle of hope.
Per Ms Boswell, “This will help us accelerate profitable growth by enhancing our operations, elevating our brand and engaging our customers differently…”
AI is a tool. Like any other tool, the success of that tool will depend on how it is used and implemented. If they beleive AI is the savior that will bring all the answers they need, they will fail miserably. Hopefully, the BBW team and Ms Boswell are up for it.
My great concern with all the AI initiatives I am familiar with is that too much is expected from AI. AI has to be guided and taught. It is not a tool where management steps back and assumes everything will be OK now.
Too many people think AI is a black box without thinking about the root issues they’re actually trying to solve!
Stuck in LA traffic so I asked a genie for help and he converted my car into a Ferrari…I had the fastest car going 1 mile per hour but I was COOL!
The only thing that gives me hope is that the talented teams at Accenture have determined that the problems facing BBW can be solved by a digital transformation led by AI. However, if people aren’t finding your product because they’re no longer interested or because of other, fundamental problems to your business then improving search capabilities won’t help. Digital transformations are valuable and necessary but sometimes all they do is cure the headache; the tumor remains.
This is encouraging to see because not only is Accenture mentioning the wonderful new AI driven innovations, but they have also commented on the focus of data. The higher the sophistication of the technological solution, the higher the need to review the core business data. The quote, ” By building a strong digital core encompassing cloud, data, and AI, the companies aim to create value…….” demonstrates their understanding of the importance of core data.
Like others have said, Bath & Body Works is a good business. They have many loyal customers that trust their high-quality fragrance items. It’s important to deliver on this project and make this digital Fragrance Finder dialed in to be user friendly, personalized and accurate to build more trust in their digital strategies.
They’re overstocked and the stores are so cluttered it is difficult to find product. However they’re also very well staffed and it is easy to find someone who can help you quickly find a specific item IF you can name that item. And this is where the problem lies. Too many items, too difficult to try them all… so this solution may have legs.
AI alone is not sufficient. It will all depend on the type of marketing, shopper, and social data they use to make better recommendations, help shoppers find the right product, and drive sales.
All retailers – and businesses in general – are trying to figure out how to apply generative AI and other technologies to deliver better results. Since many retailers simply do not have a depth of expertise in-house, it makes sense to hire firms that do. And while the successful implementation of these types of technologies can have an material impact, they’re not a panacea that will automatically deliver positive comp sales. Accenture’s report claiming that companies applying GenAI can anticipate a 25% higher revenue increase compared to those concentrating solely on productivity enhances is based on surveys they conducted, not actual outcomes from work that they completed. I question this claim and it’s a good reminder that these types of “reports” are often merely marketing devices for these firms. Notwithstanding their recent results, BBWs is a still a successful retail operation with a solid track record. In FY 2023, they generated $7.4B in revenue and adjusted net earnings of $747M. To BBW management I say, go ahead and get some good advice – that’s smart – but also don’t forget that no one knows your business better than you do.
The 25% is truly hard to believe, with way too many qualifications around it the number is all but meaningless.
I guess I still don’t really know what AI is going to be leveraged for, or what is actually meant by “hyper-relevant and immersive experiences”. The only tangible thing I understood from this is the fragrance finder, which let’s be honest, do we seriously need AI for this? BBW doesn’t need a rocket ship it just needs something with a touch more sophistication than a Buzzfeed quiz…
What’s the actual problem BBW is trying to solve here? What’s the root cause of sales declines? Isn’t its chief strength the fact that it drives a ton of traffic by being in malls, can constantly churn out new products people actually like, converts super well and builds big baskets with BOGO? Mall traffic being down definitely hurts, but I’m curious what else is driving the decline.
Bath and Body works should look in the mirror and start to fix its operational problems, starting with the ridiculous over reach of misstating pronouns being an item to report to management about, indeed a fireable offense.
I am highly doubtful of this initiative succeeding, for the following reasons: most of BBW’s customers are recurring, viewing the beauty products as consumables used in their daily lives. This initiative will not help them spend more.
For new customers, I’m dubious that an AI tool will convince anyone to spend money at a store, that despite being around for 30 years, they’ve never shopped at. We don’t need AI telling us the difference between Vanilla or Rose Petals from a scent perspective, and it likely won’t drive significant new growth.