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.