In a brightly lit Manhattan office above a fragrance laboratory, Mary Testa-Gough brought a white strip of paper to her nose and inhaled. Two perfumers’ assistants awaited her verdict, as if the fate of a multibillion-dollar olfactory empire depended on it.
“Smoky,” Ms. Testa-Gough said. “Mossy. Woody. But it feels unfinished.”
As the chief “nose” for Bath & Body Works, Ms. Testa-Gough is in charge of finding the next Japanese Cherry Blossom. That single scent has generated more than $1.5 billion in sales over the last 20 years, filling millions of homes with the aroma of Asian pear, white jasmine and basmati rice.
The fragrance — which emanates from candles, air fresheners, lotions and body mists — has been a best seller since it debuted in 2006. It’s so popular that the retailer celebrated its 20th anniversary with an ad campaign and new packaging this past spring as part of a broader expansion strategy to help bring in new customers.
Sales at Bath & Body Works have slipped to $7.3 billion last year from a pandemic-era peak of $7.8 billion, pushed down by competitors marketing on TikTok and consumers increasingly suspicious of chemicals in fragrances.
To fight back, the chief executive, Daniel Heaf, unveiled a plan in November that included marketing “iconic” fragrances online as stand-alone brands and offering products on Amazon. Bath & Body Works will also begin selling some its products at hundreds of Ulta Beauty stores this month.
They’re coming out with new products. Ms. Testa-Gough has high hopes for Watermelon Whirl and Tangerine Twirl — which are among the scents being released this week in a new product line promoted by the actress and singer Hilary Duff.
Nobody knows for sure why some scents become classics, while others fall into the discount bin. Despite all the money spent on marketing and focus group testing, some scents still fall flat while others invoke such intense loyalty that customers rant on social media when they can’t find them in a store.
That’s why the company has invested millions of dollars in being able to quickly manufacture and distribute more candles, lotions, air fresheners and body mists when customers fall in love with a particular scent. In 2011, for instance, Bath & Body Works stopped buying plastic bottles from China and began sourcing from Axium Packaging, a plastics container manufacturer that built a factory near the Bath & Body Works headquarters in New Albany, Ohio.
Kdc/one, the contract manufacturer that mixes fragrances into foaming soaps, lotions and gels, also built a plant there, helping to cut the time to market for some products to weeks from months.
“It was a massive unlock to be more responsive to what the customers are buying in the store,” said Nicholas Whitley, Kdc/one’s chief executive.
The Birth of ‘Beauty Park’
Since 2008, Bath & Body Works has consolidated its number of strategic suppliers to about 50 from hundreds. It offered long-term contracts to vendors who agreed to build factories in New Albany, creating an industry cluster that is now known as Beauty Park.
“Fifty-percent of our whole supply chain came from China” in 2008, recalled Toby Thunberg, who handled supply chain logistics for Bath & Body Works at the time and now works for Axium, the bottle maker. Today, 85 percent of the supply chain for Bath & Body Works hails from North America, according to Susanna Zhu, chief procurement and supply chain executive at Bath & Body Works; of that, 55 percent is in Beauty Park.
Beauty Park was the brainchild of the retail mogul Les Wexner, founder of L Brands, which owned Bath & Body Works, Victoria’s Secret and Abercrombie & Fitch. Mr. Wexner said in 2007 that the global supply chain for the fragrance business was too cumbersome, according to Mr. Thunberg. At the time, the company searched for inexpensive plastic bottles from China. They had to be ordered months in advance, making it impossible to quickly restock best-selling scents, he said.
Inspired by an apparel hub in India where Victoria’s Secret suppliers turned around underwear orders quickly because they were all clustered in the same area, Mr. Wexner envisioned factories surrounding the company’s headquarters in New Albany where he owned vast tracts of land.
It was a radical pitch. The proposed site was a pig farm 17 miles from the nearest railway, leaving his own staff and vendors deeply skeptical. Mr. Wexner flew his team and key suppliers to India to witness the hyper-efficient ecosystem firsthand, Mr. Thunberg recalled.
Today, the tightly integrated hub allows Bath & Body Works and its core suppliers to work together more closely — shrinking lead times to weeks, from months. During the pandemic, the company was able to quickly pivot to making hand sanitizer and experienced its best year on record.
Today, Bath & Body Works and its core suppliers have an almost familial relationship, even though the companies also make products for other customers.
“They are an extension of ourselves,” said Stephen Smith, a supply chain senior executive at Bath & Body Works.
Those informal bonds make it easier to create new products together, according to Alan Malter, associate professor at the University of Illinois Chicago, who has studied the impact of industry clusters on innovation.
“If you are just going to have a contract manufacturer in the cheapest place you can find, you will probably be innovating less with them,” he said. “It will be more of a relationship where you are giving them instruction, and say ‘Make this.’ It is less of a partnership.”
One afternoon this spring, Ms. Zhu popped into Alene Candles, a key supplier in Beauty Park that pioneered the three-wick candle with Bath & Body Works. She chatted briefly with technicians in the burn lab who measure the soot content and height of flame from candles in every batch.
Then she stopped by the laboratory at Kdc/one and thanked the technicians who helped develop a daily moisturizing hand soap that had been flying off the shelves.
She wanted to know if they were working on anything new.
How a Fragrance Is Born
The search for a new iconic fragrance begins in New York, where master perfumers at major fragrance houses, like DSM-Firmenich, compete to get on the shelves at Bath & Body Works by crafting new aromas based on themes that she brings them.
They create dozens, if not hundreds, of different scents — inspired by ideas like Mother’s Day or the joy of spring. They fine-tune them, based on feedback from Ms. Testa-Gough (the “nose”). Later in the process, focus groups are paid to smell them as well.
In the past, fragrances were made by boiling spices for hours or pressing oils out of flower petals. Today, the process is often more high-tech.
For instance, to create the Milk Bar Birthday Cake collection molecules were collected from the steam of a freshly baked cake at the popular New York bakery chain, then analyzed and recreated in a lab.
With the Japanese Cherry Blossom, whose real petals hardly have a scent, the fragrance was more of a perfumer’s fantasy.
Harry Fremont, a master perfumer at DSM-Firmenich who is best known for creating Calvin Klein’s CK One, designed a cherry blossom-inspired scent in 2006 for Bath & Body Works. Camille McDonald, the creative force behind Bath & Body Works at the time, asked him to make it more complex, so it would appeal not just to mall-loving teenage girls but also their mothers.
“She said, ‘I want to make something different with it to elevate the brand, to make it more sophisticated,” said Mr. Fremont, who is now retired. “She said, ‘I want to make our Shalimar,’” a reference to the famous perfume created by Jacques Guerlain in 1925.
Mr. Fremont added sandalwood, musk and molecules that smell like basmati rice when it cooks. “Maybe it’s a bit too sophisticated,” Ms. McDonald told him after a round of focus group tests. He added back top notes of apple and pear, and it became the company’s top-selling fragrance of all time.
