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In the News

How would you turn around the fortunes of The Body Shop?

A great article on the BBC website about a brand that lost its way.

The article starts with a quote: "A confused shop with a mish-mash of products with no emphasis on the fact that this is supposed to be a shop specialising in cruelty-free, fair trade toiletries and make-up”.

It’s hard to overstate what an exciting brand the Body Shop represented in 1980s Britain. It now looks to be a victim of intense competition that has copied its USP, and of the difficult headwinds effecting every High Street retailer. The chain is still a sizeable High Street presence with more than 3,000 stores in 66 countries and employs 22,000 people. The once independent chain was bought by cosmetics giant L'Oreal for £652m in 2006.

A retail analyst in the article states that the Body Shop's struggles are down to the same issues facing the retail sector as a whole:

  • competition from an ever-increasing number of shops all crowding in to the market niche, from supermarkets to fashion chains
  • the seemingly unstoppable popularity of online shopping
  • the high cost of running a large number of shops

"Retailing in shops is becoming an increasingly challenging business. You've got to have a very compelling retail proposition as opposed to a brand or product proposition. Everyone that shops in The Body Shop spends most of their personal care budget somewhere else. They're constantly chasing their tail, having to work hard to attract people into a store”.

The firm was famous for both its product range and what was – at the time – a distinctive focus on corporate social responsibility (CSR). But the firm’s purchase by L’Oreal led some to think that the fiirm "slightly lost its way" under L’Oréal’s ownership, with its distinctive business culture undermined by being part of ‘big business’.

These days the firm is not seen as "a trendy brand", but mostly as a shop for gifting and low-value items, such as its body butters and body lotions. Yet, Prof John Colley from Warwick Business School believes there will still be plenty of interest from private equity funds if L’Oreal decides to sell the business. "They [L'Oreal] are trying to get rid of it because it's underperforming. But anyone bidding will see a clear turnaround. Independent ownership would probably serve the firm well. A refreshed image would almost certainly work," he says.

What would be your recommendation for a turnaround plan?

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