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Teaching activity

In the News Teaching Activity – the Body Shop shuts down some of its UK stores (Feb 2024)

Elizabeth Veal

26th February 2024

The Body Shop, once a pioneer in ethical trading and cruelty-free beauty, has been struggling and it announced closures of many of its UK stores this month as the UK business goes into administration.

The Body Shop plans to close up to half of its 198 stores in the UK and reduce its head office size, resulting in hundreds of job losses. The restructuring aims to "re-energise" the brand, with immediate closures affecting high-rent locations in London. The move follows the UK arm entering administration after being purchased by German private equity firm, Aurelius. The Body Shop, founded in 1976, faced increased competition challenges from other beauty product firms. The brand's troubles began with its 2006 sale to L'Oreal, resulting in a perceived loss of its original values. Failure to evolve in the natural beauty space and competition from brands like Lush and Neal's Yard Remedies contributed to its stagnant position. Additionally, the sensory experience that defined The Body Shop has diminished, leaving it struggling to compete in a market with diverse and attractive alternatives. The company intends to focus on online sales, product offerings, and wholesale strategies. While the closures do not impact global franchises, it is possible that this could signal an end for The Body Shop brand in the UK.

The Body Shop to shut up to half of its UK stores - BBC News

1 Explain why the Body Shop’s sale to L’Oreal created problems for its brand

2 Using a cost and revenue diagram, show why the Body Shop is having to shut down some of its stores in high rent locations such as London.

3 Discuss the price and non-price strategies the Body Shop could use to revive its fortunes.

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Elizabeth Veal

Liz has taught Economics for over 25 years, including several years as Head of Economics at leading schools.

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