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The Body Shop: Can It Rise Again?

LONDON — The Body Shop’s road to ruin was paved with many good intentions. But in the end, the brand that pioneered cruelty-free beauty fell victim to cruel fate and poor management decisions, under the ownership of founder Anita Roddick and her husband Gordon Roddick, L’Oréal, Natura and the German private equity firm Aurelius.

While Roddick helped to set a template for future retailers and entrepreneurs when she initially launched The Body Shop, it has now fallen so far behind the competition that success will be impossible without major funding, committed owners and a new strategy, according to industry experts.

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“When The Body Shop launched in 1976, it was a different company. It stood out — it was hugely revolutionary,” said Sarah Montano, professor of retail marketing at University of Birmingham Business School, noting its impact on formulations, animal testing in the cosmetics industry, and women’s and social issues, among others.

The Body Shop's Drops of Youth
The Body Shop’s Drops of Youth concentrate.

“It’s unfortunate what happened, and there’s nothing to say it can’t be turned around,” Montano continued. “But so many factors need to change: price points, products and innovation.”

All is not lost. Although worldwide the company is unwinding in different ways — it was placed under administration in the U.K., is closing operations in the U.S. and restructuring in Canada — the online business continues to operate as do some franchises and wholly owned stores in a variety of regions worldwide.

Still, it’s a far cry from its former self. When the company first launched, The Body Shop epitomized innovation in beauty. Roddick was at the forefront of the naturals movement, offering products based on every-day and exotic ingredients. She championed environmental issues by encouraging recycling long before it became fashionable to do so, and she spearheaded beauty’s ethical drive, with high-impact campaigns against animal testing and promoting fair trade — long before they became rallying cries for other brands.

She also endorsed a holistic approach to beauty and promoted a more inclusive take on what is considered appealing.

In its heyday, The Body Shop operated 2,085 doors, many of which were franchised, in 54 countries worldwide. In fiscal 2005, the British beauty giant generated revenues of 419 million pounds, or $736.1 million.

That success didn’t go unnoticed. In 2006, L’Oréal acquired The Body Shop in a deal valued at 652 million pounds.

Over the past 18 years, the company has changed hands three times, and last month was placed into administration in the U.K., The Body Shop’s largest market, by its most recent owner, Aurelius, with hundreds of job losses and store closures.

In the next few weeks the administrators, FRP Advisory, will vote on the Company Voluntary Arrangements to decide on the fate of the retailer in the U.K.

The Body Shop’s Coconut & Yuzu Hair & Body Mist
The Body Shop’s Coconut & Yuzu Hair & Body Mist

According to industry observers, former employees and collaborators, the company’s failure was a long time coming, and not due to any one owner, or set of managers. Instead, it was a slow process of “customer alienation, and poor decisions with massive consequences,” that began when the company went public in 1984, according to a former employee.

Corporate restrictions and the profit-before-people demands of the public markets in the go-go Eighties clashed with everything The Body Shop stood for.

The person said that Roddick had good intentions when she eventually “sold to L’Oréal because she saw The Body Shop as a Trojan Horse, a way of changing a big corporate from within.” And to a certain extent, it worked.

“It’s not selling out,” Roddick said during a press conference following the sale, which she attended with L’Oréal’s top brass. “And the assumption that I am sitting next to an enemy is one that is absolutely wrong.”

Some of her customers would disagree. According to Montano, those early shoppers were heavily invested in The Body Shop, its products and mission.

“Anita Roddick was the brand, she lived it, and those customers wanted to give their money to her, and support her causes. They didn’t want to give their money to L’Oréal,” Montano said.

Natural beauty entrepreneur Mark Constantine, cofounder and chief executive officer of Lush, worked alongside the Roddicks in the early days of The Body Shop. Like others, he believes the brand lost its way after the company went public in London.

“The Body Shop is all about principles. If they can be bought and sold, it doesn’t work,” Constantine said. “My personal belief is a combination of family ownership and staff ownership could have been an answer. Selling to the highest bidder? It broke the dream.”

Many would argue that Roddick’s Trojan Horse strategy was successful, even after her death in 2007, within a year of the sale to L’Oréal.

With The Body Shop in its stable, the multinational ramped up its efforts to eliminate animal testing with the development of EpiSkin; improved its sourcing models, and became involved in numerous fair-trade schemes Roddick had supported.

In 2012, The Body Shop named Lily Cole as a global brand ambassador. She lent her name to a cruelty-free makeup line and helped to communicate the Beauty With Heart campaign, with a mantra “Look Good, Feel Good and Do Good.”

HONG KONG, CHINA - 2020/09/16: British cosmetics, skin care and perfume company The Body Shop seen in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)
The Body Shop inside a Hong Kong shopping mall.

Concurrently, The Body Shop set up interactive areas in-store to inform customers about its fair-trade activities.

Another former employee said that despite those and other efforts, the L’Oréal and Body Shop cultures never quite gelled, and to exacerbate matters, the French beauty giant at the time was not a retailer but a brand owner. “And The Body Shop was a company that lived and breathed retail,” the former employee said.

The Body Shop ended up losing more luster as other retailers moved onto its sustainability turf.

“It used to be a very innovative and interesting retailer, but it has felt boring for many years,” said Neil Saunders, managing director and retail analyst at GlobalData Retail. “The primary problem with Body Shop is the proposition and brand not being compelling enough for consumers. This meant that sales online and in stores suffered equally.”

Richard Hyman, a partner at Thought Provoking Consulting, agreed. “It didn’t really have any new ideas, and failed to effectively defend its original ones,” he said.

In 2017, when Natura & Co. purchased The Body Shop from L’Oréal at a valuation of $1.1 billion, it also had good intentions. But Natura had its own organizational and profitability worries, and didn’t really do much with the once-revolutionary British brand.

Just five years later, in November 2023, Natura would go on to sell The Body Shop to Aurelius for an enterprise value of $254 million, roughly one-quarter of its original purchase price.

Three months after the sale, in February, Aurelius placed The Body Shop into administration in the U.K., claiming that it could not turn the business around fast enough given weak trading over the holiday season and the cost-of-living crisis in the U.K.

Earlier that month, The Body Shop signed an agreement with an international family office to sell most of its business in mainland Europe and parts of Asia. The part of the activity affected was equivalent to about 14 percent of The Body Shop’s business worldwide. At the time, the company operated around 2,800 retail locations in more than 70 countries.

The retailer’s U.S. operations ceased on March 1, while its Canadian subsidiary began restructuring proceedings. In France, The Body Shop’s subsidiary entered administration in early April.

As The Body Shop moved from owner to owner with no one quite figuring out how to nurture it, the beauty industry was evolving at warp speed, with brands and entrepreneurs of every stripe tearing a page from Roddick’s playbook and focusing on social causes, sustainability and cosmetics that promised to be kind to skin and to the planet.

Still, industry experts think The Body Shop could be salvaged, at least in part.

Saunders believes the retailer “can make something of a comeback, as a much smaller entity — perhaps more focused on online and wholesale.” However, since its U.S. operation is closing, it looks unlikely The Body Shop will be fully revived in that market. Instead, it could concentrate on Europe and other countries abroad, especially through a franchise model.

But the going wouldn’t be easy. “Retail is under huge pressure,” Hyman said. “Consumers are less well-off and have other spending priorities.”

He believes The Body Shop has already become more of a brand than a retailer. “It needs to focus investment in its core — ie., the product,” said Hyman, who views its website as needing greater functionality and better narratives to support the offer and highlight what makes the brand unique.

To help rebuild The Body Shop’s emotive connection with consumers, it might consider moving away from its longstanding focus on clean beauty, which is omnipresent, and home in instead on biotech-created products that deliver performance — and provenance, according to Wizz Selvey, strategic adviser and mentor at Wizz & Co.

“This could be an area The Body Shop pivots to and educates consumers on, as there is still not mainstream understanding,” she said, adding sustainability could be another of its focuses looking ahead.

“I don’t think this is the last we will see of The Body Shop, but it needs to operate, look, feel and act very differently to survive,” Selvey said.

On the plus side, beauty has been a robust area of growth — for the companies that get it right. But the question of whether or not The Body Shop can reestablish relevance with a new generations looms large.

“So The Body Shop’s demise says more about [itself] than the wider beauty sector,” Saunders said. “That said, it does underline how not staying connected with consumers can cause issues. Today’s market punishes those retailers that don’t make an effort to stay relevant.”

“Success in retail requires constant reinvention and investment,” he continued. “Standing still means retailers will fall back. This is the trap Body Shop fell into.”

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