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How Did The Body Shop Begin Its Downfall, and Can It Be Saved?
The Body Shop, known for its iconic fragrances like satsuma and coconut, has long been a fixture in malls across 70 countries, boasting over 3,000 retail locations worldwide and drawing in crowds with its natural ingredients and ethical stance on cosmetics. Within its walls lay an array of colorful soaps, shimmering bath pearls, and row upon row of lotions. The Body Shop “practically took on cult status” in the ’90s and early 2000s, according to CBC. However, as time marched on, the once-popular brand began to lose its luster.
Recent developments have cast a shadow over its ability to remain in the retail world, especially after it announced plans to close almost half of its 200 stores in the U.K. on Tuesday. Already, seven locations have been shut down: Surrey Quays, Oxford Street Bond Street, Canary Wharf, Cheapside, Nuneaton, Ashford Town Centre, and Bristol Queens Road.
The Body Shop is also laying off 40% of the employees at its London headquarters — about 270 in total — leaving about 400 full-time workers.
This announcement follows the company’s acquisition in November 2023 by private equity firm Aurelius Investment, which made the decision to place the British arm of The Body Shop into administration last week, endangering the livelihoods of over 2,000 employees. This move reflects the challenging retail landscape and economic uncertainties exacerbated by Brexit.
The collapse into administration signals a grim reality for a once-revered institution. Fans lament the loss, reminiscing about the brand’s impact on their lives and its role in shaping ethical consumerism. However, financial woes and ownership changes have led to this unfortunate turn of events, leaving many to wonder about the future of The Body Shop globally.
In Canada, where the beauty industry saw an 18% surge in sales in 2023, The Body Shop has experimented with innovative concepts like the “Changemaker’s Workshop” stores, aiming to engage customers beyond mere transactions. Yet, even in the face of such initiatives, the overarching challenges remain, raising concerns about the brand’s resilience in an ever-evolving market.
Today, The Body Shop faces a crisis. Aurelius Investment’s decision to let the company fall into administration comes on the heels of disappointing sales during the crucial Christmas shopping season, extending into January. Reports suggest that The Body Shop’s financial health was not as robust as initially thought, according to BBC. Some argue that this downfall was inevitable.
Established in 1976 by Anita Roddick with a single shop in Brighton, England, The Body Shop was a trailblazer in offering ethically produced skincare, haircare, and makeup. Roddick’s vision, centered on sustainability and activism, resonated with consumers worldwide. She championed natural ingredients and pioneered eco-friendly practices such as refilling empty containers in-store.
However, The Body Shop now finds itself stagnating while competitors in the natural beauty space surge ahead. The brand, which was once synonymous with Roddick’s vision, has lost its way since being acquired by L’Oréal in 2006. The subsequent acquisition by Natura &Co in 2017 raised questions about the brand’s commitment to its ethical values. The move alienated some of its customers, leading to boycotts and a decline in loyalty. Under corporate ownership, the brand’s essence began to fade.
As The Body Shop changed hands between various owners, competitors emerged, offering their own natural alternatives with modern branding. The once-iconic sensory experience of shopping at The Body Shop has been overshadowed by rivals like Lush and Rituals, whose vibrant stores, broader range of products and ingredients, and online presence appeal to a younger demographic.
“The Body Shop itself hasn’t really evolved its concepts but all its competitors have come up behind it and not only have the advantage of sustainability but some also have really beautiful branding,” said Diane Wehrle, CEO of Rendle Intelligence and Insights. “The Body Shop hasn’t actually deteriorated but it hasn’t moved.”
Despite ongoing activism and celebrity endorsements, such as Leona Lewis’s cruelty-free makeup line, the brand faces challenges, and its authenticity has come under scrutiny. Its acquisition by Aurelius further clouds its sustainable roots. Social media criticism and customer backlash highlight the growing divide between the brand’s past ideals and its current image.
As discussions unfold about potential rescues or closures, the fate of The Body Shop hangs in the balance. While the brand may not vanish entirely, its future remains uncertain.
Discussion Questions
What lessons can be gleaned from The Body Shop’s trajectory for other retailers navigating the intersection of sustainability, corporate ownership, and market demands?
As The Body Shop faces the aftermath of administration, how might its legacy of ethical trading and sustainability be preserved or revitalized under new ownership structures or strategic partnerships?
What role do shifting consumer preferences, evolving industry dynamics, and the challenges of maintaining brand authenticity play in shaping the fate of iconic retail institutions, and what strategies can be devised to reinvigorate relevance and resonance amidst such turbulent landscapes?
Poll
Loading …BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Carol Spieckerman
President, Spieckerman Retail
With sustainability and environmental issues moving up the consumer agenda, this should, at least in theory, be The Body Shop’s time to shine. Unfortunately, the opposite is true: the brand has lost a lot of its luster. Part of this is because many other firms have moved onto the sustainable turf, so this is no longer a unique point of difference. Body Shop has also become far less visible in the market. It used to be a very innovative and interesting retailer, but it has felt boring for many years – almost very corporate which is exactly what founder, Dame Anita Roddick, always feared would destroy the brand. My sense is that that neither L’Oréal (which first acquired it) nor Natura (which subsequently bought it) knew quite what to do with it and how to move it forward – so it has languished. Other more energetic competitors, like Lush, have captured consumer attention. As to whether it survives, I think it will – in some form. However, it will be a much smaller business as unprofitable locations and divisions are closed. And then, the long process of brand rebuilding needs to begin – and finding points of purpose and differentiation are absolutely key.
The list of private-equity or VC takeovers of a retailer that translated into success is short. The Body Shop is another example. And while private equity masters and retail operators rarely have alignment on objectives, I don’t think we can blame The Body Shop’s current situation all on private equity. Creating a concept like The Body Shop that achieves world-wide success is truly magical, and that’s what Anita Roddick did in the 70s. However, maintaining the magic is hard to do, and The Body Shop lost it’s magic. This sad outcome for The Body Shop is a good reminder that the market never sleeps, new competitors are around every corner and you’re only as good as your last success. The Body Shop rested on it’s laurels and the acquisitions/private equity just muddied the water.
This is a hard reality for so many brands: operating retail stores is hard. Operating profitable retail stores is harder.
The Body Shop is collateral damage to misguided leadership and management. After all of these years, the brand’s original proposition of sustainability and ethical sourcing could not be more relevant today. This is a good indication that the brand could still be thriving today if it had been managed more sincerely.
The easy way out is to say they were ahead of their time. But they were–and still are what consumers want. The problem is, a good idea without a good business strategy rarely yields long-term profits.
I remain hopeful that something lucrative can be salvaged from this classic business school case study.
Aurelius Investments has already made its money. I am quite sure most of their investment was in debt, and when The Body Shop comes out of administration in the UK, Aurelius will hold the bulk of the equity to further cash in. I do not doubt that Aurelius, when they acquired the operation, knew exactly how they would cut the muscle out of the retailer. This will not be a rebuilding effort.
Fifty years ago, natural ingredients and ethical stance on cosmetics were a unique offering. Yes, FIFTY years ago! The Body Shop served a niche consumer. It’s natural ingredients and ethical stance on cosmetics are almost mainstream attributes. Why would there not be competition from big and innovative retailers? Why would the leading brands not develop products now for this larger target audience?
The Body Shop had a good run, as have many now minimized name retailers. It is a common story that will be repeated.
When any given retailer “hasn’t really evolved its concepts but all its competitors have come up behind it and not only have the advantage of sustainability but some also have really beautiful branding”, it is officially in the worst possible predicament. Sometimes it’s crushing debt, and sometimes it’s strategic blunders. And sometimes it’s all of the above. I’m not reading about crushing debt, so it sounds like there’s been a series of blunders or a sheer lack of vision. Or again, all of the above. So why did Aurelius Investment buy them? What was the fix that they saw? It’s not like buying an ailing retailer with a lot of real estate that can be monetized. The Body Shop is going to have to be a strategic and creative and a coming-from-behind fix. Only the hardest possible combination. Sounds like we will be reading about new leadership some time soon.
The Body Shop deserves some obituary type credit for (IMO) creating a brand with sustainability as one of the core tenets.
I also do not think that having so many stores in Malls helped much either, with the decline of Malls in general.
Finally, it is VERY tough to create and maintain a long term, successful, beauty brand. Body shop is not going to be resurrected. RIP.
Two words: category killer. Sure, getting passed around didn’t help matters yet, like Bed Bath & Beyond and Party City before it, The Body Shop’s narrow focus in a high-margin segment makes it vulnerable to more diversified competition. It seems everyone is attacking beauty, wellness, and all things sustainable personal care. The Body Shop is swimming in a sea of ruthless competition.
The Body Shop’s heritage and beliefs were built around ethical, sustainable business practices and being a force for good. During their heyday, a leading activist brand was joined by Patagonia, Lush, and Tony’s Chocolonely. It put campaigning for sustainability, and a better world as a foundation for their purpose, and few brands have been able to replicate this energy,
However, maintaining that unique social responsibility stance over the decades has been an extremely challenging model for sustaining profitability. Unfortunately, the Body Shop entered into administration (the English version of bankruptcy protection) with Aurelius, a European private equity firm, in mid-February. The Body Shop had been sold to Aurelius in late 2023 for $254.32 million. Unfortunately, the PE acquisition may have happened far too late, as there wasn’t enough time to turn the business around in light of so much competitive forces and changing consumer behaviors.
Theoretically, if the Body Shop were launching in a 2024 world, where sustainability, environmental issues, ethics, social responsibility, and conscious consumerism are on the rise, it would be a far different story,
After Natura acquired The Body Shop, I believe the company’s decline began. Natura did nothing for The Body Shop, and when you do nothing, you fall behind.
Under its previous parent, L’Oréal, the retailer known for its anti-animal testing campaigns and environmental ethos had “run out of steam.”
Natura’s sale to Aurelius, a private equity firm, has, in my opinion, both good and bad implications. Private equity groups intend to build value, and that’s encouraging, but some equity firms lack the right people, knowledge, and experience to redevelop a given type of business they acquire. Not saying that is the case.
Body Shop has lost its way. The company has lost fans, and it hasn’t connected with new customers, and in the United States, many regional malls have closed, which hasn’t helped.
In terms of ethos for anti-animal testing , other retailers and brands have caught up with the eco-conscious market.
It’s time for The Body Shop to redefine itself and stay true to its ethos. – Db
The story of the Body Shop shines the light on the fragility of a trail-blazing brand’s future once the founder is out of the picture. The Body Shop ethos that attracted a following was diluted after Dame Anita Roddick sold the company to L’Oreal and in the subsequent ownership changes. A ship may be well-outfitted in crew and equipment, but if those at the helm don’t appreciate its built-for-purpose and what that means to crew and passengers, it will drift aimlessly and unenergetically until it hits the shoal.