Brazilian owners of The Body Shop Natura & Co is considering selling it just six years after purchasing the retailer.
When Anita Roddick founded The Body Shop in Brighton in 1976, it was groundbreaking.
The retailer's promise to sell you natural, animal-tested, reusable cosmetics was ahead of its time. Women all over Britain were amazed and The Body Shop was a resounding success.
However, where the retailer once broke new ground, it now has to catch up.
Amid declining sales and the Brazilian owners of Natura & The company is considering selling it, just six years after buying it for €1 billion from French beauty house L'Oreal.
“It's no exaggeration to say that 2022 was the most difficult year in The Body Shop's history.” – Natura & Co, which also owns Avon's cosmetics business, made the announcement in its latest annual report. “An extraordinary array of external factors has severely disrupted the business.”
Inflation, the lingering impact of the pandemic, and the exit from Russia, where the company has franchised its brand, have made it difficult for The Body Shop.
However, industry experts say the bath and beauty retailer has done little to improve its fortunes in recent years.
“The Body Shop has no real excuse that it can cite the economy, declining consumer prices or something like that, because it's not.” — Neil Saunders, managing director of Globaldata Retail. “It's become very bland… and I think consumers just don't pay attention to it.”
Last year, the chain's revenue, which has about 3,000 stores worldwide, fell by 24.3%. This downturn came in a booming market valued at more than $400 billion.
“The Body Shop is in a growing part of the retail market,” says Saunders. “I mean, cosmetics sales in the US are still on the rise and things are going well in the UK.
“Business has been underperforming for years – even before the pandemic, it was mostly underperforming” .
When it first opened, The Body Shop stood in opposition to mainstream beauty standards. Its marketing focused on topics such as self-care and natural beauty rather than weight loss or anti-aging messages.
The company has taken a stand on issues such as animal cruelty and veganism. The brand echoed the activist spirit of youth culture in the 1980s, and sales skyrocketed.
In many ways, Roddick, who died in 2007, helped set the tone for a socially driven business.
“I sincerely believe that business can be fun, it can be done with love and powerful force to achieve goals. good,” Roddick, who received an MBE in 2003, once said.
The problem with The Body Shop is that now these ideas have become almost ubiquitous. Everyone from Hellman's maker Unilever to the solid big banks claim to have a purpose, making it increasingly difficult to stand out.
Rival beauty retailers Rituals and Lush hold B Corp accreditation, which many consider the industry standard for sustainable business.
“The Body Shop has a very strong record of ethical products and that continues to hold true for consumers. ' Saunders says. “I think the problem is that everyone else has just taken this position.
“The Body Shop originally had this moral high ground, but now everyone else has risen to the top.”< /p>
News of the potential sale comes as Lush and Rituals are expanding significantly. Last year, Lush announced a £7 million growth plan and Rituals opened over 100 stores in 2022 alone.
“[Lush and Rituals] have opened very, very aggressively across the UK offering a similar price and similar ethos,” says retail consultant Jonathan De Mello, founder of JDM Retail.
Meanwhile, Boots Pharmacy doubled its presence in the market by opening its first purely cosmetics store in London this week.< /p>
In addition to many competitors having similar ethics, many competitors have more modern stores.
“Rituals have bigger stores that have things like meditation rooms,” says De Mello.< /p>
Lush, meanwhile, reopened its flagship store on Oxford Street in 2021 with a spa, florist, vegan cafe and perfume library. “Standing still in this market is never good,” says De Mello.
The Body Shop recently relaunched some stores under the name “Change Workshops”. These refurbished stores have been updated to focus more on the activity the brand was originally known for.
Body Shop Key Facts
Last year's Natura & Co described them as “a place to explore products, share ideas and learn how we can speak up together and stand against injustice.”
These ideas go back to The Body Shop's heyday in the 1980s, when activism was a major trend among the youth. However, today's beauty shoppers seem to be more concerned with taking care of themselves and their health than changing the world.
“I don't think that makes much of a difference,” says Saunders. “I think most people buy groceries first. And then they buy into the attributes of the product, including ethics and activism.”
The Body Shop also found itself in a state of confusion when it came to online shopping. Some of the fastest growing companies in the market were internet-only players who figured out how to use social media and influencers to increase sales.
Meanwhile, The Body Shop is still focused on stores and a reseller network part-time workers, The Body Shop at Home, who sell products to friends and neighbors.
Although visits to her stores showed “Signs of recovery by the end of the year,” the company said, “this was not enough to offset the decline in The Body Shop at Home's 'direct sales'.
Sales continued to fall in 2023 . “The difficult macroeconomic environment, particularly in the UK and the rest of Western Europe, continues to weigh on retail sales,” the company said in May.
Efforts are being made to change the situation. David Boynton, who has been in charge of the business since 2017, stepped down in April and was replaced by Ian Beakley, board member and former president of luxury bag company Coach.
Earlier this month, the company said that now it is. “undertook a fundamental reassessment of all aspects of its business” and embarked on major cost-cutting to boost profits.
This included cutting senior management jobs in February, resulting in a 25% reduction in leadership roles, and 12% reduction in staff across the business.
However, the biggest problem remains the hotel. carve out a niche in a crowded market.
“It's hard to predict who might be interested in buying it. I think a lot depends on the price,” says Saunders.
“I think that private investment will take over this business, and they may see some potential in this business, especially in its further digitization and real increase in sales. Especially if they can get it at a good price, they might see a positive effect here.”
Any sale would be a second big deal for Natura & Ko this year. In April, she sold luxury brand Aesop to L'Oreal for $2.5 billion (£2 billion). It was the French luxury giant's biggest deal in decades.
The sale, however, could take time.
Saunders says: “[The market] wants things that can be redone.” designed quite quickly and are profitable, and I'm not sure if the Body Shop falls into that category.”
Natura & The company declined to comment.
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