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How cosumers fell out of love with The Body Shop
NOVEMBER 17 2023
Shortly after The Body Shop was sold in 2017, its then chief executive shared a blunt diagnosis of the British ethical beauty retailer’s woes.
“Why should The Body Shop be operating today?,” David Boynton rhetorically asked staff as he sought to reinvigorate the brand under its new owner, Brazilian group Natura.
The retailer known for its anti-animal testing campaigns and environment-friendly ethos had “run out of steam” under its previous parent, French cosmetics giant L’Oréal, he said, recounting the anecdote in a speech.
The same question applies six years later in the wake of Natura’s sale of the 47-year-old chain to European private equity firm Aurelius. The acquisition, which was announced this week, values the retailer at £207mn — of which £90mn would be payable in five years if the company met certain undisclosed targets.
This is a fraction of the £880mn that Natura paid L’Oréal for it. “It’s lost its way,” said Catherine Shuttleworth, who runs digital marketing agency Savvy. “It has lost people who were real avid fans, and it has not connected with new consumers.”
The Body Shop, founded by the late trailblazer Anita Roddick in 1976, was among the first companies to argue business could be a force for good. In the 1980s and 1990s, it earned its place as a household name with products including White Musk fragrance, Dewberry oil and Peppermint foot scrub. The brand helped change 24 laws in 22 different countries by mobilising its customers, including campaigning against animal testing in cosmetics, said Boynton, who stepped down earlier this year.
But other retailers and brands have since caught up with the trend to attract more eco-conscious shoppers. One example is Aesop, the Australian high-end soap maker known for its vegan products, which Natura sold to L’Oréal in a $2.5bn deal earlier this year. “There is a lot more competition in that sphere of the industry,” said Natalia Van Boxel, an analyst at GlobalData. Shuttleworth said:
“They’ve just got to redefine themselves for the modern day but stick back to those ethical and sustainable things because I bet a lot of young shoppers don’t know what we know [about the brand].”
The Body Shop, which has about 2,500 shops in more than 70 countries, has struggled with a slump in sales amid increased competition and surging inflation.
It recorded a pre-tax loss of £71mn last year, according to UK public filings. Revenues slid from £507mn in 2020 to £408mn in 2022, according to the filings. Its UK market share dropped to 0.8 per cent last year, from 1.4 per cent in 2020, and is expected to be flat this year.
Some critics blame Natura for failing to revive the chain. It was the Brazilian group’s mistake to assume that its mastery of selling directly to South American consumers could transfer into running a network of stores in territories it was unfamiliar with, they say.
The São Paulo-based company also owns door-to-door cosmetics seller Avon, which it bought for $2bn in 2019. Thiago Macruz, head of research at Itaú BBA, said Natura took on the “global turnaround of a retailer” with The Body Shop. “It really wasn’t their skillset.” He added: “Even though they had some initial success . . . They were never able to really rethink this company’s growth opportunities.”