468 Retail and Channel Management Blog

Monday, March 13, 2017

The Body Shop or The Body Flop?

Founded in 1976, The Body Shop became a pioneer in the beauty industry by kick-starting the trend of selling ethical and environment-friendly skincare products. Over the 40 years that it has been operating, The Body Shop has went from humble beginnings in Brighton, UK to having over 2,500 stores in over 60 countries. Despite the success The Body Shop has seen, it has been struggling in the last couple of years and has even become L'Oreal's worst performing brand in 2016. This has lead L'Oreal to explore all strategic options and even consider bids for the brand. What happened to such a prominent beauty brand and is there any hope for The Body Shop?

A loss of identity

Part of what made The Body Shop very successful was its unwavering commitment to better business practices which encompassed banning all animal testing on its products and using all natural ingredients among other things. The skincare and cosmetics industry is always evolving and while The Body Shop’s commitment to social issues was a game changer in the 1980’s, more and more companies are jumping aboard and doing it much better. For example, LUSH went from being one of The Body Shop’s suppliers to becoming a thriving competitor and seller of natural products by doubling its market share over the past 5 years. The Body Shop's market share has declined to 9% in 2016 and it has lost itself in the beauty market where the natural and ethical approach has become the norm and the competition is able to do it all at a cheaper price.

Big changes with short-lived returns

In an attempt to boost sales, The Body Shop revamped its store format and introduced the interactive model Pulse which gave its stores a “fresh and vibrant boutique” look and allowed customers to linger around the store longer. By changing the look and feel of the store, the company was able to reiterate its company’s message and values to its customers all while engaging with them. In a saturated market such as the beauty industry, format decisions have a huge impact and according to CEO Jeremy Schwartz, the new format led to an increase in the company’s profits. But given the current financial state of the company, it is evident that despite changing up a store’s environment can be very impactful, more needs to be done to regain lost market share.

Selection and product innovation

Managing its product selection can be integral in improving The Body Shop’s financial situation. Currently, the company sells a wide variety of products from skin care to makeup to products for men, but it lacks innovative and on-trend offerings especially with its makeup section. In order for The Body Shop to compete with its competitors that are investing in developing exciting and cutting edge products, it will need to reevaluate its customers’ needs and wants and come up with a retail value proposition that not only speaks to its core values but one that can distinguish The Body Shop in such a saturated industry. 



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