What Lies Ahead for the Body Shop: A Peek into the Future
The Body Shop leads the way in sustainability among UK cosmetics brands, a key factor for its continued growth and success
Private equity owners have acquired The Body Shop for £207m, representing a significant decrease in value compared to the previous sale of $1bn in 2017.
Nonetheless, the brand's new owners have the opportunity to capitalize on its established legacy and strong reputation for sustainability. In fact, according to Brand Finance, The Body Shop holds the highest sustainability perceptions among all UK cosmetics brands.
Private equity group Aurelius has acquired The Body Shop on 14th November. The brand was previously owned by Brazilian cosmetics company Natura, which also holds ownership of Avon. Natura purchased the brand from L'Oréal in 2017.
Brand Finance suggests that The Body Shop can foster growth by capitalizing on its original values. Founded in the UK by Anita Roddick in 1976, the brand revolutionized the market by introducing affordable ethical and sustainable cosmetics.
The Body Shop maintains a strong sustainability reputation in the UK, evidenced by its score of 6.01 in Brand Finance's 2023 Sustainability Perceptions Index. This score surpasses the industry average by 35% and stands as the highest among cosmetics brands in the UK. Additionally, The Body Shop has held B-Corp certification since 2019.
Brand Finance's research also examined the impact of sustainability perceptions on brand value for consumers. Notably, Tesla's brand value includes a significant 26.9% attributed to its reputation for sustainability.
The sustainability credentials of a brand drive an average of 10% of its value in the cosmetics industry. The Body Shop, which has achieved the highest sustainability perception score among all brands in the UK cosmetics industry, is in a strong position. Sofia Liszka, a senior strategy and sustainability analyst at Brand Finance, points out that consumers now possess a much greater understanding of the cosmetics industry compared to the past.
"Being perceived as sustainability leaders now requires brands to go above and beyond," she emphasizes, underscoring the importance of taking bold risks to truly make a substantial impact.
She suggests that The Body Shop, despite maintaining a robust reputation, should strive to reignite Anita Roddick's visionary zeal under its new ownership.
Priced out?
To potentially enhance its growth prospects, The Body Shop could consider further leveraging its existing robust sustainability credentials. According to GlobalData analyst Tash Van Boxel, the brand's recent underwhelming performance can be attributed to its pricing strategy.
The pandemic was a profitable time for The Body Shop as consumers turned to cosmetics for self-care, resulting in its market share reaching a peak of 1.4% in 2020. However, this momentum could not be sustained in the following years due to the cost of living crisis. Van Boxel explains that the recent challenges faced by The Body Shop are a result of consumers opting for more affordable retailers, disregarding sustainability and ethical claims in favor of value for money and lower prices.
According to GlobalData, The Body Shop experienced a decrease in market share to 0.8% in the previous year and is projected to maintain this level in the current year.
According to the YouGov Brand Index, The Body Shop possesses considerably higher value perceptions compared to other popular cosmetic brands found on high streets, such as Lush, L'Occitane en Provence, and Clarins. Over the course of the past year, it consistently achieved an average score of 7.3, whereas Lush attained a score of 0.5, Clarins obtained 0.1, and L'Occitane scored -0.9.
In terms of brand health, The Body Shop outperforms its three rivals, surpassing them in its index score.
However, when it comes to value, The Body Shop lags behind competitors like Boots and Superdrug, according to Brand Index. Moreover, its value perceptions have declined from an average of 8.0 last year.
GlobalData’s Van Boxel advises that Aurelius should broaden the appeal of The Body Shop brand by forming partnerships or concessions with other retailers like John Lewis & Partners. This strategy will allow the retailer to reach a diverse audience and capitalize on the current demand in the industry. Aurelius, known for acquiring brands to revitalize them, recently obtained footwear retailer Footasylum from JD Sports.
The group expressed today that it recognizes a unique opportunity for The Body Shop in a thriving beauty sector, despite the difficulties posed by the retail industry.
"We are thrilled to proceed with this acquisition of a renowned British brand, which led the way in promoting cruelty-free and natural ingredients within the health and beauty market," stated partner Tristan Nagler.
