What Went Wrong for The Body Shop?

In yet another potential hit to the high street, The Body Shop announced that it’s set to appoint administrators soon. The ethical skincare brand is reportedly operating with insufficient working capital and rumoured to have seen weaker-than-expected Christmas trading.

The store’s troubles are impacted by an ongoing dispute against them regarding alleged unpaid bonuses. The chain has seen several takeovers recently, and over 20 former employees claim that they are owed unpaid bonuses totalling almost £3m after a previous sale.

The Body Shop was established in 1976 by the late Anita Roddick, and enjoyed stratospheric growth after its humble beginnings as a single Brighton-based shop. Unfortunately, it now looks likely that any restructuring will see several stores closing in order to streamline the business.

Its current owners, the private equity firm, Aurelius, has already set about shedding elements of the business. Large parts of the beauty chain’s European and Asian businesses were sold to an international family office recently as part of a “strong turnaround strategy”.

What went wrong?

So how has this UK cosmetics giant found itself in such dire straits of late? As with any businesses with a high street presence, it may have found that its omnipresent retail footprint has become somewhat of an albatross in today’s e-commerce-led world.

Some may also point to the instability seen at the very top of the company. Roddick’s sale of the brand to L’Oréal in 2006, was followed by a £880m takeover by Natura in 2017.

Just six years later, Natura sold the skincare brand to Aurelius for £207m, making a hefty loss of £673m in the process.

Managing Director of Forbes Burton, Rick Smith, opined that “while the loss-making sale in in November 2023 seemed to suggest the writing was on the wall for The Body Shop, the actual problem may have sat in the loss of the company’s identity.

“The Body Shop was built upon a solid set of ethical beliefs such as not testing on animals. Once they were sold to a large corporate like L’Oréal, and started to trade in China, where law required the testing on animals, their original USP was lost.

“Without its environmentally friendly modus operandi, the business became just another cosmetics company in a heavily competitive landscape. In the meantime, a new batch of ethically conscious skincare businesses have risen to fill the gap they left, leaving them with no obvious place in the market now.

“Today, their website still lists their ethical beliefs, but these are buried within ‘About Us’ pages and almost entirely absent from its homepage and product pages. It seems a company unsure about a USP that its marketing merely whispers about now.”

This sentiment is echoed by Chief Executive of Lush, Mark Constantine, who as a former supplier to The Body Shop, was afforded some insight into the business. He told The Sunday Times that “you can’t cheapen everything, remove the values and take more profit without the customers noticing and going elsewhere”.

It remains to be seen how administration will affect The Body Shop. Its 10,000 employees and 12,000 franchisee staff will be hoping for a solution that sees minimal branch closures. With almost 3,000 stores spread across over 70 different countries, however, a sizeable restructuring plan is likely to take place.

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