€1 billion in 2017, is experiencing such a rough patch, if you look at The Body Shop’s history over the past two decades, the writing has been on the wall. British business advisory firm FRP Advisory, which The Body Shop hired to oversee its finances during this period, stated, “The Body Shop has faced an extended period of financial challenges under past owners, coinciding with a difficult trading environment for the wider retail sector.” The Body Shop’s winding ownership trajectory The Body Shop was founded in 1976 in Brighton, England, by environmentalist and human rights activist Anita Roddick. The company differentiated itself by refusing to test products on animals and prioritising natural ingredients in its formulations. In 1989, The Body Shop became the first beauty retailer to campaign against animal testing in cosmetics. The retailer has continued to disrupt the beauty industry, becoming in December of last year the world’s first global beauty brand to achieve 100 per cent vegan product formulations across all ranges including skincare, body care, hair care, makeup and fragrance, with the entire product formulations portfolio having been certified by the Vegan Society. As Marie Driscoll, an expert on luxury retail and the founder and chief analyst at Driscoll Advisors, noted, “Anita Roddick and the company she founded, The Body Shop, were trailblazers in the beauty industry, combining ethical and social causes with beauty products at affordable prices. Truly differentiated branding nearly 50 years ago at its founding.” In 2006, the company was acquired by beauty conglomerate L’Oréal for approximately US$1.2 billion, a move that some industry insiders questioned. For one thing, The Body Shop prided itself on its focus on natural ingredients and refusal to test products on animals, whereas L’Oréal is not completely cruelty-free and has an aesthetic that clashes with The Body Shop’s more subdued tone. At the time of the sale, Roddick commented, “I don’t see it as selling out. L’Oréal has displayed visionary leadership in wanting to be an authentic advocate and supporter of our values.” However, the acquisition produced less-than-desirable results for the French beauty giant, and in 2017, it sold The Body Shop to Brazilian global personal care cosmetics group Natura & Co for €1 billion. At the time of the deal, The Body Shop’s then-chairman and CEO Jeremy Schwartz stated, “I am sure that all customers, employees, franchisees and stakeholders of The Body Shop will join me in welcoming L’Oréal’s decision to enter into exclusive discussions with Natura. The ethical values and expertise of Natura makes it the perfect new owner for The Body Shop to accelerate the rejuvenation of the brand and its future expansion.” By 2023, The Body Shop had expanded to over 2500 retail locations in more than 80 countries and was available to purchase online in more than 60 markets. However, this expansion was a key factor in its eventual demise, according to Driscoll. “In today’s crowded marketplace with low barriers to entry, new beauty brands and their founders hit the market daily, many cause-based. While The Body Shop continues to have brand equity and intellectual property, too many US stores undermined brand profitability,” she said. “When The Body Shop was founded, mall-based stores were part discovery, part marketing, and part transaction locations; the business model has changed.” Neil Saunders, managing director and retail analyst at GlobalData, agreed that The Body Shop has failed to keep up with changing consumer behaviour and retail models. “The primary problem with Body Shop is the proposition and brand not being compelling enough for consumers. This meant that sales online and stores suffered equally,” he said. “The brand basically needs to be stronger to drive traffic to stores and online. Stores reflect this and feel a bit old-fashioned and traditional. The offer online does not have enough visibility in the market.” At the same time, rising real estate prices, the pandemic, and an increased number of competitors that share similar ethical values with The Body Shop, like Lush, have added to the beauty brand’s trouble. Early last year, Natura noted in a report that The Body Shop was facing “headwinds” with a year-over-year revenue decline of 13.5 per cent in 2022, a year the company stated “was far from easy” for the brand. The Body Shop’s direct-to-consumer channels, which had “benefitted during Covid,” returned to “more normalised pre-pandemic levels,” further impacting sales numbers, Natura said. Towards the end of last year, Natura & Co sold The Body Shop to asset management group Aurelius for about US$266 million. Can The Body Shop make a comeback? While it appears that there are tough times ahead for the once-groundbreaking brand, all hope is not entirely lost for The Body Shop. While the market for vegan and ethically-produced beauty products was not as well-established when The Body Shop was originally founded, there is a strong and ever-growing interest today, especially amongst millennial and Gen Z consumers, for the brand’s core products. According to leading intelligence firm Research and Markets, the global vegan cosmetics market is expected to reach US$24 billion by 2028, expanding at a compound annual growth rate of 6.31 per cent between 2023 and 2028. “The Body Shop brand can make a comeback,” Driscoll said. “Its original raison d’être still resonates with beauty shoppers seeking brands with environmental, ethical, and social values and its heritage is a plus.” To return to growth, the retail expert suggested that the beauty brand should open “far fewer stores (if any)”. “Meaningful social media and marketing can usher The Body Shop into today’s beauty market, unencumbered by its costly real estate that no longer drives profitable sales. Wholesale accounts and retail collaborations are additional growth opportunities,” she elaborated. Saunders had a bit more sombre take on the brand’s future, noting that “with the collapse of the main group, the US arm was left exposed. Its financial performance has been poor over recent years and the decision to liquidate reflects the fact it had no real financial options but to cease trading. “As the operation is closing in the US it looks unlikely the brand will be fully revived here. The best it can hope for is that someone buys the brand and trades it online or via wholesale.”