The Price of Ethical Business: The Fall of The Body Shop
In recent news, the renowned brand The Body Shop has filed for bankruptcy and closed all of its branches in the United States and several locations in Canada. This unfortunate turn of events is not limited to these regions alone, as many other markets have also faced closures and employee layoffs.
The Body Shop’s Business Operations in the US and Canada Cease
According to an announcement made at the beginning of March 2024, The Body Shop revealed that its business operations in the US would cease from that month onwards. Additionally, out of the total 105 branches in Canada, approximately 33 would be immediately put up for sale, along with the suspension of their e-commerce activities in the country. However, it’s worth noting that The Body Shop’s business operations in Canada have not come to a complete halt.
The impact of inflation in recent years has significantly affected retailers in the cosmetics industry, including The Body Shop. With a strategy that focused on opening standalone stores instead of concentrating on shopping malls, the company targeted middle-class customers who were tightening their expenses.
Australia Struggles while the UK Closes Stores and Lays Off Employees
The Body Shop still operates over 100 establishments in Australia, but they are currently facing financial difficulties in meeting their obligations to suppliers. This situation arose after their parent company in the UK announced its inability to fulfill payment commitments. In the UK, The Body Shop will close 75 stores and lay off nearly 800 employees.
In addition to Australia and the UK, The Body Shop has faced bankruptcy declarations in Denmark and Belgium. Furthermore, the company’s operations in Ireland were dissolved just last week. The situation was so dire that the employees in Ireland even refused to work during their final days due to being owed three weeks’ wages.
Before its dissolution, The Body Shop had over 1,000 stores worldwide, with more than 1,600 franchise branches.
The Body Shop’s Commitment to Natural and Ethical Products
The Body Shop brand is well-known for its products that are advertised as natural, sustainable, ethical, and non-toxic. It was founded in 1976 in the UK by human rights activist and environmental campaigner Anita Roddick, primarily targeting environmentally conscious young customers who valued ethical business practices.
As one of the first companies to ban animal testing, The Body Shop received the “B Corp” certification in 2019, a distinction granted to companies that meet specific standards of transparency and dedication to the environment.
By 2023, the company expanded to over 2,500 retail locations in more than 80 countries and established online sales platforms in over 60 markets.
The Body Shop’s Change of Ownership and Recent Struggles
Throughout its history, The Body Shop has changed ownership multiple times. The cosmetics giant L’Oréal acquired the company in 2006 for over $1 billion before selling it to the Brazilian company Natura in 2017 for another $1 billion.
However, The Body Shop’s brand name has weakened in recent years. In a report at the beginning of 2023, Natura acknowledged that The Body Shop was facing headwinds as its sales in 2022 dropped by 13.5% compared to the previous year.
Even Natura itself described 2022 as a challenging year for the brand. Data from Natura reveals that the direct-to-consumer channels that benefited The Body Shop during the COVID-19 pandemic have returned to normal levels, adversely affecting sales figures.
In late 2023, Natura sold The Body Shop to the asset management group Aurelius for approximately $266 million.
Sources: CNN | The Guardian