Back to the future? What’s next for the Body Shop brand

The Body Shop has been sold to private equity owners for £207m. In 2017, it was sold for $1bn, meaning the sale is a considerable markdown in value for the brand.

However, there is considerable potential for its new owners in the brand’s legacy and continued reputation of sustainability. Indeed, it holds the best sustainability perceptions of any UK cosmetics brand in the UK, according to Brand Finance.

Private equity group Aurelius has agreed to buy The Body Shop today (14 November). It had been owned by Brazilian cosmetics company Natura, which also owns Avon. Natura bought the brand from L’Oréal in 2017.

Building on its founding principles may be a way for The Body Shop to generate growth, notes Brand Finance. The brand was founded by Anita Roddick in the UK in 1976 and pioneered ethical and sustainable cosmetics at an affordable price point.

The Body Shop does have a strong reputation for sustainability to this day, particularly in its home market of the UK. In Brand Finance’s 2023 Sustainability Perceptions Index, it scored 6.01, this was 35% above industry average and was the highest score for any cosmetics brand in the UK. The company has also been B-Corp certified since 2019.

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In the same piece of research, Brand Finance looked at consumer’s sustainability perceptions and how they contribute to the value of a brand. For example, it found that 26.9% of Tesla’s brand value is associated with a reputation for sustainability.

For the cosmetics industry, an average of 10% of a brand’s value is driven by its sustainability credentials. With The Body Shop achieving the highest sustainability perception score of any brand in the UK cosmetics industry, it is well-positioned.

Brand Finance senior strategy and sustainability analyst Sofia Liszka notes that consumers are now much more knowledgeable about the cosmetics industry that they once were.

“Brands now have to do much more to be seen as sustainability leaders,” she says, adding that taking risks is essential to really make waves in the area.

“The Body Shop’s reputation remains strong, but perhaps under new ownership, it should aim to revive Anita Roddick’s pioneering spirit,” she adds.

Priced out?

One avenue for growth for The Body Shop may be to dial-up its already-strong sustainability credentials. GlobalData analyst Tash Van Boxel diagnoses the brand’s sluggish performance in the last few years as being down to its price proposition.

The Body Shop did well during the pandemic, when consumers sought to treat themselves with cosmetics, she notes, adding that its market share peaked in 2020 at 1.4%. It has not been able to sustain this momentum in subsequent years during the cost of living crisis, she notes.

“The Body Shop’s recent struggle has been driven by consumers trading down to more affordable retailers, casting aside sustainability and ethical claims in favour of value for money and lower price points,” Van Boxel says.

According to GlobalData, The Body Shop’s market share dropped to 0.8% last year, and is expected to remain flat this year.

The Body Shop’s value perceptions are significantly above that of other high street cosmetics brands, such as Lush, L’Occitane en Provence and Clarins, according to YouGov Brand Index. Over the past year it averaged a score of 7.3, versus 0.5 for Lush, 0.1 for Clarins and -0.9 for L’Occitane.

Its index score, which is an overall measure of brand health, is also higher than any of those three rivals.

However, on value, The Body Shop is outperformed by the likes of Boots and Superdrug, according to Brand Index. It has also seen its value perceptions drop from an average of 8.0 last year.

“Aurelius should focus on widening the appeal of The Body Shop brand via partnerships or concessions with other retailers such as John Lewis & Partners. This will enable the retailer to reach a more varied audience and ensure that it can take advantage of the ongoing demand in the sector,” advises GlobalData’s Van Boxel.

Aurelius is a company with experience in acquiring brands from corporate entities, with a view to revitalising them. Last year, it acquired footwear retailer Footasylum from JD Sports.

The group said today that it sees a distinct opportunity for The Body Shop in a growing beauty category, despite the challenges of the retail environment.

“We are delighted to be undertaking this acquisition of an iconic British brand, which pioneered the cruelty-free and natural ingredient movement in the health and beauty market,” says partner Tristan Nagler.