In the second part of this article, we drill down deeper to find out what might be the best strategy to take in an effort to return to the business to a growth cycle, and also consider which players might be best placed to take this challenge on if L’Orêal does decide to sell.
To find out more, Cosmetics Design spoke to Kline Group’s vice president of consumer products, Susan Babinsky, who has extensive knowledge of the both beauty brands and the specialty retailers that occupy this space.
Indeed, Kline Group’s research and consultancy undertakings in these two areas are highlighted by its separate reports focused on both the beauty retailer segment and the natural personal care segment.
Babinsky has been closely following the roller coaster trajectory of The Body Shop business over the years, and believes that now is the time to take action in an effort to stem the current downward trend.
The business needs changes
“First and foremost, The Body Shop is in need of turnaround so any buyer needs to have the leadership, experience, and vision of how they will take the business forward,” she said.
“Financial buyers offer a good fit given their experience in improving financial performance (cost reductions and other business improvement measures). An ideal financial buyer would also have other beauty or fashion retail businesses in its portfolio, enabling it to leverage this know-how and to effect synergies with The Body Shop.”
Another potential type of buyer would be another beauty retailer or beauty brand that wanted to tap into the extensive global bricks-and-mortar retail platform that The Body Shop business represents.
Who would be a good fit?
Babinsky believes that there are several players that could fulfil this criteria, with one of the most obvious being L Brands, which already has Victoria Secret Beauty and Bath & Body Works in its portfolio.
This could prove to be a profitable acquisition for L Brands, if it can ensure that three basic criteria will be met”
“Firstly the business case needs to assess if the total business is better with The Body Shop, secondly their vision of how to improve the business and thirdly understanding the potential impact/cannibalization with its other beauty retail brands,” she explained.
Other brands that may be potential suitors could include a number of foreign beauty brands without a U.S. retail footprint, which Babinsky believes could include some of the fast-growing South Korean brands.
Channelling the “inner apple”
“To achieve a true turnaround and revitalization of the business, The Body Shop needs to channel its “inner Apple” to determine how it can both re-establish its relevance and its connection with consumers,” Babinsky said.
Although The Body Shop was a trailblazer in the 80s and 90s, the natural beauty space is much more crowded now and other brands have come along to raise the bar, both with respect to formulation and environmentalism and in responding to consumer concerns.
Indeed, it is because of heightened consumer awareness of what goes into natural beauty products and associated environmental concerns, as well as the new ways that millennials engage in the retail experience that Babinsky believes strategists will have to focus on redefining the business.
“A good strategy will determine how to evolve positioning of the brand to take advantage of the future of environmental change and demonstrate how The Body Shop is the leader in embracing and offering a brand, products, and solutions that understand this,” she said.
“Equally important will be building its digital/social marketing and commerce presence to engage with the important millennial consumer base, and some store closures will likely be warranted.“