Case study

The Body Shop—good luck or good marketing?

The Body Shop may have grown rapidly during the 1970s and 1980s, but its founder, Anita Roddick publicly dismissed the role of marketing. Roddick ridiculed marketers for putting the interests of shareholders before the needs of society. She had a similarly low opinion of the financial community, which she referred to as ‘merchant wankers’. While things were going well, nobody seemed to mind. Maybe Roddick had found a new way of doing business, and if she had the results to prove it, who needed marketers? But how could even such an icon as Anita Roddick manage indefinitely without consulting the fundamental principles of marketing? By embracing ethical issues, was she way ahead of her rivals in understanding the public mood, long before the major retailers piled into Fairtrade and ‘green’ products? Or did the troubles that the Body Shop suffer in the late 1990s indicate that a company may publicly dismiss the value of marketing while the going is good, but sooner or later it will have to come back to earth with good old-fashioned marketing plans? Roddick had been the dynamo behind the Body Shop. From her first shop, which opened in Brighton in 1976, she inspired the growth of the chain of familiar green-fronted shops, which in 2006 comprised 2, 100 stores in 55 countries around the world. She was the first to introduce socially and environmentally responsible business onto the High Street and was talking about fair trade long before it became a popular corporate buzz-word. Her pioneering products included naturally based skin and hair care preparations, such as Fuzzy Peach Bath and Shower Gel and Brazil Nut Conditioner. Her timing was impeccable, coming just at a time when increasingly affluent consumers were becoming concerned about animal testing and the use of chemicals in cosmetics. She had not gone down the classic marketing route of understanding consumer trends and then developing the appropriate products with the right positioning. She simply had a passion for humanely produced cosmetics and was just lucky with her timing—more consumers were coming round to her view just as she was launching her business. As for planning a promotion campaign, she did not really need to do very much at all. With her boundless energy, outspoken views, and unorthodox dress sense, she was continually being talked about in the media. Her flair for publicity won free editorial space for the Body Shop worth millions of pounds.

Much of the company’s success has been tied up with its campaigning approach to the pursuit of social and environmental issues; but while Roddick campaigned for everything from battered wives and Siberian tigers to the poverty-stricken mining communities of southern Appalachia, the company was facing major problems in its key markets. Yet until the late 1990s, she boasted that the Body Shop had never used, or needed, marketing.

By the late 1990s the Body Shop seemed to be running out of steam, with sales plateauing and the company’s share price falling—from 370p in 1992 to just 65p in 2003. What was previously unique about the Body Shop was now being copied by others, for example, the Boots company matched one of the Body Shop’s earliest claims that it did not test its products on animals. Even the very feel of a Body Shop store—including its decor, staff, and product displays—had been copied by competitors. How could the company stay ahead in terms of maintaining its distinctive positioning? Its causes seemed to become increasingly remote from the real concerns of shoppers. While most UK shoppers may have been swayed by a company’s unique claim to protect animals, how many would be moved by its support for Appalachian miners? If there was a Boots or a Superdrug store next door, why should a buyer pay a premium price to buy from the Body Shop?

The Body Shop may have pioneered a very clever retailing formula over 20 years earlier, but, just as the product range had been successfully copied by others, other companies had made enormous strides in terms of their social and environmental awareness. Part of the problem of the Body Shop was its failure fully to understand the dynamics of its marketplace. Positioning on the basis of good causes may have been enough to launch the company into the public’s mind in the 1970s, but how could this position be sustained?

Many commentators blamed the Body Shop’s problems on the inability of Roddick to delegate. She is reported to have spent much of her time globe-trotting in support of her good causes, but had a problem in delegating marketing strategy and implementation. Numerous strong managers who had been brought in to try to implement professional management practices apparently gave up in bewilderment at the lack of discretion that they had been given, and then left.

The Body Shop’s experience in America had typified Roddick’s pioneering style which frequently ignored sound marketing analysis. She sought a new way of doing business in America, but in doing so dismissed the experience of older and more sophisticated retailers—such as Marks & Spencer and the Sock Shop, which came unstuck in what is a very difficult market. The Body Shop decided to enter the US markets not through a safe option such as a joint venture or a franchising agreement, but instead by setting up its own operation from scratch—fine, according to Roddick’s principles of changing the rulebook, but dangerously risky. Her store format was based on the British town-centre model, despite the fact that Americans spend most of their money in out-of-town malls. In 1996 the US operations lost £ 3.4 million.

Roddick’s critics claimed that she had a naive view of herself, her company, and business generally. She had consistently argued that profits and principles do not mix, despite the fact that many of her financially successful competitors have been involved in major social initiatives. Critics claimed that, had Roddick not dismissed the need for marketing for so long, the Body Shop could have avoided future problems; but by the early 2000s it was paying the price for not having devoted sufficient resources to new product development, to innovation, to refreshing its ranges, and to moving the business forward in a competitive market and fast-changing business environment. It seemed that heroes can change the rulebook when the tide is flowing with them; but adopting the disciplines of marketing allows companies to anticipate and react when the tide begins to turn against them.

The year 2006 turned out to be a turning point for the Body Shop. In that year, the cosmetics giant L’Oré al acquired the company for £ 652 million. L’Oré al was part-owned by Nestlé, and both companies had suffered long disputes with ethical campaigners. L’Oré al had been the subject of boycotts because of its involvement in animal testing, and Nestlé had been criticized for its treatment of third-world producers. Ethical Consumer magazine, which rates companies’ ethics on its

‘Ethiscore’, immediately down-rated the Body Shop from a rating of 11 to 2.5 out of 20, following the takeover by L’Oré al. A contributor to the magazine commented about the Body Shop:

I for one will certainly not be shopping there again and I urge other consumers concerned about ethical issues to follow my example. There are plenty of other higher scoring ethical companies out there.

Not to be outdone, Roddick dismissed claims that she was ‘selling out to the devil’ by arguing that she would be able to use her influence to change L’Oré al from inside the company. Suppliers who had formerly worked with the Body Shop would in future have contracts with L’Oré al, and through an agreement to work with the company for 25 days a year, Roddick would be able to have an input into its ethical sourcing decisions.

It seemed that the Body Shop was destined to become a safe, predictable company, carrying out marketing in more of the textbook fashion that had allowed its new owners to grow steadily but surely over the years. Maybe the missionary zeal had long ago gone out of the Body Shop, so perhaps having new owners who placed less emphasis on ethics would not be too great a price to pay in return for bringing the huge wealth of marketing experience of L’Oré al to the Body Shop.

Part of the marketing experience of L’Oré al led it to treat the Body Shop as an independent brand and to respect its trusted heritage. It was aware that ecological concerns were rapidly rising up mainstream consumers’ concerns, and having Roddick on board would not only be good for PR, it could also help change mindsets within L’Oré al more generally.