The Body Shop International plc

Watersmead Business Park
Littlehampton, West Sussex BN17 6LS
United Kingdom
Telephone: (903) 731-500
Fax: (903) 726-250
Web site: http://www.the-body-shop.com

Public Company
Incorporated: 1976
Employees: 6,304
Sales: $538.8 million (2002)
Stock Exchanges: London
Ticker Symbol: BOS
NAIC: 446120 Cosmetics, Beauty Supplies, and Perfume Stores

The Body Shop International plc is one of England’s best known retailers of cosmetics and personal care products, with over 1,900 stores in 50 countries. The company is best known for pioneering the natural-ingredient cosmetics market and establishing social responsibility as an integral part of company operations. In fact, The Body Shop has historically received more attention for its ethical stances, such as its refusal to use ingredients that are tested on animals, its monetary donations to the communities in which it operates, and its business partnerships with developing countries, than for its products. This focus, however, proved to be costly as The Body Shop lost market share in the late 1990s to product-savvy competitors that offered similar cosmetics at lower prices. The company manufactures over 600 products and claims that a Body Shop product is sold every. 4 seconds. Anita Roddick, founder of the company, built The Body Shop by flouting industry conventions. In 1991, Business Week quoted this cosmetic industry leader as saying: “We loathe the cosmetic industry with a passion. It’s run by men who create needs that don’t exist.” After several years of faltering profits and sales, Anita and her husband, Gordon Roddick, stepped down as co-chairs in 2002.

Beginnings

Roddick entered the industry in 1976 when she used £4,000 to open a small stand-alone shop of natural-ingredient cosmetics and personal care products. Her goal was to support herself and her two daughters while her husband spent two years riding horseback from Buenos Aires to New York. Her store design, product packaging, and marketing approach all originated from her need to economize. Roddick painted the walls dark green to hide cracks, rather than to suggest respect for the environment, and the award-winning clear plastic bottles were actually urine sample containers purchased from a local hospital. When Roddick’s original supply of bottles ran out, and she did not have enough money to buy more, the Body Shop’s famous refill policy was born.

Other hallmarks of the company were born during this frugal period. Handwritten labels filled with product information established the Body Shop’s candid approach to customer relations. For example, one of the first products, a henna hair treatment, sported a label explaining that the product smelled like manure but was great for the hair. Also during this time, Roddick developed an aversion to advertising; not wanting to spend the time or money on advertising, she instead relied on press coverage to spread the word about the fledgling company.

Success came quickly: Roddick’s cosmetics store thrived, and she opened another before the company’s first year was over. Returning home in 1977, Gordon Roddick joined his wife in the enterprise. They decided to franchise the operation during the company’s second year, and by 1984 The Body Shop boasted 138 stores, 87 of which were located outside of the United Kingdom. Franchising outpaced the opening of company-owned stores over the years, until franchises accounted for 89 percent of Body Shop stores in 1994. The company’s fast-paced development continued when it went public in April 1984. The Roddick’s kept 27.6 percent of the company’s stock. Gordon Roddick became company chairperson and handled the finances as well, and Anita Roddick continued as managing director, essentially determining the course the company would take.

Focus on Social and Environmental Awareness in the 1980s

During this time, Roddick decided to encourage and contribute to social and environmental change through her company. Although she first allied The Body Shop with established groups, such as Greenpeace, Amnesty International, and Friends of the Earth, she soon began her own campaigns, particularly ones that focused on recycling and on putting an end to animal testing in the cosmetics industry. Body Shops displayed posters and made petition sheets available to customers. By the mid-1990s, franchises were asked to support two to three campaigns a year for such causes as AIDS education, voter registration, and opposition to animal testing in the cosmetics industry.

In 1987, Roddick began The Body Shop’s Trade Not Aid program. Combining the company’s need for exotic natural ingredients with its mission of social responsibility, the program established business partnerships with struggling communities. By purchasing such ingredients as blue corn from the Pueblo Indians in New Mexico and Brazil nut oil from the Kayapo Indians of the Amazon River Basin, the Trade Not Aid program avoided exploiting native peoples and helped developing countries earn money selling renewable resources rather than destroying their habitat. The Body Shop’s ethical practices also included aiding communities close to home. For example, the soapmaking factory the company founded in Glasgow returned 25 percent of after-tax profits to the economically depressed city. The retail store in New York’s Harlem established a policy of giving 50 percent of store profits to local community groups. Other charitable activities included donating £230,000 in 1991 to start a weekly newspaper to be sold by the homeless in London.

The Body Shop fared just as well publicly as it had privately. In its first eight years on the London Stock Exchange, its stock price rose 10,944 percent. Between November 1986 and November 1991, investors realized a 97.2 percent annual return. In 1991, sales were up 46 percent from the year before to $238.4 million; net profits were $26.2 million, up 71 percent from the previous year. The company’s notoriety also increased dramatically. Profiles of Roddick appeared in numerous magazines, from People to Forbes. The company was cited in Business Week as a pioneer in marketing. The magazine explained The Body Shop’s appeal as follows: “Typical Body Shoppers are at the back of the baby boom, a skeptical group. They distrust advertising and sales hype, demand more product information than their elders, and are loyal to companies they consider responsible corporate citizens.”

The Body Shop Enters the U.S. Market: 1988

The Body Shop opened its first stores in the United States in 1988; all were owned directly by the company. Deciding that the company needed to first adjust to the new market, particularly to selling in shopping malls, Roddick postponed franchising any stores until 1990. The first franchise opportunity prompted 2,000 applicants, whom Roddick screened through a written questionnaire, asking such unconventional questions as what books and movies the applicants liked and how they would want to die. “I want people who are politically aware and want a livelihood which is values-led,” Roddick explained in Working Woman.

In the autumn of 1993, The Body Shop opened new headquarters in Raleigh, North Carolina, to help manufacture and distribute its U.S. product lines. The new facility was needed to reach and support the company’s goal of 500 stores in the United States by the year 2000. Sales figures in 1994 supported that vision of aggressive growth. Sales in the United States had grown by 47 percent in the first half of fiscal 1994 to $44.6 million, with profits up 63 percent to $1.9 million. However, Allan Mottus, a U.S. cosmetics industry consultant, warned in Working Woman that The Body Shop would have difficulty in the coming years: “Opening new doors is one thing. Sustaining business is another. Americans are not as brand-loyal as Europeans. They will look at products and price.”

Such competition was already challenging The Body Shop by the mid-1990s, both in the United States and elsewhere. H2o Plus, Goodebodies, Bath & Body Works, Origins, and Garden Botanika were also offering natural products in simple packaging but usually for a lower price. The company’s two first major competitors appeared in 1990. That year, Estee Lauder Inc. introduced Origins, a product line with natural ingredients packaged in recycled containers. Leslie Wexner, owner of the Limited, opened Bath & Body Works in the United States in the fall of 1990; 18 months later he had 100 stores grossing $45 million. Although Roddick brushed off many of the U.S. lookalikes as too small to be a threat, she sued Wexner for copying her stores too closely. “It was becoming confusing between the two businesses,” Gordon Roddick explained in Working Woman, noting that Body Shop customers “were bringing in Wexner’s containers to be refilled.” Roddick reports having settled with Wexner out of court. However, Bath & Body Works continued to pose a threat to The Body Shop in both the United States and England, where it opened its first shop in the fall of 1994.

Company Perspectives:

The Body Shops strives to dedicate our business to the pursuit of social and environmental change; to creatively balance the financial and human needs of our stakeholders, employees, customers, franchisees, suppliers, and shareholders; to courageously ensure that our business is ecologically sustainable; to meaningfully contribute to local, national, and international communities in which we trade by adopting a code of conduct which ensures care, honesty, fairness, and respect; to passionately campaign for the protection of the environment, human and civil rights, and against animal testing within the cosmetics and toiletries industry; and to tirelessly work to narrow the gap between principle and practice, whilst making fun, passion, and care part of our daily lives.

In 1994, L’Oreal entered the natural-style product market with its Planet Ushuaia line of deodorants, shampoos, and other personal care products. Like Bath & Body Works, L’Oreal copied the bright coloring of The Body Shop packaging and emphasized exotic ingredients. The same year, Procter & Gamble, with its vast resources, also entered the fray with their purchase of Ellen Betrix, a German company that had introduced Essentials natural cosmetics early in 1994.

The Body Shop’s phenomenal growth slowed somewhat in 1992. Fiscal 1993 profits (the company’s year ends February 28) were down 15 percent from the previous year, from £25.2 million to £21.5 million. Roddick criticized dissatisfied investors in Working Woman as “speculators who make their money off buying and selling. That is where the greed factor comes in. They expected us to make £23 million. Tough—we made £21 million.” However, the company seemed to recover some of its momentum the following year: pretax profits for the first half of fiscal 1994 were £10 million, a 20 percent increase over the same period in 1993.

Falling Victim to Bad Press: 1993-94

The Body Shop faced other problems in the first half of the 1990s, as its reputation as a socially responsible company was repeatedly challenged. The first attack came from a British television program entitled “Body Search,” which accused The Body Shop of misleading customers with its “Against Animal Testing” product label. The Body Shop’s policy, designed as an incentive for companies to eliminate their animal testing, rejected ingredients that had been tested on animals in the previous five years. The television program, however, charged the company with using ingredients that had been tested on animals. The Body Shop brought suit in the summer of 1993 and won £276,000 in damages.

Although the company won their suit, the battle had focused attention on The Body Shop’s ethical record and inspired additional criticism. Cosmetics competitor Goodebodies tried to distinguish themselves by pointing out that, unlike The Body Shop, they did not use any animal by-products, such as tallow from pigs to make soap. The Body Shop responded, however, that it only used by-products from the meat industry and that it provided customers with information in the store if they wished to choose products with no animal ingredients.

Questions about the company’s integrity continued in the summer of 1994, when it was reported that the U.S. Federal Trade Commission was investigating The Body Shop for exaggerated claims of helping developing nations and for alleged pollution from a New Jersey warehouse. The investigation, combined with the company’s slowing growth, led Franklin Research & Development, an investment fund that dealt only with socially responsible companies, to sell 50,000 shares. That in turn led to a stock price drop of 11 percent in the next two weeks. Although the stock price stabilized soon thereafter, the company remained in a defensive position.

In the mid-1990s, the company showed signs of changing some of its long-standing policies, such as its refusal to advertise. From 1976 until 1994, The Body Shop used window displays, catalogs, and point of purchase product descriptions to attract and inform customers. In 1994, however, Anita Roddick appeared in an American Express commercial, talking about the company’s Trade Not Aid program. Later that year, the company placed its first “advertorial” in the magazine Marie Claire. This eight-page spread offered a discussion of the Body Shop Book on personal care techniques and products. In addition, the company was considering further “advertorials” or television “documercials” for the Trade Not Aid products that would focus on the stories and people behind the products. Angela Bawtree, The Body Shop’s head of investor relations, explained the company’s apparent change of attitude toward advertising in an October 1994 article in Advertising Age: “It would be wrong for people to think we have some kind of moral problem with using advertising. But using glamorous images or miracle cure claims—those kinds of things you won’t see us doing.” As of late 1994, the company had no plans to hire an advertising agency.

In the mid-1990s, the company increased its focus on international expansion. Same-store sales in the United Kingdom, The Body Shop’s most mature market, declined 6 percent in fiscal 1993 and were stagnant in fiscal 1994. New international stores seemed the key to continued growth, and Gordon Roddick specifically targeted Germany, France, and Japan for expansion. In early 1994, Germany had 39 stores and Japan had 17, and Roddick believed that each of these countries could support 200 stores. In addition, The Body Shop opened its first stores in Mexico in 1993.

“We think the limit for the number of stores we can have globally is more than 3,000,” Gordon Roddick said to Working Woman in 1994. He also commented that “in three years we will see the company’s worth hit $1 billion.” This statement was supported by a 1994 report from NatWest Securities, which expressed “confidence that the international growth potential (over 2,000 stores in year 2000) cannot only be realized, but also translated into healthy profits.”

Key Dates:

1976:

Anita Roddick opens a small shop that sells natural-ingredient cosmetics.

1977:

Anita Roddick’s husband Gordon Roddick joins the company, and the couple decide to franchise the operation.

1984:

The Body Shop goes public with 138 stores in operation.

1987:

The Trade Not Aid program begins.

1988:

Body Shop stores are opened in the United States.

1993:

The company files suit against a television program that claims it uses products that have been tested on animals.

1994:

The Body Shop begins using traditional methods of advertising for the first time.

1998:

Patrick Gournay is named CEO; the company forms a United States-based joint venture with the Bellamy Retail Group LLC.

1999:

The company stops manufacturing as part of a restructuring program.

2002:

Anita and Gordon Roddick step down as co-chairs of the company.

The Body Shop Falters: Late 1990s and Beyond

Gordon Roddick’s speculation, however, was not fulfilled. While The Body Shop had indeed experienced stellar growth throughout the 1980s and early 1990s, it appeared unable to concoct a strategy strong enough to overcome increased competition in the industry. As a result of weakening sales— especially in the United States—and faltering profits, The Body Shop spent much of the late 1990s and beyond restructuring and revamping business operations. In 1997, the firm announced that it would discontinue certain lower-priced merchandise in an attempt to attract a more upscale clientele. Then in 1998, Patrick Gournay was named CEO while Anita Roddick became co-chairman with her husband. The company commented on the management changes in a 1998 WWD magazine article, claiming that “the task of realizing our strategic plan and developing the brand without losing the nonnegotiables surrounding its philosophy and business ethics will be challenging. We have taken the view that this will not be achievable without substantially strengthening our top management team.”

During that year the company also entered into a joint venture with the Bellamy Retail Group LLC to oversee its United States-based operations. At the time, The Body Shop had reported a loss of $2.8 million from its U.S. stores while sales fell by 2.1 percent over the previous year. Sales in the United Kingdom were also weak and its Asian operations were also suffering due to economic difficulties in the region.

The restructuring moved ahead in 1999 as the company continued to report losses. In an effort to win back profits, The Body Shop exited the manufacturing sector to focus on its retail operations. It also sought to improve its product time-to-market, slash operating costs, and decrease the number of franchise-owned stores. Management was also reorganized into four main geographical segments including the United Kingdom, Europe, the Americas, and Asia.

Despite the restructuring efforts, problems continued for The Body Shop as it entered the new millennium and the firm began feeling out possible sale and merger options. A May 2001 Marketing article suggested that during the 1990s the company had “rested on its laurels while top management allowed itself to be diverted by wider global issues. It is paying the price, both in the United States and the United Kingdom, where Boots, Superdrug, and new entrant Lush have made significant in-roads.” As management worked to gain back this lost market share, the firm continued to report losses. In 2000, pre-tax profit fell by 21 percent over the previous year due in part to low profit margins on new products and mismanaged inventory levels that led to high warehouse costs.

Changes continued in 2002 when the Roddick’s stepped down as co-chairs but remained non-executive directors. At the same time, Gournay resigned after his restructuring efforts failed to restore The Body Shop’s financial record. In fact, according to a 2002 WWD article, Anita Roddick publicly claimed that under his leadership, The Body Shop had “lost its soul.” Adrian Bellamy was named executive chairman and Peter Saunders took over as CEO—both men had led firm’s North American operations. Under direction of this new management team, The Body Shop announced that it was no longer for sale. Whether or not Bellamy and Saunders would be able to boost the company’s fortunes and restore it to its former glory of the 1980s and early 1990s, however, remained to be seen.

Principal Competitors

Bath & Body Works Inc.; The Boots Company plc; The Estee Lauder Companies Inc.

Further Reading

“Body Shop Aims for Bigger Spenders,” Cosmetics International, January 25, 1997, p. 10.

“Body Shop Pulls Out of Manufacturing,” Soap & Cosmetics, April 1999, p. 64.

“Body Shop Sees Profits Fall by Nearly a Quarter,” Cosmetics International, May 25, 2001, p. 5.

Colin, Jennifer, “Survival of the Fittest,” Working Woman, February 1994, pp. 28-31, 68-9, 73.

Conti, Samantha, “Body Shop Reshuffles, Roddicks to Step Down,” WWD, February 13, 2002, p. 16.

Fallon, James, “Body Shop Reports a $25.4 Million Loss,” WWD, May 7, 1999, p. 11.

——, “Body Shop Shakeup Brings New CEO,” WWD, May 13, 1998, p. 3.

“Has The Body Shop Lost its Direction for Good?,” Marketing, May 10, 2001, p. 19.

Jacob, Rahul, “What Selling Will Be Like in the ‘90s,” Fortune, January 13, 1992, pp. 63-4.

Siler, Charles, “Body Shop Marches to Its Own Drummer,” Advertising Age, October 10, 1994, p. 4.

Zinn, Laura, “Whales, Human Rights, Rain Forests—And the Heady Smell of Profits,” Business Week, July 15, 1991, pp. 114-15.

—Susan Windisch Brown

—update: Christina M. Stansell

The Body Shop International PLC

Watersmead Business Park
Littlehampton, W. Sussex BN17 6LF
England
903 717107
Fax: 903 726250

Public Company
Incorporated: 1976
Employees: 1,926
Sales: $666 million
Stock Exchanges: London
SICs: 5999 Retail Stores, Not Elsewhere Classified

The Body Shop International PLC is one of England’s most successful retailers of cosmetics and personal care products, with over 1,100 stores in 45 countries. The company is best known for pioneering the natural-ingredient cosmetics market and establishing social responsibility as an integral part of company operations. In fact, The Body Shop has received more attention for its ethical stances, such as its refusal to use ingredients that are tested on animals, its monetary donations to the communities in which it operates, and its business partnerships with developing countries, than for its products. The company manufactures over 400 products; its most popular include its Colourings cosmetics, the Mother & Baby product line, and its Mostly Men products. Anita Roddick, founder of the company, has built this phenomenal success by flouting industry conventions. In 1991, Business Week quoted this cosmetic industry leader as saying: “We loathe the cosmetic industry with a passion. It’s run by men who create needs that don’t exist.”

Roddick entered the industry in 1976 when she used £4,000 to open a small stand-alone shop of natural-ingredient cosmetics and personal care products. Her goal was to support herself and her two daughters while her husband, Gordon, spent two years riding horseback from Buenos Aires to New York. Her store design, product packaging, and marketing approach all originated from her need to economize. Roddick painted the walls dark green to hide cracks, rather than to suggest respect for the environment, and the award-winning clear plastic bottles were actually urine sample containers purchased from a local hospital. When Roddick’s original supply of bottles ran out, and she did not have enough money to buy more, the Body Shop’s famous refill policy was born.

Other hallmarks of the company were born during this frugal period. Handwritten labels, packed with product information, established the Body Shop’s candid approach to customer relations. For example, one of the first products, a henna hair treatment, sported a label explaining that the product smelled like manure but was great for the hair. Also during this time, Roddick developed an aversion to advertising; not wanting to spend the time or money on advertising, she instead relied on press coverage to spread the word about the fledgling company.

Success came quickly; the first store thrived, and Roddick opened another before the company’s first year was over. Returning home in 1977, Gordon Roddick joined his wife in the enterprise. They decided to franchise the operation during the company’s second year, and by 1984 The Body Shop boasted 138 stores, 87 of which were located outside of the United Kingdom. Franchising outpaced the opening of company-owned stores over the years, until franchises accounted for 89 percent of Body Shop stores in 1994. The company’s fast-paced development continued when it went public in April 1984. The Roddicks kept 27.6 percent of the company’s stock, Gordon Roddick became company chairperson and the finances as well, and Anita Roddick continued as managing director, essentially determining the course the company would take.

During this time, Roddick decided to encourage and contribute to social and environmental change through her company. Although she first allied The Body Shop with established groups, such as Greenpeace, Amnesty International, and Friends of the Earth, she soon began her own campaigns, particularly ones that focused on recycling and ending animal testing in the cosmetics industry. Body Shops displayed posters and made petition sheets available to customers. By the mid-1990s, franchises were asked to support two to three campaigns a year, on such topics as AIDS education, voter registration, and animal testing in the cosmetics industry.

In 1987, Roddick began The Body Shop’s Trade Not Aid program. Combining the company’s need for exotic natural ingredients with its mission of social responsibility, the program established business partnerships with struggling communities. By purchasing such ingredients as blue corn from the Pueblo Indians in New Mexico and Brazil nut oil from the Kayapo Indians of the Amazon River Basin, the Trade Not Aid program avoided exploiting native peoples and helped developing countries earn money selling renewable resources rather than destroying their habitat. The Body Shop’s ethical practices also included aiding communities close to home. For example, the soapmaking factory the company founded in Glasgow returned 25 percent of after-tax profits to the economically depressed city. The retail store in New York’s Harlem established a policy of giving 50 percent of store profits to local community groups. Other charitable activities included donating £230,000 in 1991 to start a weekly newspaper to be sold by the homeless in London.

The Body Shop fared just as well publicly as it had privately. In its first eight years on the London Stock Exchange, its stock price rose 10,944 percent. Between November 1986 and November 1991, investors realized a 97.2 percent annual return. In 1991, sales were up 46 percent from the year before to $238.4 million; net profits were $26.2 million, up 71 percent from the previous year. The company’s notoriety also increased dramatically. Profiles of Roddick appeared in numerous magazines, from People to Forbes. The company was cited in Business Week as a pioneer in marketing. The magazine explained The Body Shop’s appeal as follows: “Typical Body Shoppers are at the back of the baby boom, a skeptical group. They distrust advertising and sales hype, demand more product information than their elders, and are loyal to companies they consider responsible corporate citizens.”

The Body Shop opened its first stores in the United States in 1988; all were owned directly by the company. Deciding that the company needed to first adjust to the new market, particularly to selling in shopping malls, Roddick postponed franchising any stores until 1990. The first franchise opportunity prompted 2,000 applicants, whom Roddick screened through a written questionnaire, asking such unconventional questions as what books and movies the applicants liked and how they would want to die. “I want people who are politically aware and want a livelihood which is values-led,” Roddick explained in Working Woman.

In the autumn of 1993, The Body Shop opened new headquarters in Raleigh, North Carolina, to help manufacture and distribute its U.S. product lines. The new facility was needed to reach and support the company’s goal of 500 stores in the United States by the year 2000. Sales figures in 1994 supported that vision of aggressive growth. U.S. sales had grown by 47 percent in the first half of fiscal 1994 to $44.6 million, with profits up 63 percent to $1.9 million. However, Allan Mottus, a U.S. cosmetics industry consultant, warned in Working Woman that The Body Shop would have difficulty in the coming years: “Opening new doors is one thing. Sustaining business is another. Americans are not as brand-loyal as Europeans. They will look at products and price.”

Such competition was already challenging The Body Shop by the mid-1990s, both in the United States and elsewhere. H2O Plus, Goodebodies, Bath & Body Works, Origins, and Garden Botanika were also offering natural products in simple packaging, but usually for a lower price. The company’s two first major competitors appeared in 1990. That year, Estée Lauder Inc. introduced Origins, a product line with natural ingredients packaged in recycled containers. Leslie Wexner, owner of the Limited, opened Bath & Body Works in the United States in the fall of 1990; 18 months later he had 100 stores grossing $45 million. Although Roddick brushed off many of the U.S. lookalikes as too small to be a threat, she sued Wexner for copying her stores too closely. “It was becoming confusing between the two businesses,” Gordon Roddick explained in Working Woman, noting that Body Shop customers “were bringing in Wexner’s containers to be refilled.” Roddick reports having settled with Wexner out of court. However, Bath & Body Works continued to pose a threat to The Body Shop in both the United States and England, where it opened its first shop in the fall of 1994.

In 1994, L’Oréal entered the natural-style product market with its Planet Ushuaia line of deodorants, shampoos, and other personal care products. Like Bath & Body Works, L’Oréal copied the bright coloring of The Body Shop packaging and emphasized exotic ingredients. The same year, Procter & Gamble, with its vast resources, also entered the fray with their purchase of Ellen Betrix, a German company that had introduced Essentials natural cosmetics early in 1994.

The Body Shop’s phenomenal growth slowed somewhat in 1992. Fiscal 1993 profits (the company’s year ends February 28) were down 15 percent from the previous year, from £25.2 million to £21.5 million. Roddick criticized dissatisfied investors in Working Woman as “speculators who make their money off buying and selling. That is where the greed factor comes in. They expected us to make £23 million. Tough—we made £21 million.” However, the company seemed to recover some of its momentum the following year: pretax profits for the first half of fiscal 1994 were £10 million, a 20 percent increase over the same period in 1993.

The Body Shop faced other problems in the first half of the 1990s, as its reputation as a socially responsible company was repeatedly challenged. The first attack came from a British television program entitled “Body Search,” which accused The Body Shop of misleading customers with its “Against Animal Testing” product label. The Body Shop’s policy, designed as an incentive for companies to eliminate their animal testing, rejected ingredients that had been tested on animals in the previous five years. The television program, however, charged the company with using ingredients that had been tested on animals. The Body Shop brought suit in the summer of 1993 and won £276,000 in damages.

Although the company won their suit, the battle had focused attention on The Body Shop’s ethical record and inspired additional criticism. Cosmetics competitor Goodebodies tried to distinguish themselves by pointing out that, unlike The Body Shop, they did not use any animal by-products, such as tallow from pigs to make soap. The Body Shop responded, however, that it only used by-products from the meat industry and that it provided customers with information in the store if they wished to choose products with no animal ingredients.

Questions about the company’s integrity continued in the summer of 1994, when it was reported that the U.S. Federal Trade Commission was investigating The Body Shop for exaggerated claims of helping developing nations and for alleged pollution from a New Jersey warehouse. The investigation, combined with the company’s slowing growth, led Franklin Research & Development, an investment fund that dealt only with socially responsible companies, to sell 50,000 shares. That in turn led to a stock price drop of 11 percent in the next two weeks. Although the stock price stabilized soon thereafter, the company remained in a defensive position.

In the mid-1990s, the company showed signs of changing some of its long-standing policies, such as its refusal to advertise. From 1976 until 1994, The Body Shop used window displays, catalogs, and point of purchase product descriptions to attract and inform customers. In 1994, however, Anita Roddick appeared in an American Express commercial, talking about the company’s Trade Not Aid program. Later that year, the company placed its first “advertorial” in the magazine Marie Claire. This eight-page spread offered a discussion of the Body Shop Book on personal care techniques and products. In addition, the company was considering further “advertorials” or television “documercials” for the Trade Not Aid products, which would focus on the stories and people behind the products. Angela Bawtree, The Body Shop’s head of investor relations, explained the company’s apparent change of attitude toward advertising in an October 1994 Advertising Age: “It would be wrong for people to think we have some kind of moral problem with using advertising. But using glamorous images or miracle cure claims—those kinds of things you won’t see us doing.” As of late 1994, the company had no plans to hire an advertising agency.

In the mid-1990s, the company increased its focus on international expansion. Same-store sales in the United Kingdom, The Body Shop’s most mature market, declined six percent in fiscal 1993 and were stagnant in fiscal 1994. New international stores seemed the key to continued growth, and Gordon Roddick specifically targeted Germany, France, and Japan for expansion. In early 1994, Germany had 39 stores and Japan had 17, and Roddick believed that each of these countries could support 200 stores. In addition, The Body Shop opened its first stores in Mexico in 1993.

“We think the limit for the number of stores we can have globally is more than 3,000,” Gordon Roddick said to Working Woman in 1994. He also commented that “in three years we will see the company’s worth hit $1 billion.” This statement was supported by a 1994 report from Nat West Securities, which expressed “confidence that the international growth potential (over 2,000 stores in year 2,000) cannot only be realized, but also translated into healthy profits.”

Further Reading

Colin, Jennifer, “Survival of the Fittest,” Working Woman, February 1994, pp. 28-31, 68-69, 73.

Jacob, Rahul, “What Selling Will Be Like in the ’90s,” Fortune, January 13, 1992, pp. 63-64.

Siler, Charles, “Body Shop Marches to Its Own Drummer,” Advertising Age, October 10, 1994, p. 4.

Zinn, Laura, “Whales, Human Rights, Rain Forests—And the Heady Smell of Profits,” Business Week, July 15, 1991, pp. 114-15.

—Susan Windisch Brown

The Body Shop International PLC

Watersmead
Littlehampton
West Sussex, BN17 6LS
United Kingdom
Telephone: 44 1903 731500
Fax: 44 1903 726250
E-mail: [email protected]
Web site: www.the-body-shop.com

RUBY CAMPAIGN

OVERVIEW

In 1976, when the cosmetics industry was making exaggerated claims about scientific advancements in skin care, Anita Roddick opened a store, The Body Shop, in a seaside town on the southern coast of England. Her product line, based on natural ingredients and age-old beauty secrets from Polynesia and the Amazon rainforest, was a vast departure from the patented laboratory-created, animal-tested products that promised to stop the aging process, eradicate dark circles under the eyes, and otherwise correct a woman's flaws. The products were plainly packaged, and they were not tested on animals and not promoted through extravagant advertising campaigns. In 1988 Roddick opened her first store in the United States, and by that time—through various social initiatives such as the "Stop the Burn" campaign to save the Brazilian rainforest (the source of many of the company's natural ingredients) and strong support of employee volunteerism—The Body Shop name had become synonymous with social activism and global preservation worldwide. The company had also become immensely profitable.

By the mid-1990s, however, The Body Shop faced growing competition, forcing it to begin its first major advertising initiative, the most prominent part of which was the "Ruby" campaign. The campaign was personified by Ruby, a doll with Rubenesque proportions who was perched on an antique couch and who looked quite pleased with herself and her plump frame. Randy Williamson, a spokesperson for The Body Shop, said, "Ruby is the fruit of our long-established practice of challenging the way the cosmetic industry talks to women. The Ruby campaign is designed to promote the idea that The Body Shop creates products designed to enhance features, moisturize, cleanse, and polish, not to correct 'flaws.' The Body Shop philosophy is that there is real beauty in everyone. We are not claiming that our products perform miracles."

The Ruby doll, a computer-generated image, appeared on posters, stickers, and T-shirts and in magazine ads. The campaign was launched in the United States in September 1997 following its successful introduction in several other countries.

HISTORICAL CONTEXT

The Body Shop was founded in 1976 in Brighton, England. From her original shop, which offered a line of 25 different lotions, creams, and oils, Roddick became the first successful marketer of body care products that combined natural ingredients with ecologically-benign manufacturing processes. Her company's refusal to test products on animals, along with an insistence on nonexploitative labor practices among suppliers around the world, appealed especially to upscale, mainly middle-class women, who were and have continued to be the company's primary market.

Part of the secret of The Body Shop's early success was that it had created a market niche for itself. The company was not directly competing against the traditional cosmetics companies, which marketed their products as fashion accessories designed to cover up flaws and make women look more like the fashion models who appeared in their lavish ads. Instead, The Body Shop offered a line of products that promised benefits other than appearance—healthier skin, for instance—rather than simply a better-looking complexion.

During the 1980s, when The Body Shop dominated the niche it had created, it avoided the kinds of traditional marketing used by the more fashion-driven cosmetics companies. This "antimarketing" strategy defied conventional wisdom in several important ways: the company had no advertising agency, it did not hire fashion photographers to photograph beautiful women wearing its products, and it did not advertise in the usual women's magazines. Instead, it relied on in-store promotions, including posters and educational materials that targeted its own customers, who then passed the word to their friends. This word-of-mouth approach, often regarded as the most effective form of marketing thanks to its built-in credibility factor, was augmented by a huge amount of favorable publicity generated largely by Roddick herself.

Roddick was outspoken in her views on environmentalism and social justice, and in the 1980s her beliefs ran against the prevailing political and social climate in a way that appealed to her target market. One of the company's best-known stands was its hard-line opposition to animal testing for cosmetics. It also instituted a Community Trade Programme, which attempted to find the company's natural ingredients from grassroots cooperatives and other community-based groups, thus helping to ensure that the profits went to people in need rather than to exploitative subcontractors. The Eastern European Relief Drive, designed to fund orphanages in Romania, and the Brazilian Healthcare Project, which provided care for 28 villages in the Amazon, were other company projects having little to do with cosmetics and everything to do with building a positive image for its socially conscious customers.

These initiatives generated an ongoing stream of favorable press attention, and The Body Shop, along with the American ice cream maker Ben and Jerry's, was hailed as a new breed of green, or environmentally conscious, business. As sales boomed, even the conservative financial markets approved of The Body Shop's impressive profit picture, and a public stock offering in 1984 was successful. An expansion campaign followed. In 1988 the company entered the U.S. market by opening a store in New York City, and by 1997 the company boasted 1,500 stores, including franchises, in 47 countries. Antimarketing seemed to be smart marketing, at least as far as The Body Shop was concerned.

TARGET MARKET

With its emphasis on natural ingredients and ethical processes, The Body Shop made it clear from the beginning that it was creating products for women who cared not only about their health and appearance but also about the environment. The company's success, in fact, was built on its ability to blend a product line with an environmentally conscious philosophy, which was particularly attractive to the generation of women who grew up in the 1960s and '70s. These women saw the Body Shop as an ethical alternative to the beauty-at-any-price stance of the more fashion-driven cosmetics companies. But it was also an emotional appeal, one that promised customers that in buying its products they were doing something good for the planet. In its early years The Body Shop's customers tended to be young middle-class women who could afford the extra expense that high-quality natural ingredients often entailed but who also bridled at the high prices attached to designer cosmetics. Over the years, as these early customers aged, many retained their "global" sensibilities, and The Body Shop continued to be a reliable source of products they could believe in.

Beauty in the traditional sense as portrayed by other cosmetics companies was never a concern either in The Body Shop's products or in its marketing. Thus, the "Ruby" campaign, which questioned the ideal of a thin body for every woman, was consistent with the company's long-standing principles. The campaign was also in line with another of the company's beliefs—truth in advertising—which had strong appeal to its target market. If The Body Shop was not going to make exaggerated claims for its products, it certainly was not going to pretend that every woman could, or should, try to look like the extremely thin models that filled women's magazines.

COMPETITION

By the mid-1990s The Body Shop's once invincible hold on its market began to loosen. Competitors, including The Limited's Bath & Body Works, Crabtree & Evelyn, and Aveda, had launched their own lines of natural cosmetics, often through their own chains of stores. The resulting glut precipitated a market shakeout in which smaller, undercapitalized companies began to be forced out of business, and even the larger companies faced flattening growth curves.

The Body Shop found that, especially in the United States, its antimarketing style was having difficulty in the face of much more aggressive efforts by its competitors. American consumers, long accustomed to being actively campaigned for by advertisers, were less loyal to brands than the English and were more apt to be tempted by new products, new brands, and new packaging. Gift giving—for Mother's Day, Valentine's Day, and other holidays—was important in the United States, but The Body Shop's European management was late in realizing how great an impact this could have. By 1995 its profits from U.S. sales were falling, and as share prices responded to the disappointing profit figures, The Body Shop's relationship with the financial community also became strained. In 1996, its 20th anniversary, the company faced a crisis that seemed to demand a new marketing strategy.

MARKETING STRATEGY

In 1995 The Body Shop responded to its eroding market share by doubling its U.K. marketing budget while dramatically slowing the rate at which it was opening new stores in the United States. It also broke tradition by creating an in-house marketing department, something it had always resisted, and it named a marketing director and added marketing managers for individual product lines. In 1994 The Body Shop had hired the London office of the American advertising agency Chiat/Day (since renamed St. Lukes), though only in a "marketing consultancy" role, and by the following year the company was poised to regroup its marketing efforts.

At the same time The Body Shop was careful to back up its high, marketing profile with a series of initiatives aimed at convincing customers that the changes were more than just skin deep. These included a complete packaging redesign, a new hairstyling line, relaunches of the hair care and skin care lines, and several new fragrances. The company also announced a new direct home-shopping service and took its message directly to the American market with a 300-square-foot show truck that toured selected cities with product demonstrations. And for the first time the company began to entertain the possibility of direct advertising at the local level in the American market. Ads began to appear, though not in any orchestrated media campaign and mostly in smaller alternative publications such as Mother Jones.

With these initiatives starting to take effect throughout 1996, the company was planning its boldest marketing effort yet, the "Ruby" campaign. Part of a broader "Love Your Body" campaign, the "Ruby" campaign in the United States began with in-store posters and an ad in Self magazine. In keeping with The Body Shop's iconoclastic tradition, the company positioned itself squarely against an idea that had long dominated the fashion industry, the notion that there was an ideal beauty to which all women should aspire and that the ideal was decided by experts in Paris, New York, and London. The "Ruby" ad showed a redheaded, decidedly Rubenesque nude doll (hence the name Ruby) lounging luxuriously on a green velvet sofa. The headline had a blunt message: "There are 3 billion women who don't look like supermodels and only 8 who do."

NOT FOR WOMEN ONLY

In the 1990s The Body Shop attempted to extended its market to include men. Although they were slow to accept "cosmetics," men, especially those who had grown up in the 1960s and 1970s, were open to shaving lotions and suntan oils. As a result, The Body Shop introduced lines of men's lotions and oils made with natural and ethically produced ingredients.

In June 1997, prior to the "Ruby" campaign, The Body Shop displayed in its stores a poster that depicted a man with a bottle protruding from his bathing suit. The poster was advertising The Body Shop's self-tanning lotion. The poster offended some people, and in North Carolina there were protests. Unwilling to be pressured by what it perceived to be a double standard in sexual stereotyping, the company refused to remove the poster from its stores.

The concept was created in-house by a team that included Roddick; her husband Gordon, who was the company's chairman; and Marina Galanti, the former international communications and media director for Benetton Group, the Italian clothing company known for its ads featuring social issues rather than clothes. In a U.S. interview with National Public Radio, Roddick described the setting of Ruby's creation: "The girls in [British fashion magazines] are exactly what the media wants … they have no bodies, they're too thin. They are passive. They are, you know, beaten up. So, we—three of us in my office—we came up with this broadsheet which was called 'Full Voice.' It was like a pamphlet on the body and self-esteem." While working on the pamphlet, they found a computer image of a doll they altered, blowing it up to an ever greater size until it became the Ruby of the campaign. The Body Shop placed the image in 400,000 newspaper inserts, and soon afterward the campaign took off.

It was notable that, like the Benetton campaigns, The Body Shop's new ad did not feature any products. It was satisfied to identify itself with a movement already well under way that held that a woman's sense of well-being, self-esteem, and beauty should arise from qualities such as health and happiness rather than from external ideals. A company statement at the time proclaimed, "As the personification of The Body Shop's commitment to self-esteem, Ruby is more than just an image; she's a state of mind—strong, independent and informed. She doesn't weigh her self-esteem against false standards. She loves her body and is true to herself."

Although this was an unusual message for a line of skin and hair care products, it came at a time when other companies were also making ads that questioned conventional images of beauty. In print ads for Freeman Cosmetics, for example, a woman was shown with her back to the camera. The caption asked, "How much do you need to see to know I'm beautiful?" An ad for Dove soap declared that its bar was "for the beauty that's already there." Even more blunt was a Canadian ad for Kellogg's Special K cereal. Featuring a very thin model, the ad asked, "If this is beauty, there's something wrong with the eye of the beholder." But among the advertising campaigns in this trend, the "Ruby" ad was among the most provocative because it not only questioned the ideal of an exceptionally thin body—which most women could not attain—but also promoted a nude "size 18" doll as an example of beauty.

Concurrent with the ad, The Body Shop produced Ruby stickers, postcards, and refrigerator magnets for sale in its stores and installed 40- by 60-foot banners of the doll in 289 selected stores in the United States. Though by far the most noted part of the company's new advertising initiative, "Ruby" was actually just one of a trilogy of issues-oriented campaigns that focused on body image, domestic violence, and aging. For the campaign on domestic violence, launched in October 1997, The Body Shop sold special whistles designed to call attention to what it had identified as another hot-button issue for women. The third issue, aging, with its natural tie-in to wrinkles and skin care, came closest to being a traditional product supporter.

These campaigns were supported by Full Voice, which, beginning as a broadsheet, was transformed into a company magazine. Produced in-house, the magazine was used to promote all of the company's ongoing environmental and social causes. Its reasoned explanations of emotionally resonant issues fit well within the company's overall strategy of appealing to the whole woman rather than just her body.

OUTCOME

The "Ruby" ad generated immediate attention both in the press and among the public. The New York Times and Good Morning America both ran stories, and the advertising press took note. Simon Green, creative partner at the advertising agency BDDH in London, wrote approvingly of the ad for the Independent: "Most women know that they are not supermodels, but there is no advertising out there that recognizes them for who they are without being condescending or patronising … I'm not even in the target audience, but even as a man it makes me have more empathy for The Body Shop." During the campaign the company reported a boost in sales in some of its markets, including a 12 percent sales increase in Australia and Switzerland.

Not everyone, though, was fond of the campaign. National Public Radio, which interviewed pedestrians passing by a Ruby poster in New York City, found mixed reactions. One person said, "I think it's too bitterly honest. It looks kind of degrading." Another pedestrian remarked, "It's representative, but they could have made her look more appealing … put a slip or something on her." Still another said, "It looks like a Barbie Doll that went wrong." But others in the interview were impressed. "It makes you feel better about yourself," a pedestrian said, reflecting one of the main goals of the campaign. The Body Shop, in fact, received thousands of calls and letters from women expressing gratitude for Ruby's realistic portrayal of beauty—gratitude, the company hoped, that would translate into increased sales for its products. But Sean Larkins, corporate public relations manager for The Body Shop, said, "We don't see profits as the be-all and end-all. We feel that business has a social responsibility to the self-esteem and well-being of its customers."

FURTHER READING

"The Body Shop Gets Real with Ruby." Household & Personal Products Industry, September 1997, p. 10.

Davis, Donald A. "Glut Indeed." Drug & Cosmetic Industry, November 1996, p. 22.

Elliott, Stuart. "The Body Shop's Campaign Offers Reality, Not Miracles." New York Times, August 26, 1997, p. C8.

Fallon, James. "Body Shop's American Agenda." Women's Wear Daily, May 12, 1995, p. S10.

Lee, Julian, and Patrick Barrett. "Body in Need of Reshaping." Marketing, April 4, 1996, p. 10.

Walker, Sophie. "Body Shop Barbie Ad Spawns New Campaign." Financial Express, September 4, 1997.

                                          Patrick Hutchins

The Body Shop International PLC

founded: 1976

Contact Information:

headquarters: watersmead littlehampton west sussex, bn17 6ls united kingdom phone: 44-1-90-373-1500 fax: 44-1-90-372-6250 url: http://www.the-body-shop.com

OVERVIEW

The Body Shop is a manufacturer and retailer of natural cosmetics and health care products. However, the company embodies two distinct philosophies. It is a capitalist enterprise, but one with an extremely well articulated plan to strike out for worthy causes, whether that cause is animal testing or acid rain. Time captured the essence of The Body Shop, stating that, "Visiting a Body Shop is like walking into the headquarters of a political cabal-albeit one scented with dewberry perfume. There are slogans and messages scattered among the fruit-scented soaps and peppermint foot lotions. Exhortations to save the whales and fight for human rights shout from store windows, countertops, and recycled shopping bags. Even Body Shop trucks are employed as rolling billboards for pithy slogans."

COMPANY FINANCES

The Body Shop went public in 1984. The first day of trading, the value per share increased from $1.30 to $2.30. This meant that first day the company became valued at more than $11 million and the net worth of Anita and Gordon Roddick increased to $2 million. In 1997, the company's per share price ranged from an average low of $8 3/4 per share to average high of $15 7/8 per share, and yielded a .56 per share dividend. As of April 27, 1998, the per share price was $10.25 per share.

Over the past three years, The Body Shop International's worldwide sales have increased at a conservative rate, from 500.1 million pounds in 1995 to 577.5 million pounds in 1996, and up to $622.5 million pounds in 1997. These sales figures represented 8-percent growth for the company from 1996 to 1997. Net assets rose slightly more slowly, from 110.6 million pounds in 1995 to 122.6 million pounds in 1996, and reaching 130.1 million pounds in 1997.

The company's earnings per share were slightly more volatile, dropping from 11.5 pence (18.6 cents) in 1995 to 9.8 pence (15.8 cents) in 1996. Earnings bounced back almost to the 1995 level in 1996, reaching 11.4 pence per share. Dividends paid per share over the same period were 2.4 pence per share in 1995, 3.4 pence in 1996, and 4.7 pence in 1997.

ANALYSTS' OPINIONS

"It's going to take years to tell whether the new marketing and sales strategies can turn around the company's fortunes," stated a 1996 Fortune article, "and to know to what extent Roddick will let her professional managers run the business at the expense of her beloved environmentalism. In the meantime, the fact that there's hardly a financial analyst who has much positive to say about the company's prospects suggests that, for now, investors should probably stick to buying the Body Shop's soap-but not its shares." In the past two years since that report, The Body Shop has continued to be a rather risky investment, performing at times so shakily as to generate rumors that Anita Roddick was going to buy back the company. Due to poor performance, The Body Shop has already purchased 25 stores from franchisees. In February of 1998, Steen Kanter, head of U.S. operations resigned, leading to speculation that The Body Shop International would sell off the stores. Adding weight to the rumor, according to an article in Investor's Chronicle, was the fact that the company's stock price has dropped to its lowest levels in almost ten years. In May of 1998, it was announced that not only would Anita Roddick not be buying back her company, but she was stepping down as CEO. Patrick Gournay from the French food company Groupe Danone was appointed as her replacement, and Mrs. Roddick will act as co-chairman along with her husband. It was yet to be determined what sort of effect this would have on The Body Shop.

HISTORY

Anita Roddick, founder of the company with her husband, Gordon, was born to Italian immigrants to the United Kingdom. She trained to be a teacher, but, after getting kicked out of a kibbutz in Israel, decided instead to travel the world. It was on a visit home in 1968 that she met Gordon Roddick.

In her travels, Roddick saw women using all sorts of natural potions for cleansing and self-care. She thought a storefront shop offering natural self-care products would do well in her funky neighborhood, so she and Gordon took out a 4,000-pound bank loan to open the first Body Shop. At one point, Gordon Roddick went off on a horse trek in South America. Upon his return, he found not one, but two shops and an ever-increasing demand for the products. When Roddick wanted to open a second store in Chichester, the bank refused her loan request for $8,000. A friend introduced her to a local businessman. Ian McGlinn, who has been billed by Roddick as the ultimate silent partner, was prepared to invest the full amount in return for a half share in the business. Since Gordon was unable to respond with his advice in a timely fashion, Anita made the deal. That $8,000-investment has since grown to more than $145 million.

FAST FACTS: About The Body Shop International PLC

Ownership: The Body Shop is a publicly owned company traded OTC (over-the-counter).

Ticker symbol: BDSPY

Officers: Anita L. Roddick, Co-founder & Chmn., 55; T. Gordon Roddick, Co-founder & Chmn. 55; Patrick Gournay, CEO; Stuart A. Rose, Managing Director, 47

Employees: 2,426

Chief Competitors: As a shop specializing in healthy and/or organic cosmetics and personal care products, The Body Shop's most visible competitors in the United States include: Bath & Body Works, owned by The Limited and Origins, owned by Estee Lauder. Foreign competitors include: Applewoods and Red Earth. Near competitors include those in the general cosmetics and personal care industry, such as Amway; Avon; L'oreal; and Mary Kay.

The Body Shop has aggressively pursued foreign expansion. However, the United States, the company's second largest market, has proved particularly difficult. The company first opened a storefront in 1988 in Manhattan. Among its travails were continued controversy over store posters, which continually surfaced through 1997, and the United States' litigious nature, which Roddick says has halted some of her ideas from coming to fruition. However, despite The Body Shop's difficulties, American entrepreneurs seemed to think she was on to a good thing: in 1993 Roddick claimed there were at least 33 copy cat stores in the United States.

A rocky year in 1992 frustrated investors more than the Roddicks. Stockholders dumped shares after a bad earnings report and price per share slid from $5.20 to $2.70. That alone put the company atop the Financial Times list of Top 10 corporate losers of 1992. In 1996, the share price was reported as having dropped 65 percent—from $6.55 in 1992 to an estimated $2.29 in early 1996. Yet, in 1993 People hailed Roddick as "one of the five richest women in England." That year she had more than 950 shops in 42 countries, over 130 of them in the United States.

More than 20 years after its birth, The Body Shop had more than 1,600 retail stores worldwide (as of May, 1998). In 1996 the company was hailed as "Britain's most successful international retail business." Sales in 47 countries in 1997 combined for a total of 622.5 million pounds in retail sales. Of the company's shops, 39 percent are located in the United Kingdom, and 27 percent are located in the United States.

Unfortunately, not all aspects of the company's performance have done so well. Despite booming sales in Asia, in the critical U.S. market it actually lost money. Rather than working on increasing sales in existing shops, the company pursued a rapid expansion policy, opening stores in top malls in the United States over the past two years with hopes of gaining a foothold against the fast-expanding Bath & Body Works. It has not been working. U.S. operations lost $3.7 million in the first six months of fiscal 1996 on sales of $46 million. Same-store sales fell by 8 percent. Bath & Body Works, by contrast, opened 412 stores in five years and is showing a profit. Unfortunately, since then The Body Shop's profits have slipped an additional 2.6 million pounds.

The Body Shop, however, is a scrappy, survivalist retailer. As Management Today observed, the company "has survived two recessions, a fluctuating exchange rate, a bout of rapid expansion and a host of those business-of-the-year-style awards that are guaranteed to put the hex on any firm." In that same article, speculation was made that Anita and Gordon Roddick might buy back The Body Shop as a result of dropping share price, poor U.S. performance, and a general discontent with the way the company must operate. However, Anita Roddick stepped down as CEO in mid-1998, and her corporate activities will be limited to her duties as co-chairman of the company. It will be left to the new CEO, Patrick Gournay to try to reverse the company's downward slide.

STRATEGY

The Body Shop's primary strategy is clearly defined in the first sentence of its mission statement—"to dedicate our business to the pursuit of social and environmental change." Whether fighting animal testing, environmental pollution, or promoting the rights of indigenous peoples, the company publicizes these activities, not its products. Slogans and messages touting these and other causes are the primary focus of in-store decor and The Body Shop's revamped web site. Basic information about products is available, but Anita Roddick relies on her personal publicity and that surrounding the company's adopted causes to promote the company.

Recently, however, minimal attempts have been made at adopting some sort of marketing plan. In fall of 1997, The Body Shop launched an ad campaign featuring "Ruby," a more realistic model the company hoped would promote diverse images of beauty and combat use of the stereotypical model. And due to declining sales in the United States, U.S. stores were redesigned with new colors and store layouts. Other store improvements included brighter lighting, a more coordinated decor, and better use of in-store promotional materials (such as signs). Finally, in 1997 The Body Shop created a "brand council" to handle strategic brand development and global marketing. They also hired an agency to handle U.K. advertising and launched the first major advertising campaign in the company's history.

CHRONOLOGY: Key Dates for The Body Shop International PLC

1976:

Anita Roddick opens a stand-alone shop of natural-ingredient cosmetics

1977:

Roddick begins licensing franchises

1984:

The Body Shop goes public

1988:

The first stores open in the United States

1990:

Opportunities to franchise in the United States prompts more than 2,000 applicants

1996:

The Body Shop is hailed as "Britain's most successful retail business"

1998:

Anita Roddick steps down as CEO

CURRENT TRENDS

In March of 1998 The Body Shop announced the release of its new hemp line. The line's initial five products, designed to combat dry skin, are Hemp Elbow Grease, Hemp Soap, Hemp 3 in 1, Hemp Lip Conditioner, and Hemp Hand Protector. In a press release, Anita Roddick described hemp as "a traditional natural ingredient with a fantastic history." She claims her new line will not only launch a new product line for the company, but help educate others and rehabilitate the market for industrial grade hemp.

PRODUCTS

The Body Shop's ever-changing line of products includes soaps, perfumes, hair care products, potions for expectant/new mothers, men's personal care items, skin care items, home fragrances, and cosmetics. Specialty areas include: aromatherapy products (Relaxing Body Lotion), products for hands and feet (Peppermint Foot Lotion), and its sensitive skin care line (includes items such as sensitive skin-lip balm, blemish stick, freshener, and body wash).

CORPORATE CITIZENSHIP

Is The Body Shop actually a corporate good citizen or simply looking to generate publicity? For some observers and customers, there's an extremely thin line between the two. More often than not, Roddick doesn't care to tow any one line, save her own agenda, which is carried out as corporate policy. Roddick has championed a host of high-profile causes—a boycott of Shell and support for organizations such as Greenpeace and Friends of The Earth, to name a couple. In the last few years, however, Roddick has defined very specific goals for the company. An example of one of The Body Shop's goals, taken from the 1997 Values Report, reads "Our future planning will be balanced between the environmental implications of our business and economics. We will devote increasing efforts to establishing nonexploitive trading arrangements with communities in less developed countries as a means to protecting their cultures and their environments." The company has invested in "Trade, Not Aid" enterprises in the United Kingdom and abroad, where, "they search the world for indigenous people willing to squeeze oil from Brazil nuts, make paper from water hyacinths, weave back scrubbers out of cactus fiber-anything that could provide the natives with income and the Body Shop with sales." These include a soap factory in Easterhouse, Glasgow, which was established in a high unemployment region in 1988. Roddick has also funded a Boys Town for orphans in India and assisted in funding the rebuilding of Romanian orphanages.

Roddick claims consumers want to feel good about the products they purchase and will pay more if they perceive that money is going to a good cause. She backed that ideology further when she and more than 30 other firms, including Ben & Jerry's and Stride Rite shoes, created a group called Businesses for Social Responsibility, which Time called "a politically correct alternative to the Chamber of Commerce." Ultimately, Roddick states in the '97 Values Report that she hopes to ". . . forge a new and more sustainable ethic for business." She wants The Body Shop to establish precedents that other companies can follow and serve as an educational resource on environmental issues.

A 1996 Management Today article offered the following observation. "It seems far more likely that she simply wants to put Body Shop money behind causes she personally believes in and is not the slightest bit interested in whether investors think they are getting value or not. The idea that profit should be the only corporate goal is, she says, just bunkum. And many would support her on that. 'Who wants another bloody faceless cosmetics company?' she asks. 'If I thought I had worked 20 years in this company and it would end up an Estee Lauder, I would pack up and go home today.' Quite right."

GLOBAL PRESENCE

Based in the United Kingdom, The Body Shop counts the United States as a foreign market. With extensive franchises around the globe, as well as suppliers around the world, in 1993 it was written that "the biggest question about Roddick's future now seems to be what she'll do when she runs out of countries." That same year The Body Shop expanded into Mexico, with plans to open retail stores in Cuba and Vietnam. Roddick and company generally look in each country or area for native products to be incorporated into the product line prior to opening retail stores in a country. Roddick projected that there would ultimately be between 500 to 1,000 Body Shops in the Americas, primarily in the United States (as of late 1997, there were 287). After the United Kingdom and United States, The Body Shop's third largest market is in Japan, whose imported natural cosmetics market is rapidly expanding and where The Body Shop is the major brand. There were 105 Body Shop outlets in Japan by fall of 1997.

EMPLOYMENT

The Body Shop has made efforts to improve employee development programs. In June 1997, the company broadened its pension and investment offerings to employees. They have modeled specific career paths and have adopted a strategy of diversity. Further improvements included more flexibility in working hours, a commitment to hiring more women in senior management positions, and employing more people from minority backgrounds and disabled persons. The company offers training for its employees at a center in London. Anyone in the company, including franchisees and their employees, can attend at no cost. According to one account, the emphasis is on the products themselves rather than selling the products. By the end of 1998, one of Roddick's goals was to "have implemented equality of opportunity monitoring systems that reflect best practices in relevant industries."

Roddick is the company's culture and its conscience. It is she who sets the tone for the entire company, including its political agenda, which some employees have, according to one 1993 article in People have found disagreeable. When Roddick announced the Body Shop's collective opposition to the Gulf War in 1991, she big-footed a protest within the company. Indeed, when asked if there's room for political diversity at the Body Shop, Roddick replies, "Not much. If you don't want to be part of this kind of social activism, you can work for Coors beer."

SOURCES OF INFORMATION

Bibliography

"body shop chief to step down." the new york times, 13 may 1998.

brock, pope. "anita roddick." people weekly, 10 may 1993.

davidson, andrew. "anita roddick." management today, march 1996.

elmer-dewitt, philip. "anita the agitator." time, 25 january 1993.

fallon, james. "body shop's operating deficit grows." wwd, 9 may 1997.

lee, julian. "body shop axes top global role." marketing, 31 july 1997.

masako fukuda. "cosmetics put on a more natural face." nikkei weekly, 15 september 1997.

roell, sophie. "us headache as boss quits." investors chronicle, 13 february 1998.

wallace, charles p. "can the body shop shape up?" fortune, 15 april 1996.

For an annual report:

on the internet at: http://www.the-body-shop.com/values/values97.pdfor write: the body shop, sharon sims, watersmead littlehampton, west sussex bn176ls

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. the body shop's primary sics are:

2844 perfumes, cosmetics, and other toilet preparations

5999 miscellaneous retail stores, nec