The Body Shop International

Exam 1

The Body Shop International PLC 2001

Kevin Peters

2/27/2013

The Body Shop International operates in the cosmetic industry. The industry is currently dominated by a small number of multinational corporations such as L'Oréal Group, The Procter & Gamble Company, Unilever, and and Estée Lauder Companies, Inc. The industry is focused on products and services with most of the product segmentation being made up of hair care, color, skin care, and bath & shower products. Since the industry is dominated by a small number of multinational corporations, there exists a monopolistically competitive market. There are high barriers to entry and a certain degree over pricing; this is an attractive industry, but difficult for new firms to enter. Starting in the late 1990s, a trend towards organic/mineral products arose and many of the companies in the industry began to reconstruct their brand's image to that of a more "greener" one.

In the late 1990s, the Body Shop International, previously one of the fastest growing manufacturing-retailers in the world, ran aground. The company had an annual revenue growth rate of 20% in the early to middle 1990s, but growth slowed to around 8% by the late 1990s. This can be attributed to the growing number of retailers that entered the cosmetics industry and shift in consumer trends. The Body Shop International placed much emphasis on its image. "Our business is about two things: social change and action, and skin care", said Anita Roddick, the founder of the company. However, The Body Shop International failed to maintain its brand image by becoming something of a mass-market line as it expanded into "almost every mall in America, as well as virtually every corner on Britain's shopping streets." Anita Roddick, founder of The Body Shop, stepped down as the CEO in 1998, after numerous unsuccessful attempts to reinvent the company. Patrick Gournay then became the new CEO and was confident that a newly implemented strategy would turn the company around. "To enhance The Body Shop Brand through a focused product strategy and increased investment in stores; to achieve operational efficiencies in our supply chain by reducing product and inventory costs; and to reinforce our stakeholder culture."