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Case Details

Case Code: BECG148
Case Length: 21 Pages 
Period: 2006-2017    
Pub Date: 2017
Teaching Note: Available
Price:Rs.500
Organization : The Body Shop International Plc.
Industry : Cosmetics
Countries : UK; Europe; US; Global
Themes: Corporate Sustainability/ Corporate Social Responsibility 
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‘Enrich Not Exploit’: Can New CSR Strategy Help Body Shop Regain Glory?

This case was a Runner Up in the 2017 oikos Global Case Writing Competition (Corporate Sustainability track), organized by oikos International, Switzerland.
 
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EXCERPTS

TAKEOVER BY L’ORÉAL

 

On March 17, 2006, Body Shop announced that it had agreed to be taken over by French cosmetics giant L’Oréal in a £652 million (US$ 1.14 billion) deal. Commenting on the acquisition, Lindsay Owen-Jones, chairman and CEO of L’Oréal, said, “We have always had great respect for The Body Shop’s success and for the strong identity and values created by its outstanding founder, Dame Anita Roddick. A partnership between our companies makes perfect sense. Combining L’Oreal’s expertise and knowledge of international markets with The Body Shop’s distinct culture and values will benefit both companies.”

Post-acquisition, Body Shop continued to operate independently within the L'Oréal Group. The management team of Body Shop was retained and reported directly to the CEO of L'Oréal. Roddick continued to act as a consultant till she passed away in September 2007. ....

 
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BODY SHOP’S CORE VALUES

According to Davis, Roddick was ahead of her time in establishing Body Shop as an ethical beauty business. Speaking about this, Schwartz said, “The Body Shop courageously pioneered new ways of thinking, acting and speaking out as a company. Our ground-breaking campaigns were ahead of their time and changed laws on animal testing, domestic violence and human trafficking. We were the first in beauty to use community trade and we still have the strongest programme in the industry. We are small, but we lead.” ....
 

CRITICISM

Though Body Shop was considered the poster child of CSR, it began facing increased scrutiny from environmental groups of its activities and claims. Environmental watchdogs such as McSpotlight and Greenpeace UK accused Body Shop of exploiting consumers by championing various agendas, while not being any different from other corporate entities in its pursuit of profit. Business ethics expert Jon Entine (Entine) reported that the Charity Commission for England and Wales records did not show any charitable contributions from the company in its first 11 years of operation. In the subsequent years, its contribution to charity was less than 1.5% of pretax profits, which was the average contribution made by US corporates...
 

TIME FOR CHANGE

Since its acquisition by L’Oréal, Body Shop’s performance had been dismal as it struggled to post profits. In 2010, Body Shop’s net sales were £754 million, accounting for just 4% of L’Oréal’s net sales. According to some analysts, the beauty retailer had lost its edge as rivals jumped on the ethical products bandwagon and devoured its market share. Competitors such as Lush, The Body Deli, and Skin & Tonic made similar green claims and benefitted from the growing demand for natural-beauty products. As a result, Body Shop was languishing at a crossroads with a steady decline in sales, according to some analysts....
 

FORMULATING A NEW CSR STRATEGY

The work on the new CSR commitment began in 2013. Christopher Davis was promoted from head of campaigns to Director of International Corporate Responsibility and Campaigns at Body Shop. He was responsible for developing and overseeing the implementation of the company’s global corporate responsibility and campaign strategy. As the head of CSR, Davis wanted to maintain the legacy of founder Roddick. Nearly for two years (2013-2015), Davis and his team undertook a comprehensive review of Body Shop’s business across all areas and 67 countries. Their agenda was not looking at what competitors were doing or at the past performance of Body Shop, but instead refocusing the company to meet the challenges facing the planet and its people in a more planned way...
 

ENRICH NOT EXPLOIT

On February 2, 2016, Body Shop unveiled its new global CSR strategy. The new commitment, entitled ‘Enrich Not Exploit’, was aimed at making Body Shop the world’s most ethical and truly sustainable global business. As part of the new campaign, Body Shop had set several targets touching all areas of the business that it planned to achieve by 2020. Davis said the commitment was intended to make Body Shop the “innovative troublemaker” within the L’Oréal group. “This commitment is kind of a statement that The Body Shop is back and that this is the kind of company that we want to be, and that we can be. Our goal is to be different and to be what The Body Shop always has been, which is the agitator, the experimenter,” he said....
 

MARKETING THE NEW COMMITMENT

One of the biggest challenges for the management of Body Shop was to involve all 23,000 employees of the company across 65 countries in this new initiative. To make employees aware of the new commitment, the company created a teaser video and a full-length film outlining its ambitions and how each employee could contribute. Employees were also provided with booklets and factsheets to keep them informed and help them spread the word about the new strategy. Besides, the company organized workshops and conferences to ensure that employees and franchise holders were fully involved....
 

CAN BODY SHOP REGAIN ITS FORMER GLORY?

In the first quarter ended March 31, 2016, Body Shop reported sales of €200.1 million compared to €192.4 million in the corresponding quarter of 2015. It delivered growth of +2.1% like-for-like and +4.0% based on reported figures (see Exhibit IX). According to analysts, going forward, one of the biggest challenges for Body Shop would be tough competition from the ever-increasing numbers of sustainable brands in the cosmetic marketplace. However, Davis was positive that the renewed CSR strategy would help Body Shop scale new heights....
 

EXHIBITS

Exhibit I:Core Values of Body Shop
Exhibit II: Body Shop’s Fair Trade Guidelines
Exhibit III: Body Shop’s Ethical Trade Standards.
Exhibit IV:Retail Sales of Body Shop.
Exhibit V:Body Shops Quarterly Sales Growth (2010-2015).
Exhibit VI:Growth of L’Oréal vs Body Shop
Exhibit VII:Body Shop’s 7 long term Sustainability Goals (2016)
Exhibit VIII:‘Enrich Not Exploit’ Targets
Exhibit IX:L’Oréal’s Sales by Operational Division and Geographic Zone