The Body Shop

Group Case Analysis: The Body Shop International PLC 2001

Situation

The Body Shop International PLC was one of the fastest growing manufacturer-retailers in the world during the early to mid-1990s. (“The Body Shop International PLC 2001,” p. 39; hereafter, “The Body Shop”) The company is best known for its natural-ingredient cosmetics and personal care products, with over 1,900 stores in 50 countries. (International Directory of Company Histories, 2003) In fact, The Body Shop has historically received more attention for its ethical stances, than for its products. Some of these ethical stances included: its refusal to use ingredients tested on animals, its business partnerships with developing countries, and its generous donations to the communities in which it operates in. (International Directory of Company Histories, 2003) The firm had an annual revenue growth rate of 20% in the early to middle 1990s, but by the late 1990s, the growth fell to around 8%. (The Body Shop, p.39) New retailers were bringing intense competition and The Body Shop failed to maintain its brand image by becoming a mass-market line. In 1998, Anita Roddick, founder of The Body Shop, stepped down as chief executive officer, after failing to reinvent the company. (The Body Shop, p.40)

Problems persisted despite hiring Patrick Gournay as the new CEO. “In fiscal year 2001, revenue grew 13%, but pretax profit declined 21%.” (The Body Shop, p.40) Nonetheless, Gournay felt confident that a newly implemented strategy of three principal objectives would enhance the company’s brand. The three principal objectives were: “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.” (The Body Shop, p.40) Anita Roddick and Patrick Gournay are looking for assistance in short- and long-term planning for The Body Shop, by...