Will The Body Shop shine now Aēsop is out of the picture?

Earlier this week, L'Oréal reached an agreement to acquire Aēsop, opening a new chapter of the luxury brand's growth story after 10 years under Natura & Co's stewardship.

Under the transaction, L'Oréal is set to acquire Aēsop for £1.81 billion ($2.525 billion). The deal is still subject to customary regulatory approvals and is expected to close in Q3 2023.

The sale of Aēsop will allow Natura & Co to strengthen and deleverage its balance sheet, freeing up resources to focus on its strategic priorities, notably the integration in Latin America, as well as the further optimisation of Avon International's footprint and the improvement of The Body Shop's business.

TheIndustry.beauty has taken an in-depth look at The Body Shop, with exclusive commentary from industry experts and analysts to gauge their opinions on its future, as well as what the sale may mean for the brand.

The Body Shop's first store in Brighton

Founded in 1976, The Body Shop began with founder Dame Anita Roddick and her belief that business could be a force for good. The brand first opened in a little green-painted shop in Brighton and has since grown into global business serving over 30 million customers worldwide.

In 2006, at the height of its success, The Body Shop was acquired by L'Oréal. However, over the next 11 years... it failed to thrive. The business was then acquired by its current owner Natura & Co in 2017, which has been implementing various initiatives, such as new packaging designs and refill schemes, to help return the brand to its former glory.

The Body Shop's new concept store at Merry Hill

As part of its strategy, The Body Shop developed a new concept for its stores to better promote the activist roots of founder Anita Roddick. Launching at various locations, including London's Oxford Street and Merry Hill, the updated design champions the brand's ethical and eco-friendly values and hopes to offer an improved customer experience for those shopping its range of skincare, bodycare and makeup.

The Body Shop's re-vamped makeup line

The brand has also re-launched its makeup category with a new collection of cruelty free, vegan and high-performance makeup. The range is designed to "inspire self expression and challenge the way we look at makeup". Powered by ingredients including hyaluronic acid, tea tree oil and vitamin C, the "new generation of makeup" also offers various skincare benefits.

Despite all of this, sales at The Body Shop have still been declining. Last month, Natura & Co reported a net loss of £139 million for the fourth quarter. The Body Shop's net revenue decreased 8.4% in constant currency and 20.6% in BRL to £235 million (BRL1.5 billion). Combined sales from stores, e-commerce and franchise also showed a low single digit decline.

This drop in sales also extends to the other quarters in the year, as net revenue was down 19.5% in Q3, 11.8% in Q2 and 16% in Q1, with The Body Shop attaching various reasons including post-lockdown channel rebalancing to its lack of growth. Meanwhile, Aēsop posted growth in every quarter.

With Aēsop exiting the Natura & Co family, the move should allow the group to better concentrate on The Body Shop, helping the heritage British brand to deliver growth and remain on the UK high street.

What do the experts think?

Millie Kendall OBE, CEO of The British Beauty Council:

I think how Natura & Co have owned and operated Aēsop is indicative of how they work with legacy brands, I think that have kept the integrity of the brand, invested in the right bits and driven brand awareness to great results.

As a British brand I have a soft spot for The Body Shop, I think they always seem to have the benefit of a new younger audience that might find that the Body Butter is their first girl to girl purchase. I hope that they realign Anita Roddick’s original vision and use that as a catalyst to further develop the brand. It’s rich in history, it pioneered an entire category years ahead of its current competition. Its credibility could be more vocal, and it would be nice to see it lead the way again.

Wizz Selvey, Consumer & retail trend analyst: 

The sale of Aēsop will naturally free up focus for the other brands in the Natura & Co. portfolio. Aēsop was cited as the most profitable brand in its portfolio, so I anticipate that the The Body Shop and Avon will now be a big focus for the group. Not only for increasing both brands profitability but also for developing greater customer engagement.

The Body Shop under Natura & Co’s ownership has started to regain its strength and heritage, something L’Oréal, the previous owners, struggled to achieve. The future consumer is more aligned than ever with the original values and mission of The Body Shop. The challenge is a huge proportion of consumers are too young to know this. They will need to focus on these values and bring them to the forefront of product development, customer experience and their communication to educate a new generation.

The Body Shop was revolutionary in the 1970s but there are now a number of brands with ethical values, and truly all brands must evolve their ethics to future-proof themselves. The question is, will reviving their heritage be enough for the brand, what else can they stand for to engage consumers?

Tracey Woodward, Board advisor, brand creator and beauty expert: 

I think it will be exciting to see how L'Oréal supports Aēsop's luxury store environment and the community that it has naturally acquired over the years. In terms of The Body Shop, this brand's development will also be interesting to watch. The Body Shop customers have changed so much over the years. Over the last decade, to me, the brand's focus has been value and convenience led. Now, it will really be able to focus on building a powerful, impactful and emphatic product offering that further benefits the farmers, consumers and the planet.