Body Shop SWOT Analysis Strategic Evaluation

SWOT Analysis Body Shop-Strategic Evaluation

Strategic Evaluation of Body Shop Plc

 Swot analysis of Body Shop

Strengths

·         Positive image – The Body Shop is a globally recognised and respected brand, with an ethical and environmental ethos, as well as the pioneer of natural ingredient products that are bought from fair trade sources.

·         Well-known brand – The Body Shop brand is well established, particularly in the UK, and attracts a high level of customer recognition and loyalty.

·         Good fit with consumer demands – the company’s products are in step with current consumer trends, both for natural and organic products and for ethically sourced ranges.

·         Accessing new consumer bases – the expansion of The Body Shop’s on-line retail channel and home sales concept will widen its reach in several markets, most notably the US.

·         Single brand focus – with only one brand in the portfolio, the company can focus all its resources on the development and support of it.

·         High level of control – by using its own distribution channels, the company has full control over product shelf planning, pricing and promotions. It also enables the company to communicate directly with the customers, achieving greater impact in its marketing activities and more effective ways of collecting and acting on consumer feedback.

·         No dependence on retailers – as it uses only its own distribution channels, the company has been protected from the growing powers of mass retailers, which have been increasingly pressurising competing brands both in terms of retail pricing and wholesale rates.

·         Franchise retrieval – the move to bring certain franchises into company ownership, as has happened for various reasons in Hong Kong, Canada and the Netherlands, among others, will allow greater brand control.

·         Low-risk franchise strategy – franchising the lion’s share of its stores protects the company from the direct risk of poor regional or local performance.

Weaknesses

·         Segmented promotional activity – marketing initiatives to date have tended to be predominantly, although not exclusively, campaign-based. This has enforced the notion of the company’s products as being only for a niche segment of the market, and partly failed to attract new customers, despite it having started re-branding in 2004.

·         Limited reach of retail outlets – the core store-based distribution of the brand may be a weakness, especially in more developed markets where high street sales are being cannibalised by supermarket channels. It also limits the customer base by excluding potential consumers living far from its stores.

·         Dependent on mature markets – The Body Shop depends too much on the highly competitive and mature regions of Western Europe, in particular the UK, and North America, which together account for nearly 70% of sales. Even in its other major market, Asia Pacific, the company’s largest market is Japan and it is absent from China. 

·         Lack of innovation in growth areas – the company’s absence from more fast-growing products such as nourishers/anti-agers and firming/anti-cellulite body care, categories that are largely driven on technology-based innovation, has a limiting effect on the company’s growth potential.

·         Damage to image from L’Oréal deal – the company has recently been purchased by L’Oréal, a company not well known for its ethical stance. This move has damaged the brand credibility of The Body Shop with many consumers.

Opportunities

·         Resources widened through L’Oréal – the recent takeover by cosmetics and toiletries giant L’Oréal is likely to provide the company with significant new resources including technology know-how, development facilities and financial support enabling The Body Shop to compete more effectively.

·         Potential to widen geographic footprint – with the backing of L’Oréal, the company should be able to expand its operations geographically to include high-growth areas such as China and Brazil, markets where L’Oréal is already well established.

·         Developing markets – the company’s entry into the Russian market in 2005 and, more recently, the Indian market in 2006, indicate that the company is taking steps to move into faster growing emerging countries, and reduce its dependence on mature markets such as the UK and the US.

·         Masstige positioning taps growing consumer base – a predicted consumer shift towards more premium products should benefit the company’s new “masstige” positioning in both developed and developing markets. 

·         Ethical stance continues to attract – the company’s ethical stance provides a strong channel for consumers interested in similar value-led activity, a segment of the consumer base that is growing in developed markets.

·         Non-store retail to further company’s reach – the planned strengthening of The Body Shop at Home direct selling arm and the Internet retail channel will help the company to widen the customer base and better exploit sales potential in developed markets.

·         Potential to increase sales through other retailers – increasing the company’s presence within large department stores would help to take The Body Shop out of its niche, and bring its products to a wider audience.

Threats

·         L'Oréal backlash – a boycott by loyal consumers, believing that The Body Shop has deserted its values by agreeing to being taken over by L’Oréal, might still affect the company and create a backlash should the action intensify.

·         Ethical positioning losing its uniqueness – another key threat to the company is the activities of other players. The Body Shop is an originator in terms of its sourcing and product development, but large manufacturers can follow at a distance, knowing their superior logistical networks will guarantee their success.

·         Large-scale competitors grab share – as a result, increasing market share from multinational players Procter & Gamble and Unilever continues to threaten The Body Shop’s share across all business segments.

·         Supply uncertainties – reliance on a number of small disadvantaged communities for the supply of certain ingredients and accessories puts the company at risk from regional crop failure, or market instability.

·         Cut-price competition – increased competition from low-cost producers, such as pharmacy chains Boots Co and Superdrug, and multiple retailers Safeway, Tesco and Sainsbury, threatens to make The Body Shop’s products seem increasingly expensive.

·         Dependence on single brand – as the company is totally reliant on The Body Shop brand, if for some reason it were to encounter problems and face negative publicity, the effects could be long-lasting and severe.

·         Vulnerable to market downturns – The Body Shop’s price positioning is at the upper end of the mass market, which makes it more likely to be affected by economic slowdowns. Owing to its level of dependence on Western Europe and North America, sales could fall when there is a slowdown in these markets. 

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