Body Shop Brand: Repositioning to Target the 'Masstige' Segment and Impact of its Acquisition by L'Oréal

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"Our strategy is to move the brand to a 'masstige' positioning by developing innovative and credible products for our customers at affordable prices."

- Annual Report of The Body Shop International Plc, in 2004.

"We see substantial synergies going forward as L'Oréal benefits from Body Shop's retail expertise, as well as its positioning in the 'masstige' segment, an area that has been expanding in the US… while [also] bringing its expertise in production, product development and marketing to Body Shop."¹

- Eva Quiroga, an analyst at UBS,² in 2006.

"This brand has been damaged, perhaps terminally, by linking itself to the world's 'least responsible company'. As people abandon Body Shop for companies with higher 'ethical scores', rather than put money in Nestlé's³ coffers, it is ethical business, their suppliers and employees who are the winners."⁴

- Mike Brady, coordinator of Baby Milk Action,⁵ in 2006.

Strange Bedfellows?

On March 17, 2006, The Body Shop International Plc. (TBS), the ethical retailer of natural-based cosmetics, announced that it had agreed to be taken over by cosmetic and beauty care company L'Oréal SA6 (L'Oréal) in a cash deal worth £652 million (US$ 1.14 billion). The deal was a significant premium for the shareholders of TBS and a major windfall for its founder Dame Anita Roddick (Roddick). However, the announcement resulted in a wave of criticism against TBS and Roddick, who had often voiced her strong opinions against the practices followed by companies like L'Oréal.

Ever since its inception, TBS had been strongly associated with social activism and had been promoting values such as opposition to testing of cosmetics on animals, support for community trade, etc.

Body Shop Brand: Repositioning to Target the 'Masstige' Segment and Impact of its Acquisition by L'Oréal - Next Page>>

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1] "L'Oréal Looks for Some Body Shop Retail Brand Therapy," www.marketingweek.co.uk, October 12, 2006.

2] UBS is a global financial services organization that provides a range of services such as investment banking, underwriting, wealth management services, etc.

3] Nestlé SA, headquartered in Vevey, Switzerland, is the world's biggest food and beverage company. Some of Nestlé's business practices, especially the manner in which baby milk has been marketed in developing countries, are controversial.

4] Cahal Milmo, "Body Shop's Popularity Plunges after L'Oreal Sale," www.commondreams.org, April 10, 2006.

5] Baby Milk Action is a non-profit organization which aims to save lives and to end the avoidable suffering caused by inappropriate infant feeding. (Source: www.babymilkaction.org).

6] L'Oréal SA, headquartered in Clichy, France, is one of the world's leading cosmetics and beauty company. It portfolio includes various brands in the field of cosmetics, concentrating on hair color, skin care, sun protection, make-up, perfumes and hair care. In 2005, L'Oréal's revenue was €14.53 billion and it earned a net income of €1.639 billion. As of December 2005, it employed 52,080 people.

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