The times are not very rosy for the retail industry. Barely had businesses begun to take shape following the onslaught of covid when companies are having to deal with another economic crisis. A prolonged Russia-Ukraine war has disturbed the dynamics of demand and supply, shoring up inflation that is hurting household budgets. As global central banks hike interest rates and inflation bites, major economies are bracing for a potential recession.
The U.K.-headquartered beauty retailer The Body Shop’s chief executive David Boynton acknowledges that the scenario is ‘difficult’ and the company’s home market has been a challenging one to navigate for the last six months or so.
“Obviously, there’s the consequences of the war in Europe but what that’s been doing to inflation, energy costs..a general concern across the industry around is the consumer being squeezed,” Boynton tells in an interview to Fortune India.
In an October blog, the IMF said that Europe’s advanced economies will grow by just 0.6% next year while emerging economies (excluding Turkiye and conflict countries Belarus, Russia, Ukraine) will expand by 1.7%. That’s down by 0.7 and 1.1 percentage points respectively from July’s projections. “Next year, Europe’s output and income will be nearly half a trillion euros lower as compared to the IMF’s pre-war forecasts,” the IMF said in the blog.
Business for the company in several markets has not yet touched the pre-Covid levels. The Body Shop, which is recognised by most customers for its chain of sophisticated offline stores, has been impacted by the intermittent pandemic-induced global lockdowns. “During 2020, in some of the regions, north of 90% stores were closed,” says Boynton.
The economic scourge of the pandemic aside, it has ushered in a culture of work from home and initiated a broader shift to hybrid work culture, something that offline businesses didn’t see coming and is now grappling with. Already, the onslaught of e-commerce and consumers’ new found love for D2C brands must have made things quite tough. After all, the bulk of the business for traditional retailers comes from store footfalls.
“The thing that most retailers are wrestling with at the moment is office occupancy...we have been saying that in some of the Northern European markets as it gets colder, because of the impact of the energy costs, people are choosing to come to the office more. On an average, two to three days a week,” says Boynton who is focused on making the store visit more experiential and fun for consumers.
The good thing is shoppers coming to the stores are showing more propensity to buy, unlike in the past. “It’s not a chore to go to a Body Shop store and experience the product. It is fun and should be fun. And if it’s not, we need to improve that position. But that will be the way we will recruit most of the customers. For us, relationship building starts at stores,” says Boynton.
The market is tricky and business sure is not going to be a breeze but The Body Shop believes that its proposition of what it calls ‘accessible luxury’ makes for a differentiating factor. The firm targets the ‘masstige’ (mass plus prestige) cohort. “Our proposition is very high quality at a more accessible price. It’s not mass and it's not for everybody of course but we are well placed. If you look at very premium brands, our quality matches and our prices are at half or a third,” says Boynton.
In an era where consumption is being redefined by informed consumers who look at much more than the brand name, The Body Shop has also crafted some deft brand messaging. Keeping in line with its philosophy of ‘changemaking beauty’, the company changed the name of its best selling skin care product drops of youth to Edelweiss.
“Why are we celebrating youth? Youth is great but all ages are great. At whatever age you are, is the best age for you. So, we changed the name of the product and the formula,” says Boynton. Besides, the brand has been able to get itself certified by the vegan society which was unbelievably difficult. “But that’s the bar we have set for ourselves. We are now able to put vegan in our packaging,” says Boynton.
Boynton is bullish about India and the company’s ability to grow in the market which it counts as its fourth largest market globally . “The middle class in India is growing very fast,” says Boynton who has set a stiff target of doubling the business in the market in the next three years.
“That’s going to come from expansion, so we are going to have more stores. We have 200 stores here already. We will upgrade stores in key locations across the country, add more of our global products to the shelf, continue investments in omni-channel and D2C to make sure we have the tools and technologies and platforms we need to build deeper relationships with. India is our fourth biggest market but we expect it to be much closer to the U.K. in the coming years,” says Boynton.