2. How did the acquisition by LOral affect the ethical image of Body Shop? Discuss the problems...

2. How did the acquisition by L’Oréal affect the ethical image of Body Shop? Discuss the problems Body Shop faced following the takeover On February 2, 2016, The Body Shop International Plc.

(Body Shop), a UK-based retailer of natural-based and ethically-sourced beauty products, unveiled a new global CSR strategy to reassert its leadership in ethical business. The commitment, entitled ‘Enrich Not Exploit’, outlined 14 new sustainability targets to be achieved by 2020 that touched all areas of the business. According to Jeremy Schwartz

(Schwartz), Chairman and CEO of Body Shop, “The Body Shop can be both a force for good and a successful, profitable business. 40 years ago [founder] Anita Roddick set out a challenge for The Body Shop to tackle the big issues of her time. We’re now tackling the big issues of today, We want our Enrich Not Exploit™ commitment to inspire a new generation of customers, supporters and especially millennials who truly care about how a company operates. Re-establishing The Body Shop as a leader will come from delivering our ambitious aim to be the world’s most ethical and truly sustainable global business.”2 Founded in 1976 by Dame Anita Roddick (Roddick), Body Shop was regarded as a pioneer of modern CSR. Since its inception, the beauty retailer, which was strongly associated with the social activism of Roddick, had endorsed and championed various social issues that complemented its core values–opposition to animal testing, developing community trade, building self-esteem, campaigning for human rights, and protection of the planet. Through these initiatives, Body Shop had cultivated a loyal customer base. But following its acquisition by beauty care giant L’Oréal SA (L’Oréal) in March 2006, both Body Shop and Roddick came under severe criticism.

Loyal customers felt betrayed as Roddick had previously been quite vocal in her criticism of companies like L’Oreal that tested their cosmetics on animals, exploited the sexuality of women, and sold their products by making women feel insecure.

After its acquisition, the fortunes of Body Shop took a sharp downturn. With a host of new competitors jumping on the natural products bandwagon and offering their own green cosmetic lines, its sales plummeted. The beauty retailer’s operating margin narrowed, reaching a seven-year low in 2015.

Body Shop’s ethical message also faded and by the company’s own admission it had been comparatively quieter on the sustainability front over a period of time.