The Body Shop is a cosmetic and beauty subsidiary of Natura & Co from UK, having global presence across 70 countries through its 3000 stores. The company has been operating since 1976 and has continued to grow and expand beyond UK into the international market. The following section outlines the external environment for the company through PESTLE analysis, which would provide insight in to the opportunities and threats for the organization.
This articles cover the detailedPestle analysis of the body shop. The pestle analysis covers the body shop external factors having impact on the company and its industry.
Political Factors
The political factors effect a business as the level of political certainty or volatility determines how well a business would function in a country. In the UK, many businesses were adversely affected due to the turmoil related to Brexit, including The Body Shop. The company had decided to shift some of the business operations to Germany, deeming the country to offer a more favorable political climate than the UK (Smith, 2019). As a result of this shifting of the business operations, it was speculated that the employees will have to be laid off from their jobs. Another factor that had disrupted the businesses in Europe was the turmoil in Ukraine that effected many businesses across Europe. The Body Shop had to respond to the crisis by halting the supply to the franchises located in Russia, and directed the efforts to offer monetary support of £700k to the war effected people in Ukraine (Skeldon, 2022).
Economic Factors
The economic factors constitute the elements of inflation, interest, taxation, unemployment and other related variables that tend to have an influence on the consumer’s buying behavior. Moreover, these economic factors affect the pricing decisions of the company, along with the implications for business operations. A slowdown in economic activities of the country results in the lower sales and profitability while booming economy helps the businesses to grow. According to Smith (2022), one of the major factors that have resulted in lower sales for the company is increase in inflation. Due to the high inflation, the consumer spending has been negatively affected and the skin care and beauty company faced losses.
Moreover, the increased cost of managing the supply chain operations due to the Ukrainian war has added to the economic complexity. However, The Body Shop has been able to respond to this challenge in a strategic manner and extended donations and support to the victims of the crisis.
Social Factors
The component of social factors includes the trends, consumer taste and preference and the other influences that shape consumer choice, which eventually effects an organization. The Body Shop has positioned itself as a company providing cruelty free products to the customers which appeals to the individuals that are in favor of such practices (The Body Shop, 2021). The activists have raised issue of testing the skin care and beauty products on animals, making cruelty free products a favorable choice. The company has been able to incorporate this notion at the core of its business practices. Increased focus on personal care has further advanced the business for the company as the consumer demand for natural products opened growth opportunity for Body Shop. In addition, the company recognizes the significance of customer loyalty in the skin care and beauty industry, thus it offers a loyalty program to its customers.
Technological Factors
The technological factors are related to the use of technology, adaption of new technology trends and harnessing the technology to make the business operations efficient and effective. Many skin care and beauty businesses have included social media marketing as an essential part of their business operations. The Body Shop has also recognized the potential of using social media to connect with its customers and use integrated marketing for its advantage. Moreover, having online stores indicates that the business is using both physical and online presence to reach a wider target market. The company is also using technology to upgrade the product quality, bringing better quality products to the market and increasing efficiency of business operations.
Legal Factors
The legal factors include the laws and regulations that outline the expected corporate conduct, in terms of taxation, trading, hiring practices etc. Failure to adhere to these laws can lead to legal issues, as evident in the case of the company. In the past, The Body Shop had to deal with a lawsuit, as the company’s supply chain practices were breaching the laws in Austria (Nisse, 1999). Over the years, the company has refined its policies and aligned its business practices with the legal framework of the regions where it is operating.
A defining feature of the company is its ethical business practices. The Body shop has openly shared its stance about unfair labor practices and modern slavery. The management makes sure that its supply chain operations are being managed in countries that also have a similar stance towards worker exploitation and modern slavery (The Body Shop, 2023). The company has also created Community Fair Trade program which indicates the fair pricing practices when purchasing materials from the suppliers.
Environmental Factors
The environmental factors effect an organization as the companies have to make changes in their operations to adhere to the environmental regulations imposed by the government. Companies also have to ensure that they follow the environmental regulations in order to avoid legislative actions. The Body Shop has developed the goal of reducing the greenhouse gas emission to net zero by the end of 2030, indicating the focus on environment friendly business practices. In addition, the company has recognized the importance of following environmental protection and has participated in protecting the rainforests to show its commitment to being eco-friendly (The Body Shop, 2021).
Conclusion
On the basis of the above analysis it can be seen that despite facing some issues and challenges, The Body Shop has been able to create a positive image in the market and maintained customer base. Issues such as increased inflation and interest have disturbed the sales volume, nevertheless, the ethical and environment friendly stance and quality of products has been able to serve as a defining feature of the company, creating a loyal customer base.
References
Nisse, J. (1999). Body Shop faces lawsuit. Independent. Retrieved from: https://www.independent.co.uk/news/business/body-shop-faces-lawsuit-1127512.html
Skeldon, P. (2022). The Body Shop raises £700k for Ukraine through online and in-store checkout donations. Internet Retailing. Retrieved from: https://internetretailing.net/payment/the-body-shop-raises-700k-for-ukraine-through-online-and-in-store-checkout-donations/
Smith, A. (2019). Body Shop announces jobs to go to Germany in wake of Brexit. Metro. Retrieved from https://metro.co.uk/2019/03/14/body-shop-announces-jobs-to-go-to-germany-in-wake-of-brexit-8898082/
Smith, S. (2022). The Body Shop owner Natura & Co sees sales drop in Q1. Industry Beauty. Retrieved from: https://theindustry.beauty/the-body-shop-owner-natura-co-sees-sales-drop-in-q1/
The Body Shop (2021). Sustainability Report. Retrieved from: https://api.mziq.com/mzfilemanager/v2/d/67c3b7d4-64ea-4c2f-b380-6596a2ac2fbf/f8bebfa0-e8f1-41b6-546a-e8ec63e555ae?origin=1
The Body Shop (2023). Modern Slavery Statement. Retrieved from: https://www.thebodyshop.com/en-gb/about-us/our-commitment/modern-slavery/a/a00030