OPERATIONAL REVIEW

The Body Shop

Review of the year

2011 marked the tenth anniversary of the launch of The Body Shop in South Africa and the franchise agreement with The Body Shop International has been renewed by the Clicks Group until 2020.

The Body Shop maintained unit sales for the financial year while the brand experienced selling price deflation of 6.6%, resulting in a 2.8% decline in turnover. Operating profit increased by 3.5% as the margin benefited from the strength of the Rand during the period.

The gifting and skincare categories showed strong growth while the bath and body category declined by 8% owing mainly to popular local product flavours being discontinued internationally. The iconic Body Butter format was reinvented with the launch of the innovative Body Butter Duo which includes two moisturisers in one container, and this product continues to be a best seller.

The Love Your Body loyalty programme was relaunched early in the financial year, based on the successful Clicks ClubCard formula. The programme has attracted 100 000 customers and already accounts for 44% of the brand’s sales. The average basket value of these loyalty cardholders is 25% higher than non-cardholders.

The Body Shop Retail Academy was launched to improve customer service and store management.

Two new outlets were opened in the year: a standalone store in Knysna and a store-within-a-store in Clicks in Cavendish Connect, Cape Town.  Capsule ranges of the best-selling lines were introduced into a further 25 Clicks stores, including the rst outlet in Botswana.

Capsule ranges in Clicks stores enable The Body Shop to increase distribution and accessibility to the brand. Sales have not been negatively impacted where these Clicks stores trade in the same shopping centres as standalone stores of The Body Shop.

As part of the global brand, the local franchise is committed to upholding the core values of sustainability, including fair trade, community upliftment and non-exploitation of scarce resources. The Rainforest haircare range and Earth Lovers shower gel were the first two products to be launched during the year under The Body Shop’s pioneering eco-conscious symbol. This symbol indicates that no sulphates, colourants and parabens are used in the manufacture of the product, while the ingredients are biodegradable and the product packaging is environmentally friendly.

The local franchise received the award for the best integration of values from The Body Shop International, recognising how the South African team has demonstrated a commitment to the brand’s values.

The Body Shop was highly placed in the specialist health and beauty stores category in The Times/Sowetan Retail Awards, and in the Sunday Times Generation Next awards for the coolest brands in health and beauty retailing.

Strategic focus areas for 2012

The main focus in the year ahead will be on leveraging the Love Your Body database to drive customer loyalty and to increase visit frequency.

Building on the success of the Retail Academy, a make-up and skincare consultancy course has been developed. Customer service training will be reinforced through the implementation of a mystery shopper measurement.

The brand’s presence will be expanded through the opening of two store-within-a-store concepts in Clicks and increasing capsule ranges to a total of 50 Clicks outlets. Two new standalone stores are planned for the year ahead.

While customers are value conscious in the current economic climate, The Body Shop strives to meet the demand for high quality, natural products through continuous product innovation and values promotions. The medium-term operating margin target of The Body Shop has been increased to 18.0% to 20.0% (previously 14.0% to 16.0%).