Review of the year

The Body Shop showed a strong recovery in the second half of the year with sales growth of over 20% for the six-month period, driven mainly by customer response to the “Love Your Body” loyalty programme.


Carol Poolton
General Manager

Five years’ service;
Eighteen years in
cosmetics industry
Former head of Clicks Beauty
Appointed general manager
of The Body Shop in 2003


Love Your Body loyalty programme attracts over
22 000
members

In-store experience of product and service greatly enhanced


    2006   2005  
Turnover Rím 65.3   58.4  
Turnover growth % 11.8   14.0  
Comparable stores turnover growth % 3.1   (1.5)  
Operating profit Rím 11.1   9.3  
Inventory Rím 8.8   5.0  
Number of stores   29   27  
Full-time permanent employees   80   76  
Weighted trading area m2 1 596   1 513  
Increase in weighted trading area % 5.5   24.6  
Weighted annual sales per m2 R 40 941   38 627  

Introduced in November 2005, the programme attracted 22 000 members by year-end. Customers purchase the loyalty card annually for R60 and receive a 10% discount on all merchandise, as well as a birthday gift and free product for every fourth purchase valued at over R140.

The Love Your Body programme aims to increase basket value and frequency of shopping. Statistics show that the basket size of card holders is already more than 50% higher than non-card holders.

In line with the “masstige” positioning adopted by the brand internationally –where personal care products combine performance, indulgence and value –in-store disciplines have been enhanced through improved staff training and more professional service.

The in-store experience of The Body Shop has been greatly enhanced. This includes showcasing new products, more impactful promotions around Christmas, Valentine’s Day and Mother’s Day, increased inventory levels in stores to create visual appeal and free product sampling for customers.

Product innovation is a differentiator for The Body Shop and several new ranges were introduced, including body, bath and hand products and fragrances. The naturally-inspired product positioning remains core to the brand, with extensive use being made of community-traded ingredients sourced from local communities around the world.

New stores were opened at OR Tambo International Airport, Johannesburg, and in Gardens, Cape Town, bringing the store base to 29. A new store design has been adopted and both these stores are trading successfully.

As a values-driven business globally, The Body Shop has a strong commitment to empowering disadvantaged communities. Locally the brand supports The Big Issue, a social development and upliftment project which assists homeless people to earn a living through magazine sales and integrates them back into the formal job market. Stores also support local communities through voluntary assistance programmes.

During the year The Body Shop International was acquired by global cosmetics house L’Oreal. This is not expected to impact the South African operations of The Body Shop which are managed by New Clicks under a franchise agreement.

Strategic focus

The Body Shop will be aggressively recruiting customers to the Love Your Body card to enhance loyalty levels. This programme also creates opportunities to analyse and exploit customer purchasing data.

Staff training and incentivisation is a key focus. A full-time trainer has been appointed to the brand and staff are now being incentivised on the sale of specific product lines.

While product availability levels are well above industry norms, these will be further improved through an enhanced focus on merchandise and supply chain planning in an effort to increase inventory turns.

Two new stores are planned for the inland region where The Body Shop is currently under-represented.

One of the main drivers of sales in the year ahead will be the new make-up range which was introduced into stores in September. These new products, with improved quality, presentation and packaging, are expected to enhance the perception of The Body Shop as a destination for world class make-up.