So Body Shop is to become part of L'Oreal after 30 years of operating in the same cosmetics space. For 13 of those years the companies were divided by the issue of animal testing, but since 1989 L'Oreal has not tested finished products on animals. The Body Shop has embraced other ethical issues of human rights and sustainability in its role as a leader in corporate social responsibility, yet it is the animal testing that people always remember.
As the marketing director of a L'Oreal cosmetic brand in the mid '80s, I witnessed at first hand the success of the Body Shop customer proposition and asked our Paris office to address the issue of animal testing. The response was illuminating - animal testing was necessary, as consumers in Latin markets (France, Spain, Italy) expected cosmetics to be tested on animals and would not buy them without this safety assurance. Animal testing was viewed as an Anglo-Saxon fixation, one I confirmed later as marketing director for Germany. This view was maintained until 1989 when L'Oreal stopped testing finished products on animals. The Anglo-Saxons had won.
The French love their pets as much as the English do, but, for them, beauty product development, like pharmaceutical R&D, requires animal testing as obviously as night follows day. The fact that in 1989 this position changed was testament to the importance of the US market - where Anglo-Saxon values prevailed - rather than the voice of reason from the UK or Germany. Even now, the distinction is drawn between finished product and ingredients, a hair-splitting difference that never washed with UK consumers. For the record, ingredients such as sulphur have been used for centuries and were originally tested on animals, so technically all cosmetics have been animal tested.
In brand values, as with corporate reputation, it is of course the perception, not the reality, that matters and the Body Shop became associated with the ethical stance of not testing products on animals. The early years of success were built on this moral high ground, which L'Oreal just did not appreciate until the close of the '80s, by which time Body Shop was well established. It helped of course that Body Shop was a retail franchise with its own distribution network, which contributed to L'Oreal not taking the threat seriously. L'Oreal aligns different brands with different distribution channels built on the French retail market, to avoid direct competition or sales cannibalisation. Body Shop, a retailer brand, was not competition on shelf in department stores, pharmacies, or grocery stores.
Selling out?
The Body Shop is not the first ethical business to sell itself to a multinational and give rise to concern among its loyal consumers, who bought the ethics as much as the products. Inevitably there will be some dismay; regardless of how the Roddicks present their case they will be seen to have sold out to an industrial giant corporation lacking an ethical backbone. Take out the emotion and there is probably a lot of good L'Oreal can do for the Body Shop in terms of scaled growth and expertise. Consider the two most quoted recent examples - Green & Black chocolate's acquisition by Cadbury and Pret a Manger's sale of a third share to McDonalds.
On first impression Green & Black is an ethical minnow swallowed by an industrial giant. However, Cadbury is a Quaker company and has always cared passionately about its staff and suppliers. Many of their cocoa suppliers have been nurtured over generations and there is a well-established case for social responsibility and sustainability. It is not such a strange home for an out-and-out ethical brand after all. No doubt Cadbury will provide expertise as Green & Black continues to grow as a brand.
Pret a Manger, the successful London-based sandwich chain, was also founded on ethical grounds. Five years ago the business sold a third of its shares to McDonalds, yet the business maintains a healthy distance from the burger chain, with few customers even aware of the association. Once again the expertise in fast food retail brought by McDonalds permitted the Pret management to focus on product development, not operational detail. Far from selling out to an unethical corporation the business has accessed the skills it could not grow organically and has in effect ramped up its operation faster than it could have alone.
Reputation risk only exists where the new owner fails to understand or exploit the unique values of the acquired brand. This is something Ford and Volvo or General Motors and Saab are still working on, as it requires more than supply chain economies to run two similar but distinct brands in the same market. Reputation is after all a perception someone else has about you, so it is fickle. The risk comes in partnerships between overtly ethical and non-ethical organisations, for it is very difficult for their values to merge.
Garry Honey is a senior fellow at the Centre for Risk Research, Southampton University, E-mail: g.honey@soton.ac.uk
