NEW DELHI — India is not just another market for The Body Shop: It is strategic for the future. “We plan to multiply our number of stores by [a factor of five] and our customers by 10 over the next five years,” Sophie Gasperment, global chief executive officer of Body Shop International, a division of industry leader L’Oréal, told WWD exclusively during a recent visit to Bangalore and New Delhi. It was her second visit to India in a year, an indication of the importance of this market in which The Body Shop has grown at 50 percent per year for the last two years and has a customer base of 290,000, according to company officials.
The Indian beauty and cosmetics market is valued at approximately $950 million, and growing at 15 to 20 percent per year.
“We believe there is a very significant growth to come over the next years and have put together a rather ambitious plan,” Gasperment said. “We have 55 stores today — we will have 100 over the next two years and more than 150 stores by 2014.” Presumably, the number will swell to over 500 by 2016.
In December 2009, The Body Shop had 35 stores and that number grew to 55 doors by December 2010. “We’re trying to drive it at a pace but at the same time to do it in a way that it is sustainable and economically strong for the long term,” she added.
In turn, the global beauty giant has shown a sensitivity to the Indian consumer and the market, lowering prices for two consecutive years to make the right corrections for affordability. In March, The Body Shop announced its price cuts of more than 30 percent. “Price adjustment was not linked to a global decision,” said Gasperment. “It was really a local opportunity. The level of local demand was way above what we could provide. The team looked at it and said, ‘Shouldn’t we consider being more accessible because that is what the consumers are looking for?’ It was not a fight but rather a brainstorming and planning on how to do it, which products to choose and the levels for readjustment,” says Gasperment.
The strategy was worked out with The Body Shop’s master franchisee in India, Quest Retail, which is a part of Planet Retail. The parent company, which has strength in the retail and fashion businesses, brought other brands, such as Debenhams, to India.
Shriti Malhotra, chief operating officer of The Body Shop India, has been working closely with Gasperment, planning the strategy for the country where stand-alone beauty stores have not really succeeded before. Concerns about the high cost of real estate in markets and malls have been a discouragement for many brands. But as Malhotra points out, this has not stopped The Body Shop from embracing various formats — shop-in-shops, street-front stores and mall locations — as well as becoming available to customers in smaller towns such as Lucknow and Jaipur. The Web site for India was launched in April 2010, changing some of the ways communication has been done and engaging the consumer with the brand. The Web site, however, does not offer e-commerce yet.
Although The Body Shop has followed the franchise model in India, it does work with different formats. Singapore and Hong Kong in Asia, for example are both company owned. “The Body Shop is doing very well in Asia and both business models have worked well for us,” Gasperment observed. “Hong Kong and Singapore used to be franchises and over the years have become company owned. They are both more homogenous markets. It is a strength for us that we work with both models. It is a little more complex than being purely one or the other but our ability to choose the right model is a strength.”
In the last four months, the brand also entered the travel retail business, with two stores at New Delhi’s new Terminal 3 at Indira Gandhi International Airport.
Along with the growth has come an understanding of what Indian customers want. “Skin care and hair care index higher than in other markets,” Gasperment said. “It is always a question of mix. In the Middle East, for example, there is a fast growth in fragrances and makeup with a lot of sales of eye liners and face products.”
Men’s products too have seen high growth in India, contributing to more than 20 percent of total business.
“I think its just going to grow stronger,” said Gasperment. “Our campaigns have been gathering more support and the direction we are going our five core values we are activating even more and stronger because that’s what our customers are expecting from us.”
“Even though it is an independent business unit,” she said, “we work with L’Oréal in community trade. In 2006 the L’Oréal group was not using community free trade, now they use it in more than 200 products. Equally, L’Oréal has a very sharp understanding of local product-usage habits. In India, it was useful for us to know they had a consumer research center here. We knew that hair care was important here. It helps us understand the key products that can work in any market,” she concluded.
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