In this edition of the Glossy+ Research Briefing, we look into what led to the demise of cosmetics brand The Body Shop, as well as the strategies other retailers have employed to revive their bottom lines with more advanced e-commerce fulfillment operations.
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Many bankrupt retailers use e-commerce to revive sales, but The Body Shop is shuttering U.S. operations
The Body Shop has closed all U.S. operations and stores, as well as dozens of stores in Canada, after filing for bankruptcy in both countries. Filings in Canada reveal that the Body Shop there owed $3.3m (£1.9m) to landlords, logistics, providers, marketing agencies, insurers, utilities and freight service providers. The Australian arm of the cosmetics brand is also currently under threat of financial collapse as it struggles to pay back debts from the busy Christmas season. The same issue caused the U.K. arm to collapse in February following the sales of U.K. operations to private equity group Aurelius.
During November and December, sources say the cosmetics brand practiced “cash pooling” when key overseas businesses paid into a shared global account. However, funds from this account were locked when the Body Shop’s U.K. parent company called in accounting firm FRP Advisory as administrators. The Body Shop’s North American and Australian divisions are counted as creditors to the U.K. arm and will need to wait months for payment. The Body Shop’s divisions in Germany, Denmark, Ireland and Belgium have all been put into insolvency. Operations in Spain, Sweden, France and Austria are awaiting resolution of ownership issues.
The Body Shop has also lost access to its e-commerce platform and third-party marketplaces through wholesale partners including Amazon. Although e-commerce has helped other struggling retailers, like Rite Aid and Bed Bath & Beyond, revive their sales numbers after filing for bankruptcy, The Body Shop doesn’t have very many options for raising capital. That includes not being able to invest in new stock options since it is already struggling to pay suppliers.
Research dive: Glossy+ Research’s e-commerce fulfillment study, which was released this week, found that retailers struggling to revive their bottom lines after a disappointing holiday sales season have turned their attention to reviving their store formats and expanding their digital fulfillment capabilities.
Specialty retailers like Sephora, Ulta and Dick’s Sporting Goods have focused on creating a seamless digital experience with easy online product searches and returns. Big-box stores like Target and Walmart have built massive distribution networks for speedy deliveries of online orders that are flexible enough to handle last-minute order modifications. Department stores Macy’s, Nordstrom and Kohl’s are working to build up their distribution networks to compete with Big Box but are currently relying on the in-person shopping experience with improved store formats like smaller-format concept stores and shop-in-shop offerings like Kohl’s x Sephora.
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