The Body Shop cuts costs, plans expansion to tap growing market

March 10th, 2009 - 12:37 pm ICT by IANS  

By James Jose
New Delhi, March 10 (IANS) With the $950-million Indian cosmetics market expected to grow 15-20 percent annually despite the slowdown, Britain-based personal care products retailer The Body Shop has drawn up a fresh strategy, including aggressive discounts and opening of new stores, to tap the market.

The company, a 100-percent subsidiary of French cosmetics giant L’oreal, has already cut prices of its products by 20-30 percent even as it plans to add new Indian cities to its footprint in India - a market which has emerged among top priorities for the group.

“We are very bullish on India and want to expand to more cities. This year we will add 10 stores. We have also cut product prices to make them more attractive to customers,” said Shriti Malhotra, The Body Shop’s general manager for India operations.

“We will be focussing on the south market and are planning to open stores in places like Chennai and Hyderabad,” Malhotra told IANS, but declined to divulge any figures, either on sales or on investment.

At present, the company is operating 25 stores in eight Indian cities under a franchise agreement with retail major Future Group, controlled by Kishore Biyani, whose enterprise also runs the Pantaloon and Big Bazaar chains.

But The Body Shop does not want to lose its premium, upmarket tag, although it slashed prices March 1. For example, a 250 ml shower gel bottle from The Body Shop costs Rs.325, while one can get the Palmolive version at a third of that price.

“Our products are definitely priced at a premium. We operate in a niche segment. But we have been keeping in mind the current economic environment and customer’s feedback. So these price cuts will attract more customers,” said Malhotra.

The company is also going the shop-in-shop route to expand its presence in India - a concept for retail strategy where large departmental stores, shopping malls or retailiters let out space to other brands.

“We already have a tie-up with Future group’s Central malls and Debenhams, a UK-based garment accessories and fashion retailer. We plan to go to other cities with this concept,” she added.

The L’oreal subsidiary was started at Brighton in the UK by two entrepreneurs - Dame Anita Roddick and her husband Gordon - by borrowing 3,000 pounds sterling (now valued at $4,200), some 30 years ago.

Three years ago, L’oreal paid 652 million pounds ($915 million) to buy the company which has 2,500 stores in 60 countries.

According to estimates by the Confederation of Indian Industry (CII), the total Indian beauty and cosmetic market size stood at $950 million in 2008 and was growing at 15-20 percent per annum.

(James Jose can be contacted at james.jose@ians.in)

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