The makeover is the result of a strategic review by Patrick Gournay, the retailer's new chief executive, who joined from the French foods group Danone last year. It will result in a one-off cost of pounds 8m but yield the same amount in savings annually.
The changes follow a disastrous trading statement last week, which showed sales weakening in both the UK and America.
Gordon Roddick, co-chairman, said: "Every entrepreneurial business reaches a crossroads. Some make the transition to a more effective, professionally run company. Some don't. That is what we are trying to do."
The company is redesigning its stores to give them a "more vibrant" feel, with less cluttered shelves, top selling lines displayed more prominently and more customer information provided.
The first "pilot" store, overhauled by Anita Roddick, has been running in Brixton, south London and has been viewed a success.
Manufacturing will be outsourced, which will lead to possible job losses among the 900 manufacturing workers at the group's base in Littlehampton.
Body Shop has put the two Littlehampton plants up for sale and is looking for strategic partners to manufacture its products in each of its four main regions.
The change will move production closer to markets, ensuring that products are more appropriate for the different tastes in different countries. It will also shorten production lead times.
Body Shop also plans to buy in more of its franchises to give it greater to control. It has already done this in France and Germany and has set up a joint venture in America.
Gordon Roddick said that in spite of Body Shop's weak share price he and his wife have no plans to take the company private.