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Body Shop look-alike to open in UK

BRITAIN's most successful green business is facing a new threat, writes David Nicholson- Lord. The Body Shop, still recovering from claims that its high-profile environmental stance is a sham, will this week see its dominance of the 'natural' cosmetics market challenged by one of the biggest names in American retailing.

Bath and Body Works, a subsidiary of the US giant The Limited Inc, this week launches its Body Shop 'look-alike' formula in the UK. In a joint venture with Next, the fashion chain, it will open its first three stores outside the US as the first step in a move into Europe.

If the venture succeeds, at least 100 more are planned. Some analysts believe it could pose the biggest commercial threat to the Body Shop in its brief but spectacular history.

The Limited, with sales last year of nearly pounds 5bn - more than 20 times those of the Body Shop, is the US's largest specialist retailer. Bath and Body Works is one of its most profitable ventures. In the US, BBW has proved the Body Shop's most serious rival: it has around 200 US stores, due to rise to more than 300 in the next year, compared with the Body Shop's 125. If these are any guide, shopping in BBW stores in the UK - the first three open on Friday in Edinburgh, Derby and Milton Keynes - will closely resemble a visit to the Body Shop.

The formula developed since 1976 by Anita and Gordon Roddick, the Body Shop's founders, has been widely copied, particularly in the US - although usually without the campaigning environmental stance of the Roddicks.

In 1991 the Body Shop began a court action against Bath and Body Works claiming it was a clone. The case was settled out of court when the American firm agreed a number of changes in format - including making less use of the colour green in its shops.

However, some retail analysts believe the style is so similar that many shoppers will not notice, or care about, the difference - particularly if the prices are lower. BBW, for example, says its products are sourced from natural ingredients, not tested on animals and designed for people who are 'concerned about the environment'.

Edward Whitefield, chairman of Management Horizons, a retail consultancy, said BBW 'have the resources to source good products, manufacture them with the lowest unit costs and engineer high gross margins'. There would 'clearly' be an impact on the Body Shop's market share, he said.

Cheaper copies of the Body Shop approach - the Natural Collection by Boots, for example - have already eroded its market lead. In August, its share price fell 15 per cent after disclosures that an American magazine, Business Ethics, was to publish a damaging investigation, allegedly undermining its high ethical and environmental stance.

The Business Ethics article failed to live up to this publicity - Body Shop dismissed it as 'recyled rubbish' and one UK ethical research group described it as unfair. The company's share price has partly recovered. One report published after the controversy predicted profits growth of 15- 20 per cent a year and said the Body Shop chain would grow from 1,100 to 2,000 shops by the year 2000.

However, the unknown factor is the loyalty of Body Shop customers to its strong environmental image - and whether that image has been blurred. Mr Whitefield said the BBW format was 'less racy, more feminine, less eco-contemporary' and would pose more of a challenge to Boots than the Body Shop. According to the Body Shop, BBW has no record in the US of ethical or environmental campaigning.

Stuart Rose, managing director, said last week that the Body Shop tried to be socially responsible, campaigning for environmental protection and social justice and was involved in hundreds of community projects around the world.