After years of financial struggles, The Body Shop in the UK has brought in insolvency administrators. Photo / AP
After years of financial struggles, The Body Shop in the UK has brought in insolvency administrators. Photo / AP
The fair trade suppliers who help communities from all over the world provide The Body Shop with ethical ingredients are concerned those workers won’t get paid for their efforts, as its UK stores go into administration.
The UK arm of the beauty retailer, which has years-long relationships with fair trade programmes in several countries from Africa to Brazil, called in administrators last week.
Sources tell The Guardian UK that those suppliers could be left with thousands of dollars worth of stock — a significant loss to low-income families in these countries.
In the UK, The Body Shop stores are continuing to trade, with creditors waiting to be updated. But those creditors will get paid before suppliers do, and if the stores close, orders could dry up.
Restructuring firm Aurelius bought The Body Shop UK for £207 million (NZ$424m) last month and is the company’s biggest creditor, expected to take on the chain after many of its locations have closed.
The German arm went into insolvency last week, with the Irish, European and Japanese arms also in doubt.
Some suppliers told The Guardian they didn’t have official contracts with the retailer, but had long-standing agreements about how much product they would supply.
Candela Peru has been supplying The Body Shop with Brazilian nut oil since 1998, with 400 families in the Amazon gathering the nuts. Its president Gaston Vizcarra told The Guardian it has half a million dollars’ worth of oil “ready to go”.
“There is no contract. It is based on trust,” he said. “We usually sell a certain volume but The Body Shop has not been buying for at least a year. It has affected our capacity to work with producers and buy nuts from them.”
After years of financial struggles, The Body Shop in the UK has brought in insolvency administrators. Photo / AP
Many of these suppliers sell their products to oil refiners or manufacturers rather than to The Body Shop directly, and are concerned that if those manufacturers are not paid by the company’s administrators, they won’t get paid either.
One Africa-based community leader points out these changes will “affect the whole supply chain”, while a Brazilian co-operative producing Babassu palm oil is worried it won’t get paid for a recent order for 30 tonnes of oil.
The Juan Francisco Paz Silva co-operative in Nicaragua has supplied the retailer with sesame oil since 1993, working with 270 families — and has around $300,000 worth of stock produced without an official contract.
Supplier Nick Hoskyns notes that “A break in trust has happened with Aurelius ... how can this happen to such an amazing company that has done so much?”
The Guardian reports some suppliers do deal directly with The Body Shop, and may not get paid as secured creditors like Aurelius are first in line.
Nepal-based Get Paper Industries has supplied handmade recycled paper packaging to The Body Shop since 1989.
Founder Milan Dev Bhattarai notes the company is not owed money, but says, “If there are closures of The Body Shop UK, not only more than 500 producers will have a negative impact in their lives, but hundreds of girls will lose the opportunity for education, thousands of children will miss the opportunities for improved school.
The Body Shop in the UK has gone into administration, risking thousands of jobs. Photo / Getty Images
“People of local communities will lose health support and many girls might be trafficked for a difficult life. Tree plantation will be disturbed.”
The Body Shop has 22 stores operating in New Zealand, currently not impacted by the changes. A pop-up on its New Zealand website reveals it’s taking phone orders during opening hours.
Viva beauty editor Ashleigh Cometti says it’s “devastating” to hear of the impact the changes in the UK have had on communities.
“The Body Shop has perpetuated its ethical trading ethos throughout its advertising campaigns by spotlighting the growers and suppliers behind the key ingredients formulated into some of its best-sellers,” she tells the NZ Herald.
“These are the same producers The Body Shop was once so proud to source from and celebrate throughout its branding. For many of these family-run businesses, these trust-based, fair-trade agreements with The Body Shop are their bread and butter.”
