Omnichannel strategy for The Body Shop's franchisee crucial for sales amidst pandemic

InNature's omnichannel strategy is key to raking in sales amidst the COVID-19 pandemic and the challenging physical retail environment, a report by CGS-CIMB Research said. InNature is the franchisee of The Body Shop's and Natura's products in Malaysia. During the first nine months of its 2020 financial year (9MFY2020), InNature's eCommerce channel accounted for about 9% of total sales, higher than the 3% eCommerce contribution during the same period last year.

For its Natura business in particular, CGS-CIMB Research noted that sales has been improving on a quarter-on-quarter (QoQ) basis, with Natura sales in the third quarter of its financial year almost doubling QoQ. The report believes that this trend was mainly driven by the social commerce and eCommerce channels.

The reinstatement of the Conditional Movement Control Order due to the recent spike in COVID-19 cases has resulted in weaker retail footfall, and CGS-CIMB Research predicts that retail sales could deterioriate on a QoQ basis, even though the fourth quarter is usually stronger due to year-end festivities. Hence, it expects InNature to focus on its eCommerce channel to draw sales in this tough environment.

"We continue to like InNature for: i) its attractive gross margins, ii) the relatively inelastic demand for cosmetic and personal care goods, iii) management’s strong track record, and iv) its successful omnichannel strategy," the research report said. However, it noted that the company faces the downside risk of more business lockdowns and a sharp decline in retail spending.

During the first nine months of the year, InNature saw a 20% dip in revenue as it was mainly impacted by movement restrictions imposed in Malaysia and Vietnam in the first half of this year. As a result, its core net profit for 9MFY2020 dipped by 46.1% year-on-year (YoY) to RM13.4 million. Separately on a QoQ basis, InNature saw a 32.8% recovery in revenue during the third quarter as a result of a return to full operations for most of its stores, especially in Malaysia and Vietnam. This was also bolstered by its first Malaysian nationwide sale of the year in August. That said, revenue for that quarter still lowered by 10.3% on a YoY basis as footfall to malls had yet to return to pre-pandemic levels.

Join us on a three-week journey at Digital Marketing Asia 2020 as we delve into the realm of digital transformation, data and analytics, and mobile and eCommerce from 10 to 26 November. Sign up here!

Enjoyed what you have read? Follow us on Instagram for the latest updates in Southeast Asia's marketing and advertising space!