How Lush took on the cosmetics industry | FT

Summary

Lush, a UK-based cosmetics company, has built a reputation as an ethical brand, handcrafting soaps, shampoos, and bath bombs with vegetarian or vegan recipes. Despite facing challenges like homelessness and business collapses, co-founder Mark Constantine has grown the company to a $1bn turnover. Lush aims to influence the cosmetics industry towards more sustainable practices, such as reducing plastic packaging. The brand's ethical stance and fresh, preservative-free products come at a premium, yet resonate with customers. Brexit uncertainty and supply chain challenges impact the business, but Lush remains committed to its values, with plans to sell a controlling stake to its employees, ensuring the company's authenticity and ethical mission endure.

Takeaways

• 🌿 Lush, a cosmetics retailer known for its handmade soaps, shampoos, and bath bombs, has been operating for nearly 25 years and is based in Poole, England.
• 🌐 The company has a global presence, with a turnover of $1 billion, and is recognized for its ethical brand image.
• 👐 Lush emphasizes manual production and vegetarian or vegan ingredients, distinguishing itself from competitors that rely on automation.
• 🏡 Co-founder Mark Constantine faced significant challenges, including homelessness and business collapses, before establishing Lush with a modest sum of £45,000.
• 🌱 The brand is committed to environmental sustainability, aiming to influence the cosmetics industry to move away from plastic packaging towards more eco-friendly practices.
• 💰 Despite high prices, Lush's ethical stance and quality products attract customers willing to pay a premium for sustainable and cruelty-free cosmetics.
• 📉 The company acknowledges the impact of Brexit uncertainty on its UK business, with challenges including staffing and tariffs affecting supply chains.
• 🌍 Lush is performing well in European markets like Germany, France, Italy, and Spain, where it has seen increased sales.
• 🏬 The company is considering opening a large department store in Birmingham, featuring innovative and sustainable elements like a spa and hairdressing with recycled water.
• 🔄 Lush has chosen an alternative path to growth by establishing an employee benefit trust, aiming to give workers a stake in the business, rather than selling to large corporations.

Q & A

How long has Lush been in operation?

Lush has been making soaps, shampoos, and bath bombs for almost a quarter of a century.

What is Lush's stance on automation in its production process?

Lush shuns automation and all of its products are made by hand.

What types of recipes does Lush use in its products?

Lush uses only vegetarian or vegan recipes in its products.

What is Lush's annual turnover?

The private company Lush has an annual turnover of $1 billion.

What was Mark Constantine's background before founding Lush?

Mark Constantine, the co-founder of Lush, was homeless for a period of time and lived in the woods, working but not earning enough to afford a room.

How did Lush initially learn about business practices?

Lush learned a lot of lessons from Anita Roddick when they became the largest supplier to Body Shop.

What financial struggles did Mark Constantine face before starting Lush?

Mark Constantine faced business collapse, had to pay mortgage payments, and was sued over a property that collapsed, eventually selling it for half of what he bought it for and paying off loan sharks.

What is Mark Constantine's vision for the cosmetics industry?

Mark Constantine wants to create a cosmetics revolution to save the planet by influencing the industry to move away from plastic packaging and towards more environmentally friendly practices.

How does Lush handle the issue of plastic waste in its products?

Lush aims to reduce plastic waste by offering 'naked products' that come in paper bags, which are easily disposable without the need for recycling.

What challenges does Lush face in the current retail climate?

Lush faces challenges such as high product prices, Brexit uncertainty affecting its UK business, and the need for fresh ingredients which can be affected by supply chain delays.

How does Lush ensure the freshness of its products?

Lush tries to turn products around through its warehouse with a 28-day use-by date, ensuring minimal time on the factory floor and minimal use of preservatives.

What is Lush's position on selling to large corporations?

Lush's founders have decided against selling to big brands like L'Oreal, as they believe it would be seen as a sell-out and could lead to a significant loss of customers, as was the case with Body Shop.

What is the employee benefit trust (EBT) that Lush has established?

Lush has established an employee benefit trust (EBT) to give workers a stake in the business, allowing them to sell shares to the EBT instead of outside investors, maintaining a stable business that can continue to focus on ethical practices.

How does Lush plan to maintain its authenticity and ethical practices in the future?

Lush plans to maintain its authenticity and ethical practices by selling a controlling part of the business to its workers through the EBT, ensuring that the company remains focused on its values rather than commercial pressures.