Lush: Fresh, Green, and Ethical Cosmetics Innovation

Lush products are made fresh with natural ingredients and are based on a bakery-style concept. Rather than carrying inventory in one of its seven globally positioned factories, all Lush products are made to order based on demand for each of the 500-plus shops it operates across 43 countries.

“In an ideal world, the store orders the product today, it’s produced today and tomorrow in the factories, it’s sent to the store the next day, and the customer buys it and uses it a couple of days after that,” said Mark Wolverton, president Lush North America. “The idea is that the products are as fresh and natural as possible.”

Green innovation

Always vegetarian and almost always vegan, Lush products are created to make a minimal environmental impact. The company sources its raw materials globally, and suppliers sign a declaration confirming no animal testing has been done. All materials are produced with fair trade, without child labor, non-conflict and, when possible, are organic.

In addition, all products are created with little or no packaging or preservatives. In many cases, creating products to fit that mold means taking out the water content to make them solid. In doing so, the medium for bacteria to grow is removed, which means there is no need to use preservatives.

“By taking the water out of the product, you don’t have to use a preservative, and you don’t need a container or packaging because it’s solid,” said Wolverton. “Consequently, a large majority of our products are naked, which means non-packaged goods.”

And while the basic tenets of being all-natural, environmentally friendly, and produced without animal testing are important, Lush certainly doesn’t overlook two of the most important elements of its success: fragrance and fun. It’s difficult to walk by any Lush store and not be pulled in by the smells. It’s equally difficult to walk out without buying a bath bomb, solid shower gel, or handmade and hand-cut block of soap.

“Many of our innovative ideas came from brainstorming. The soap design came from looking at the bulk supply, bulk display, and visual simplicity of cheese shops around the world,” said Wolverton. “We’re a market leader in natural, environmental, fresh, organic, fun to use, amazing products. We stand out from anyone else. You can’t walk by a Lush store and not go in because it’s simply amazing to see.”

Ahead of the rest

Vertically integrated, Lush sources its raw materials globally, creates and manufactures its products, and delivers them to its stores. Inhouse marketing and PR teams manage the stores, and the furniture and signage are developed with the same environmentally conscious focus as the products themselves.

Although Lush runs into some shipping challenges because the products are perishable and need to get to the stores overnight, the products are naked, which removes any hurdles in getting them unpacked and on the floor immediately. The lack of packaging and preservatives and the focus on producing products that make as little environmental impact as possible also puts Lush ahead competitively. For example, Lush shampoo bars are solid in format, require no packaging, and run up to 80 washes per bar—the equivalent of three 350-milliliter bottles of soap or shampoo.

“It would take 15 truckloads of bottled shampoo to get the same impact on the sales floor as one truckload of our shampoo bars,” said Wolverton. “We’re not only cutting down on the impact on landfills, we’re also cutting down on the transportation costs and greenhouse effects of transporting all of the packaging.”

And any Lush products that do require packaging are placed in 100% post-consumer waste—another competitive advantage. Wolverton said Lush is the only company that provides 100% post-consumer waste bottles for the goods it ships in North America. In addition, the company’s handle bags are made from post-consumer waste, its catalogues are made from recycled paper with water-based vegetable inks on them, and the gifts sold in the stores are wrapped with recycled paper.

Lobbying change

In addition to following its chain of supply back to the producers of its raw material, filming and taking notes on what’s happening to produce those materials, and posting the results on its Web sites, Lush is working to push an environmental change throughout the industry. “There is the way you operate environmentally and ethically within your business, and then there’s the way you operate using the customers’ money,” said Wolverton. “When a customer buys your product, the responsibility should be on the retailer to use that money to produce more products using ethically sourced raw materials, but we’re also using that money to lobby change.”

Recently, Lush and a number of large soap producers went to a trade summit regarding sustainable palm oil—the base for most soap. Palm oil is primarily brought from East Asia and Sumatra, where locals are burning down rain forests to produce palm plantations. By cutting down the rain forests, the locals are also displacing the native orangutans that then come into the palm fields and are killed off.

Lush has pioneered the production of non-palm-oil-contained soap bases and is lobbying people to make change by using that formula to produce soap without palm. Although the company is smaller in terms of production, it’s a larger force to be reckoned with in terms of action, and Wolverton believes change is on the horizon. All it takes is a little ingenuity and a lot of heart.

“Sumatra is rated two or three for the production of greenhouse gases because of the burning down of those rain forests to create palm plantations,” he said. “We’re trying to eradicate some of that by changing the way people formulate the products rather than trying to Band-Aid the situation.”

Room for growth

Regardless of its ethical tenets, for any business to succeed, there must be growth. Lush plans to open 72 new stores in North America by June 2009, not including the eight it will open by the end of June 2008.

Part of that expansion will come through a partnership with Macy’s. In 2006, Lush put its products in a Macy’s location on Michigan Avenue in Chicago. The store did roughly $4,000 a square foot in sales, which resulted in the development of 15 more stores last November.

“The stores are doing so well that we’re adding another 26 stores with Macy’s in the next four months, and that’s in addition to the standalone stores we’re opening across North America,” said Wolverton. “I expect us to get to 250 US stores fairly quickly.”

Wolverton said the first round of expansions has been easy for the company. Because the demand is so high and because of the “cultish energy” behind the brand, Lush is able to cherry pick the best malls and cities across the country and move in without a hitch. The company has implemented a Microsoft POS product called RMS in its stores and uses MFG Pro, an estimating inventory control manufacturing system, for its UK, Japanese, and North American factories.

“We integrate our inventory management ordering and reporting capabilities into our accounting system so the information flow is as seamless as possible,” said Wolverton. “We also use Web-based payroll systems. We align ourselves so we can report on efficiencies no matter what country the manufacturing business is in. That transparency will be extremely important as we continue to grow.”