Lush North America: Innovating with Ethics and Experience in the Cosmetics Industry

“We don’t want a store where customers come in and browse and then take their products to the salesperson behind the till. Our staff ask questions about skin and hair type and make a big fuss over each customer, so it is fun, and they have a great experience,” said Mark Wolverton, president of Lush North America, headquartered in Vancouver, British Columbia.

Lush makes handmade body care products from fresh fruits and vegetables. Launched in 1995 in England by the original creative team behind product development for the Body Shop, Lush now has nearly 600 retail stores in 44 countries and e-commerce sites in 27.

Wolverton brought Lush to North America in 1996. Five years later, he opened the first US Lush store in San Francisco.Today, about $90 million of the company’s global annual sales of $350 million come from its North American operations, comprising manufacturing facilities and distribution via storefronts, malls, airports, and a store-within-a-store concept in which Lush has a 300- to 500-square-foot store in the cosmetic department at 38 Macy stores.

In total, Lush opened 47 new locations in North America last year and has no intention of slowing its overall pace. “The Body Shop has more than 2,000 store in the US, and we have 104. So we have a lot of room to reach out and develop further. We will continue to add extensively to the store base, continue to deliver new brands to the customers, and create a much bigger following globally,” Wolverton said.

The lipstick effect

Although sales softened during the worst of the winter recession, Wolverton reports that Lush revenues are back to what they were last fall before the bottom dropped out of retail. In part, he credits the lipstick effect: women might stop buying expensive clothing when times are tough, but many will still treat themselves to a new lipstick.

“About 65% of our products sell for under $10. We are a specialty brand, but in an economic slowdown, higher-priced items and larger industries are going to be affected much more significantly than we are at our level,” he said.

Lush also has the advantage of being a vertical company. Everything from product design to financing, manufacturing, marketing, IT, and even the construction of its wooden store furniture, displays, and signage is done inhouse. Lush has even started to buy rose and other flower fields so it can control the supply of its essential oils. As a result, little outside the company affects the speed at which it moves.

Lush’s just-in-time manufacturing also helps. Because everything is made fresh, there is no stored inventory. Products are ordered, manufactured, shipped, and on the shelf ready for the customer in less than a week.

That speed and quality control goes a long way in supporting rapid-pace product development. This summer, for instance, Lush will introduce 25 new products. Those will be followed by a new holiday line this fall.

“Our product innovation and range is second to none. As a result, there is something new for customers to find every time they come into the store,” Wolverton said.

Concepts and products are usually tested in England and then rolled out to other regions. The most recent introduction is Synaesthesia, an in-store spa treatment for all of the senses that will start rolling out in the company’s North American locations later this year. In conjunction with the concept, the stores will get a new floor plan incorporating a kitchen-table-type layout.

“This will be a more interactive format, with customers able to sit around the table and get their skin care consultations. In the stores in England that already have this format, it raised initial sales by 15% to 20%,” Wolverton said.

Lush has also developed an entirely new brand, B Never Too Busy to Be Beautiful, which offers color cosmetics and fragrances. New standalone stores will be introduced in North America in the coming months.

Naked and proud

A key element in much of Lush’s innovation is its commitment to be driven by its ethics. For example, more than 60% of its products are marketed “naked,” with no packaging at all. Naked products are concentrated solids: eliminating the water content results in more product per ounce without the need for bottles or preservatives. When packaging is used, it is all recycled and recyclable.

The company partners with others to support environmental and social activism. For instance, its Charity Pot hand and body lotion is packaged with a variety of lids, each sporting the logo of Lush’s handpicked charities. All proceeds (excluding taxes) from the sale of Charity Pot fund grassroots initiatives and projects both locally and internationally.

Lush has strict policy against animal testing and supports Fair Trade and Community Trade initiatives. To ensure transparency, a Lush film crew travels the world to document its sourcing of raw materials and operations. This information and more will soon be available online.

“We want to be the place to go for information about natural cosmetic ingredients, so we are rebuilding our Web site to be more of a training platform for customers and staff,” Wolverton said, adding that Lush is rebuilding its global training platform to expand its breadth and depth.

Lush didn’t tout its ethics much in the past, but as green initiatives become mainstream, and greenwashing more plentiful, the company has started to shine a light on its credentials as a values-based organization. In some cases, that means taking a highly visible stance on a social issue such as Canada’s controversial commercial seal hunt.

Lush North America partnered with a conservation group dedicated to stopping the seal hunts this spring, staging a media event and introducing a new bubble bar shaped like a baby seal. All proceeds of the sale of the bar go to the conservation group.

This type of brand/issue awareness building will continue. “We have built a large global store base, so I think we can afford to get the word out on issues we think need focus. In the end, people will make their own choices, but we can bring the issue to life,” Wolverton said.