How Lush took on the cosmetics industry | FT

You only have to follow your nose to find a branch of lush the retailer has been making soaps shampoos and bath bombs for almost a quarter of a century impaul on England's south coast and it's long tried to build a reputation as an ethical brand nowadays that's a trend that the rest of the high street would also like to buy into lush shuns.

Automation all of its products are made by hand and it uses only vegetarian or vegan recipes today the private company turns over 1 billion dollars but co-founder mark Constantine's journey to this point wasn't easy I was homeless for a period of time and I lived in the woods I had a job but he didn't pay enough to get the basic room he went on.

For about a year or so I was given money by a charity it's just a small sum but it made such a dramatic difference to my life I meant that I could continue on in my employment I was fortunate enough to meet an issuer on it when she had one shop so we became body shops largest supplier and we learnt an awful lot of lessons from them then we had a business.

Collapse and then I just had to pay the mortgage payments then I'd put my savings into this other house but it's part of it collapsed on the back of some beach huts and they sued me and I eventually sold it for half why I bought it full and then I had to pay the loan sharks off and I had about 45 grand left and that's why I started Bosch with just.

Small sums of money go a long way rather ambitiously mark Constantine wants to create what he calls a cosmetics revolution to save the planet we have to do it through influence we're 0.5% of the cosmetic industry even at a billion turnover yeah so we have to influence the others as well they have.

To move off a plastic packaging they have to move to more environmentally friendly things so that's part of the revolution preferably you don't have some bottle you have to throw away and what you're going to do with it you're gonna recycle it is it this PE T is it that one you don't have any of that if you've got to make a product that's.

Just in a paper bag you know what to do with a paper bag that's the end of it we know we've got to change but we've got far too much plastic hanging around we all know we have gives it for other companies to lead that though by saying actually we're no longer doing this this is this I don't see how they're going to survive if you've got climate refugees.

All over the place and your shops are shutting it's all bad for business so they have to change just a question of when and how quickly luscious prices will put off some customers a single bath bomb costs around five pounds so the ethical campaigning brand is important to the lush product and people are prepared to pay a premium for it.

There's as many reasons not to come in to cosmetic retailer that isn't offering you a good deal or particularly good deal it's a relatively pricey thing and so I think the ethics can sometimes tip the balance business considering the climate is good the banks are not lending they've not been doing that for eighteen months they're expecting a.

Downturn they certainly aren't keen on retail British retail even Japanese banks are telling me they're not keen on British retail and at the moment in Britain we're plus or minus 2% unlike for like so not too good not too bad you know just just okay could it be there are people out there with minus twenty minus ten all sorts of dreadful things.

Going on brexit uncertainty isn't helping luscious business in the UK we try and turn the products around through our warehouse with a 28-day used by date on so it has to leave the warehouse within 28 days and then it sits on the factory floor for four months if you go into regular retailers beauty retailers you'll find products there have a shelf.

Life of two to three years because we're light on some preservatives and indeed many of our products don't have preservatives at all and then we like to get it through as fast as possible so you can have the best possible experience staffing is probably the biggest thing and then the next thing would be the tariffs but we as my.

Described it's got to be very fresh on the ingredients and everything so any delay in those supply chains can affect our product I'm a businessman I don't understand how increasing my costs increasing red tape and generally stopping me being able to get a proper workforce and cutting the eggs of markets that I was quite happily.

In before and having tariffs the truth is I don't get it I don't understand it Europe is a great area for me to be able to increase business so Germany France Italy Spain great places for us and we're doing very well so we got increased light for likes in those countries I would say biggest pressure point is Hong Kong we've got just.

Weighing ten shops there the climate there is dreadful I quite like the idea of doing a big department store of lush right I've got one nearly there in Birmingham and that means having quite a lot of interesting things that people would like to come to so a spa with original treatments hairdressing with maybe recycled water a.

Whole floor of just naked product with no plastic on the whole floor parties opening a department store at a time when many big high street retailers are struggling to compete with online rivals sounds like a bold move but then lush isn't a typical high street retailer the founders still owned most of the business and there is no desire to.

Follow him body shops footsteps and sell to big brands such as L'Oreal I think most customers orders are selling and I think it well body shop lost 20% of its sales so this speaks for itself doesn't it 20% of the customers no longer shop there luscious founders looked at how body shop exited and decided it wasn't for them so they decided instead to.

Launch an Employee Benefit trust which is designed to give work as a stake in the business in the future when you've got finders who at some stage you're going to want to either leave or they will die in their shares will be up for sale you have to have someone that can buy it traditionally you would go to the city or you would get private investment.

Businesses that have done that are very very highly geared got too much borrowing so if you have an employee benefit trust an EBT that and you have an agreed between your shareholders as to how much you're going to increase your profits to sell your shares that we have five times then you can still sell to your EBT.

Instead of selling outside and keep a stable business that can can be privileged enough to offer things that maybe you know ethical things that maybe are not quite so commercial but if you take loads of money out and you have lots of borrowing and big bonds and all of that sort of thing that is much more hard harder to run this sort of setup.

Company such as lush are increasingly part of the mainstream and it's worked for the business trends such as veganism and Xero packaging have come to its way of thinking rather than the other way around from its headquarters still above its first shopping pool to its intention to sell a controlling part of the business to workers it still does feel.

Like an outlier for now whether or not it can continue to compete as successfully to sell its bath smelly's is another matter now that every consumer Brown wants to do good but then you can't buy authenticityHow Lush took on the cosmetics industry | FT

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