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Lush: A Rarity in the Cosmetics Industry*

CASE STUDY, ENTREPRENEURSHIP & STARTUPS
ET Cases - GSMC, 18 Pages
AUTHOR(S) : Achyut Telang and Gaurav Bhatt

Case Preview

Lush: A Rarity in the Cosmetics Industry

 

"We believe in the right to make mistakes, lose everything and start again.”

– Part of the Lush mission statement


“Lush is about passion and iconoclasm: passionate for natural products, fresh handmade cosmetics, seductive perfumes, growth and profit, and iconoclastic about  everything else.”

– Angus Jenkinson and Branko Sain, Professor and Research fellow of Integrated Marketing - Luton Business School



“The whole point of LUSH is that it should be fun for our customers and fun for us.”

– Mark Constantine, LUSH’s Managing Director


In February 2009, Lush opened its 100th store in the USA. By 2014, Lush had over 830 stores in 51 countries of the world. In 2009 the revenue for Lush was around  $595 million. The Sunday Times Rich Listestimated Mark Constantine’s (co-founder and the man behind Lush) monetary wealth at £50 million.

Lush started with a single store in 29 High Street Poole with a small team of people who made hand-made cosmetics, using natural ingredients like fruits: oranges, lemons, juices etc purchased in the supermarkets and used them in soaps and other products. From such humble beginnings, the company went on to achieve a phenomenal growth. Although originally formed in the UK, one of the major regions for Lush was North America (50% in Canada and 40% in the USA) where Michael Wolverton controlled most of its operation since 1996. Around $90 million of the company’s global annual sales of the $350 million come from its North American operations only. Lush continued to be a privately owned company (shareholders: Mark Constantine 37%, Margaret Constantine 25%, Andrew Gerrie 12%, others 26%). Lush achieved all this without compromising on its core beliefs and values and standing up strongly for what it believed in. The company was always against using harmful chemicals, animal testing and packaging from the environment point of view. Lush came to be known as one of the good, ethical companies of the  world................

Lush: An Overview

Lush, a cosmetic company in the UK was formed in 1995. One of the main founders of Lush was Mark Constantine (Mark). Lush actually started in 1977 when Mark- a trichologist7 met Liz Weir (Liz) who was a beauty therapist. They both worked in a hair and beauty salon and became friends. When the time came for their contract to be renewed, Mark wanted to move on and have his own venture. Liz reluctantly agreed and thus Constantine and Weir Plc was formed. The products that they made were unique, different and innovative but did not seem to have commercial value...........

Mark Constantine – The Man behind Lush

Mark Constantine’s life was a mixture of highs and lows. He faced tremendous success and utter failure. He was born in UK in 1952. He grew up without his father who left the house and family when Mark was only two. He therefore did not remember or know anything about his father except for his father’s letter that his mother read out to him. He was affected by it and he described his childhood as tough and thus having a ‘psychological problem’ of entrepreneurialism............

Lush: Its Products and its USP

Lush developed a huge range of products over time. Since they had a policy of experimenting and innovating, they were not afraid to try and make new products. They used natural fresh ingredients like fruits and vegetables and made a variety of products ranging from products:

1. For bath: bath bombs, bubble bars, bath melts, soaps, etc.
2. For shower: shower jellies, shower gels and smoothies, emotibombs, shower scrubs, soaps,
3. .............

Packaging and Innovation

Lush had a unique philosophy because of which it was different from the other companies. One of the unique features of their product was that they generally tried to have their products in solid form, even for shampoos, conditioners, moisturizers, massage bars and scrubs. This allowed them to use less preservative and also eliminated the need for packaging. These products were wrapped in grease proof paper instead of plastic...........

Against Animal Testing

Lush had been against animal testing for over 30 years, fighting for animal rights and informing and encouraging others to join in and participate. They never tested their products or ingredients on any animals and even refused to buy them from animal-testing suppliers. They had a policy that.............

Always Supporting a Good Cause

Lush, in view of supporting good causes or raising social awareness about certain things, encouraged shoppers in India to create a ‘pledge tree’ in the window of their store. This was to bring attention to the issue of deforestation which is done for coal mining. They planned on having a tree trunk in the window with “Fools for Forests” on it...........

Campaigns

Lush always stood by what it believed. Lush was different from others in the way that it did not necessarily choose well supported issues or aligned with big well known groups, instead it chose issues that it really cared about and thought wouldn’t receive much support from others. Following are some of the major causes they supported:

1.1 Save The Sharks

One was of saving sharks around the world. According to them, around 100 million sharks were killed each year for their fins which was used in the soups, for flesh, for cartilages which was used in health care supplements and for oil which was used in cosmetics. And according to their figures, around 90% of the shark world population.............

1.2 Against Seal Hunt

They also had a campaign against the Canadian Commercial Seal Hunt. They said that seal meat was also now served in Canadian parliament for the first time in 110 years. According to a report by The National Post, January 10, 2010, still over 15,500 Canadians............

........................

1.7 Living Wage

Lush undertook various initiatives, supported causes that they believed in and prided themselves on being ethical. In keeping with that, they came up with something unique and innovative which came about for the first time, called as a ‘Living wage’..............

Issues

Criticisms raged about some of the ingredients in the products of Lush like harmful detergents. In his defence, Mark said, ..............

Website Hacked

The Lush website was hacked around the end of 2010 between 4th October 2010 and 20 January 2011. This proved to be a huge setback to the company which could erode the trust of its customers. Due to this hacking, the credit card details of its customers who had ordered online could have been compromised. It put up notices on its website, emailed to its customers who had ordered online.............

Questions on Campaigns

Question marks raised over some of the issues Lush was supporting, its campaigns and the way it was doing it. Cory Morningstar, a climate justice activist said:..........

Looking Ahead: Can it Sustain?

Lush consciously remained a privately-owned company to have the freedom to control its own affairs. Lush did not want to give away the controlling shares and Mark out rightly rejected the idea of selling or floating. After the sale of the Body Shop, Mark expressed his opinion that it was disappointing when the founders of the business sold it to somebody...........

Assignment Questions

I. What according to you were the reasons for the failure of ‘Cosmetics-to-go’ started by Mark Constantine? What did he do differently in Lush because of which it succeeded?
II. ...............

Exhibits

Exhibit I: Lush’s Product

Exhibit II: Lush’s Message on its Website on Hacking of their Website

Exhibit III: Lush’s Email to Customer on Website Hacking

Exhibit IV: Lush’s Message to Hackers

Exhibit V: Lush Stores

Teaching Note Preview

Lush: A Rarity in the Cosmetics Industry

 

Synopsis

This case is about a successful entrepreneurial start up called Lush. Mark Constantine along with a few others started ‘Lush’ with a single store in the UK in 1995 which grew on to become a famous cosmetics company in the world having over 750 stores in 45 countries by 2011. The main man behind Lush- Mark  Constantine was a trichologist. He had always been different from others and had an interest in cosmetics from the very beginning. He loved to experiment and came up with a lot of his own products. He developed a dislike for chemicals from a young age when he once saw an advert about rat poison. This later came to define the company Lush as well which was against chemicals and in favour of natural materials. After becoming a supplier for Body Shop and the biggest one at that, to later starting a company –Cosmetics to go’ which failed, to finally opening up Lush; told an interesting journey of the entrepreneur Mark Constantine.

Lush was unique in many ways. The company had a strong stand against using chemicals, against animal testing and packaging. Lush used a lot of natural  materials like fruits in its products such as soaps, shampoos, gels, moisturizers, creams etc. To avoid harming the environment, Lush even tried to use as little packaging as possible..............

Teaching Approach and Strategy

This case can be used effectively in classroom discussions as well as in distance learning programs. The case moderator can initiate the discussion by giving a brief introduction about the company Lush and the man behind it- Mark Constantine. An overview of his previous entrepreneurial ventures can be mentioned too as well as the various issues that they faced could also be briefed. This can be followed by a discussion regarding the various policies adopted by Lush, its ethical stand and the decision to support various campaigns. The moderator can take the discussion further with the help of the following questions.

Assignment Questions

  • I. What according to you were the reasons for the failure of ‘Cosmetics-to-go’ started by Mark Constantine? What did he do differently in Lush because of which it succeeded?
  • II. ............................................


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Abstract

This case is about a successful entrepreneurial start-up called Lush. Mark Constantine, a trichologist, started ‘Lush’ with a single store in the UK in 1995. Lush went on to become a famous cosmetic company in the world, having over 750 stores in 45 countries by 2011. Lush was unique in many ways. It had a strong stand against using chemicals, animal testing and packaging. Lush used a lot of natural materials like fruits in its products such as soaps, shampoos, gels, etc. To avoid harming the  environment, Lush used as little packaging as possible and mostly had solid products. Even for transportation, the company innovatively used popcorns to be  eco-friendly as well as to protect the products. Because of natural ingredients, even the life of their products was longer. Lush also had a unique philosophy to  encourage innovation. Once a year they would have a ‘Mafia Meeting’ wherein they would discard one third of their products that weren’t doing well. This encouraged employees to come up with something new and innovative. Mark also had a very hands-on approach and would be involved in almost every aspect of the company. This case covers the interesting journey of the entrepreneur Mark Constantine from initially becoming the biggest supplier for Body Shop, to starting a company – ‘Cosmetics to go’ which failed, to opening Lush and the challenges he faced.



Pedagogical Objectives

This case is designed to enable students to:

  • Understand the various challenges faced by an entrepreneur
  • Understand the factors which influence the success of an entrepreneurial venture
  • Assert the possible reasons for the failure of the previous start ups by Mark Constantine
  • Analyse whether Lush was truly an ethical company the way it projected itself
  • Analyse whether a business can be successful while functioning in a truly ethical way
  • Analyze and assess the stand taken by Lush under the leadership of Mark regarding the support extended to various campaigns and also the funding provided to controversial organizations
  • Visualize the future of Lush without Mark Constantine
  • Case Positioning and Setting
    This case is meant for MBA students as a part of the Business Strategy/Marketing Management curriculum

    * GSMC 2014, IIM Raipur

    This Case Pack Includes:
    - Abstract
    - Case Study
    - Teaching Note (**ONLY for Academicians)
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