Strategy spotlight: Five ways Lush is building its brand identity to accelerate future growth

1. International driving bulk of revenues 

In September 2021, Lush acquired full control of its North American joint venture, which has been consolidated into its group results. Group sales jumped to £657m due to this addition for the year ending June 30, 2022 (2021/22). Removing this, revenues would have been £430.8m, rising 5.4% or 9% in constant currency.   

The beauty retailer has just over 100 stores in the UK, while internationally it is fast approaching 1,000 stores. 

Unusually for a British retailer, Lush generates the bulk of its sales overseas. In 2021/22, international retail sales represented 77% of total revenue, up from around 65% for the five years prior to its latest acquisition. 

2. Emphasis on customer wellbeing 

Lush is putting its customers’ mental health first. In November 2021, it announced it would boycott several high-profile social media platforms amid concerns for its customers, launching its ‘Global Anti-Social Media’ policy. The retailer said: “We wouldn’t ask our customers to meet us down a dark and dangerous alleyway – but some social media platforms are beginning to feel like places no one should be encouraged to go.” 

In its annual results to the end of June 2022 (2021/22), it said this policy may have cost an estimated “£10m in sales but it could well have been £10m in profit or 10% of our £800m brand sales (£80m). We simply don’t know.” 

Lush research indicates that 62% of people respect “a brand that cares more about a social media platform’s ethics than the number of people they can reach”. Its focus remains on a “human approach with community activities, more meaningful, inclusive campaigns”. 

In December 2022, it opened “the antithesis of a commercial pop-up” – its Lush Lounge – in White City, London, to help relax stressed shoppers. The space featured mood-based galleries, massage and activities to encourage mindfulness.  

Its Lush Bathe app was created in collaboration with wellbeing experts, practitioners, sound healers and mentors. A series of in-app meditations help users to create mindful practices when bathing as well as connect to users’ health data. 

As consumers continue to face a barrage of external stressors, retailers who act with empathy and compassion stand to gain loyalty in the long term. 

3. New formats and store investment 

Lush is firmly committed to physical retail, having announced a £7.6m investment in its stores in 2022. The retailer doubled the size of its Bluewater store the same year with the 1,500 sq ft area including a dedicated space for personal and bespoke Lush skincare consultations as well as customisable in-store parties. 

Lush senior shop and space planner Danielle Platt said: “The new, larger store focuses on bringing people together through spaces to create perfect, personalised gifts for loved ones, throwing a party with friends or meeting our fantastic in-store team.” 

The retailer will be opening new shops in Covent Garden, Aberdeen and a new anchor (flagship) destination in Glasgow from the end of 2023 to early 2024. 

It has also been experimenting with new formats, having launched a 24-hour vending machine in London’s Coal Drops Yard, King’s Cross, in April 2022.

In Autumn 2023, it is set to launch its first Lush HairLab in Brighton. The salon will use natural henna hair colouring while also working to reduce salon waste. In line with its ‘all are welcome, always’ philosophy, the HairLab will offer no-mirror and silent treatments, quiet hours with reduced music and lighting, and gender-affirming events, such as trans masculine shaving workshops. 

As customers look for meaningful connections, a post-pandemic resurgence in store sales is driving retailers to become more innovative when it comes to physical retail. 

4. “Leaving the world Lusher than we found it” 

Lush has a “cosmetics masterplan” with three strands: 

Lush Earthcare engagement lead Rae Stanton-Smithson told Retail Week Live 2023 that retailers should “leap over” the term sustainability, which is “overused and underacted” on, instead thinking about regeneration. 

Its supply chain remains a key part of its purpose. Lush completed its move to a larger recycling centre (its Green Hub) in Hamworthy, Dorset, opening its doors to the public in May 2023. The £2.3m facility spans 40,000 sq ft, having relocated from its smaller Fleets Corner building, which had been operational since 2015.  

The move allows Lush to process ten times more materials than its old Green Hub. It can process 500 tonnes of wastewater a year and 20 tonnes of plastic a week.  

Lush Earthcare strategy lead Ruth Andrade said: “From the early days of the first Green Hub in 2015, it has been about much more than just ways to process materials, it has been about finding the hidden potential in the materials we use.” 

As part of its sustainability initiatives, Lush customers have been able to return its empty pots since 2009 in exchange for a discount or free face mask.  

In 2022, its customers and staff returned an estimated 720,000 items of Lush packaging to its stores. Many of its products such as bath bombs and soap can be sold package-free, cutting down on waste in the supply chain. 

5. Creating cross-generational excitement 

While The Body Shop has seemingly faltered under the weight of competition, Lush has cleverly pivoted its strategy to collaborate with other franchises to grow its reach while keeping its brand identity firmly intact.  

Over the past 12 months Lush has launched eight collaborations including with Netflix show Stranger Things to movie tie-ups such as Asteroid City, Super Mario Bros Movie and most recently Barbie.  

The retailer said that five of these collaborations have produced total sales of £15.4m so far, with the Super Mario Bros Movie collection in particular proving to be a key driving force for “creating cross-generational excitement”, hitting £10m in sales globally. 

Sales from new customers following the collaborations rose 11.2% from March to June 2023 (2022/23) with 12-month rolling traffic up 1.2% on the same time last year. 

Lush has gone as far as to dedicate its shop space in Soho, London, as an in-person space specifically for collaborations.   

The retailer is eyeing new categories on which to collaborate, with each one boosting new customer numbers by an average of 30%.

Lush concepts creative director Melody Morton said “we have pillars on where we’d like to make sure collaborations are being considered, such as sport, music, entertainment, fashion, art and gaming”. 

With further brand collaborations in the pipeline as well as focus on its stores and services, the Retail Week analyst team forecasts Lush to reach total revenues of £823m by 2027/28.