Why transparency and sustainability make good business sense for award-winning retailer, Lush Cosmetics

Lush Cosmetics prides itself on being a company founded by “hippies” but with 900 stores, 1500 employees and revenue nearing $1 billion worldwide, the hippies that power this retail chain must be doing something right.

Lush Cosmetics Australia is on track to turn over $50 million this year, as directors Peta Granger and Mark Lincoln drive the business through a major growth phase while also moving to further improve its supply chain, sustainable processes and ethical standards.

“Just buying fairly trade ingredients, is that actually getting to the root cause of inequalities in supply chains? Not really,” Granger told SmartCompany.

“It’s wanting to go beyond that, beyond just a fairly traded ingredient.”

In early 2017, Lush Cosmetics Australia will open up its manufacturing kitchen to the press and public in a bid to boost transparency around how its products are made.

Located in Villawood, New South Wales, and spanning over 4000 square metres, the “Lush Kitchen” will be open for people to come in and even try their hand at making some of the bath and beauty products.

Speaking at a private lunch in Sydney last week, Granger also revealed Lush will be opening more larger format, stores including a 250-square metre space at the Queen Victoria Building in Sydney, which will open this August.

Continuing the focus on delivering fresh and natural cosmetics to consumers sustainably, Granger said Lush has got 80 new products planned for release in early October.

To cope with this, the the size of the Villawood manufacturing facility will double over the next couple of months.

With no funds spent on celebrity endorsements, opting instead to pay extra for more environmentally friendly ingredients, and taking on risky social and political campaigns, Lush received international recognition at the 2016 World Retail Awards, where it took out the honour of Responsible Retailer of the Year.

Closer to home, Lincoln says the business is also having internal wins.

“We run an anonymous survey for staff, which helps with our to-do list,” he says.

Of Lush’s Australian workforce of more than 400 employees, Lincoln says more than 70% are satisfied with their pay, work and environment.

“Learning to tell our story better definitely had a big impact,” Granger says.

“We just got better at communicating [the values and ethics that had always been there] to staff and customers.

“Having both of those sets of people understand who we are, what we do and the lengths that we go to, that has a huge impact on engagement.”

Switching to better ingredients — even at a cost

On a mission to produce beauty and skincare products without animal testing, using sustainable ingredients and ethical buying, Granger and Lincoln say Lush seizes every opportunity to deliver on these aims and increase the benchmark for what is possible in the cosmetics industry.

When the business discovers an ingredient that isn’t as sustainable as it could be, it will swap to something better for the environment and consumers, even if it’s more expensive.

After receiving feedback on the negative impact of plastic glitter, Lush swapped to a seaweed based ingredient that cost six times more because it would be better aligned with the company’s environmental values, Lincoln says.

He adds that Lush has also chosen not to patent the palm oil-free soaps it recently invented so that other brands wanting to switch to more sustainable methods can follow suit.

Investing in startups to amplify impact

Lush directs 2% of its buying spend into sustainable startup ventures around the world via its “Slush fund” (Sustainable Lush Fund).

Through non-exclusive partnerships, this fund helps entrepreneurial permaculture farmers grow businesses while simultaneously helping Lush clean up its supply chain even further by sourcing more environmentally friendly, sustainable and fairer than fair trade ingredients.

“We try to focus on projects that have the potential to become sustainable,” Granger says.

“You don’t want to start funding something you’re going to have to fund for the next 10 years, the idea is that the funding that you give helps it get off the ground and get to a scale where they can become self-sustainable.”

To date, the fund has injected more than $5 million into 44 projects across 21 countries.

“We really want to work with developing communities by supporting and respecting local wisdoms,” says Granger.

Having tough conversations

Tackling sensitive issues like the treatment of asylum seekers and more recently, saving the Great Barrier Reef, is no easy feat for a retailing brand trying to make sales.

But Lush takes a very strategic approach to ensure its frontline staff are well prepared to manage the difficult conversations that come with being an activist retailer.

Granger jokes that they’ve been called an activist group that uses shops as a front.

This isn’t far too removed from the truth.

With Lush set up at some of Australia’s busiest retail spaces, the brand is effectively using these as broadcasters and billboards for not-for-profits, charities and greater causes.

The big goal is to spark conversations about “hard truths” with those that aren’t the converted.

“Those hippies and activists still run the business,” says Lincoln.