Lush boss Mark Constantine on Covid, Brexit and the future of shopping in Poole

AS the pandemic took hold last year, there was a time when Lush boss Mark Constantine wondered how long the business could survive.

In the same week that Lush co-founder Liz Bennett – formerly Liz Weir – died, governments throughout the world forced shops to close.

“It was really a bleak week. At that stage, I thought I just couldn’t see how we were going to come through,” he says.

“Obviously, if you’re mainly a retail business and all of your shops… How long have you got before you, you know? Six weeks, maybe two months. How long have you got?”

He recalled the failure of his mail order business Cosmetics To Go in 1994 and the Echo headline “Cosmetics To Go has gone”.

Back then, he was motivated by the words of Echo journalist Faith Eckersall, “who said ‘If Cosmetics To Go has gone, what on earth is wrong with the world?’ and that encouraged me to get off my **** and do something else”.

“Have we just been through a similar feeling? Yeah, it felt like that, it felt like we were back there again in many regards,” he adds.

A sign in the window of a Lush store in Liverpool offering a free hand wash service last year

A sign in the window of a Lush store in Liverpool offering a free hand wash service last year

Lush’s losses in Covid

In accounts filed this week for the year ending June 30, 2020, Lush revealed that group turnover fell by 19.7 per cent to £437.8million.

It recorded a loss of £45.2m. Although £37.9m was explained by accounting adjustments, writing down the value of assets and leases in “anchor” stores, its chief executive acknowledges that “a loss is a loss”.

The positive news, he says, is that in the 12 months since then, the business has become profitable.

Lush carried out the thorough review which the accountants call the “Covid rinse”.

“We were fortunate that we had some fat to cut out. We had practices that we could improve on,” he said.

“We’ve certainly gone through the Covid rinse. We’re a lot more efficient than we were and when you’ve got constant growth, by nature it tends to be a little bit of a fatter organisation.”

There were some painful cuts, with 215 redundancies, including 100 in Poole, 32 of them in the factories.

That leaves a total of 1,285 staff locally – 874 in manufacturing and digital fulfilment, 411 in support and retail.

Some changed jobs because their old role had disappeared, with many switching to dispatching online orders. “There are people packing parcels who were organising train travel, there are people packing parcels who were doing other jobs,” says Mr Constantine.

“Those people who want to work for Lush and enjoy working for Lush looked to the future, have been adaptable, and that’s made the difference.”

The year 2020-21 has been much better, he says. “We already know that we’ve restored profits to an extremely good level and we’ve restored all our cash.”

The accountants did not require the company to flag up any uncertainty about the viability of the business.

“Last time they put a qualification in about Lush being a going concern. So we didn’t get that this time – and they really were very vigorous, ‘Do this model, that model, every other model’ –and as they pointed out, most of their other clients were not getting away with that.

“We felt we were being rewarded for the hard work but there’s still, as always, plenty of hard work coming up.”

Lushs spa in Poole

Lush’s spa in Poole

How Lush lost sales but grew its digital business

Lush has lost 25 per cent of its sales in two years.

“The interesting thing is cosmetics as a category have not reduced in their consumption. Other people have had our 25 per cent of the sales,” says Mr Constantine.

“Boots have had them, Superdrug have had them, supermarkets have had them. So we’ve now got to work very hard to get them back because people have got into other habits over a two-year period.”

Many people have had more disposable income, with no holidays or social life to spend on. “Therefore they’re spoiling themselves a bit more and they’re having things sent in, they’re eating more chocolates and they’re having more baths. If you can’t go on holiday, you can take a bath,” he says.

“People have still been buying things but they haven’t been buying from us because our shops were shut.”

Digital sales are expected to exceed £100m in 2020-21, compared with £46m two years before. They now account for 30 per cent of sales, compared with 10 per cent in 2018-19.

Lush, which has historically spent nothing on advertising, invested in paid search to drive traffic to its website. Mr Constantine says this was a way of protecting its trademarked name.

“Our competitors were paying for our name anyway,” he says.

“If someone impinges on that trademark in the physical world, we can do something about it, but if they impinge on it in the digital world, the laws are different and there’s no strength to a trademark, so the only way you can strengthen your trademark is to pay for AdWords.”

One of Lushs factories on the Nuffield Estate in Poole

One of Lush’s factories on the Nuffield Estate in Poole

Lush and the impact of Brexit

Lush and Mr Constantine have become known for an anti-Brexit stance.

He did not actually threaten to quit the UK under Brexit, as is sometimes suggested, but he did warn that there would be pressure to move parts of the business to the European mainland. He also said growing European markets would be served by Lush factories in the EU rather than expansion in Poole.

However, the pandemic has reduced Brexit to a “fairly mild irritation”, he says.

Are Brexit warnings from JP Morgan, Lush and Siemens coming true?

“It’s very difficult to see where there’s any benefit from it – and obviously I can see your readers now sharpening their pencils – but in the end it’s the red tape I think is just so onerous and the lack of opportunity for us to do things for Britain.

“We’ve got a superb team here, we’ve been manufacturing in Poole for 40 years, so we’ve got a hell of an expertise here.

“Manufacturing in Germany or Croatia is great and it’s been fine but obviously we had the expertise here, we didn’t need to do that, so it’s just irritating. It’s just irritating, but is it as dire as Covid? No.

“Having had a fundamental challenge to the total business, red tape and irritation with Brexit has paled into insignificance really but it’s still irritating and nothing’s growing from it. It’s like watching a bit of your garden where nothing grows because it’s all tied up, it’s not working.”

The Kingland shopping parade in Poole

The Kingland shopping parade in Poole

How Poole could be the future of shopping

Asked about the future of bricks and mortar shops, Mr Constantine finds inspiration close to home – the Kingland parade in Poole.

Landlord Legal & General is allowing 10 independent shops there to enjoy two years without rent or rates. (One of them is ånd Fragrance, selling the wares of Mr Constantine’s perfumer son Simon.)

“How lovely to have that line of independent shops now in Poole,” says Mr Constantine.

“It’s stunning, isn’t it? That’s definitely the future. How far-sighted of the landlords in doing that. Absolutely superb. Every set of landlords should be doing that.

“I think, of those shops, three of them are connected with ex-employees, all of whom we like to support, go along and buy stuff from them.

“If every town incubates businesses like Poole is, how vital will things be in five years’ time? Not all of them will make it, we know that. We’ll try and support them and get them there but how exciting an environment. Then hopefully they’ll still want to see Lush in the high street and we’ll be part of a very dynamic situation.”

As for his own shops, he says the immediate priority is to keep staff and customers safe.

“The interesting is the customers that are coming in don’t want to browse, they want to buy. Whereas when you have the normal relaxed state of affairs, people are enjoying a recreational form of shopping, what you get here is people coming in and buying what they want. Even at the door they know what they want. So you don’t get so many customers but you do get the custom,” he adds.

“It’s up to us to try to create an environment that’s as safe, both for the staff and the customers, as possible and up to now we’ve had plenty of guidelines from the government. What’s interesting now is as we go into this new arrangement where the government’s no longer going to provide the guidelines and we all have to make up our own minds, again it will be up to us to provide an environment that people feel safe in.

“We have to have a mindset now which is entrepreneurial. This is the mindset we had when we started the business and you don’t know what’s coming.

“And that’s quite difficult – to take off the cosy coat of predictability and go back into this wonderful world that is the real world. It’s the real world that’s uncertain.”

Lush chief executive Mark Constantine

Lush chief executive Mark Constantine

Diversity and the 100-year life

Lush says it has started work on “embedding equity and diversity”, with a focus on sustaining support for the Black Lives Matter movement.

Mr Constantine says in the past “black and Asian staff didn’t feel comfortable in Poole a lot of the time”.

Mark and Mo Constantine on the 20-year success of Lush

“We’re not talking about just in the streets, although they found that too, but I think it’s having communities or places where you feel comfortable. So we’ve been working hard on that,” he says.

Aged 68, he says everybody’s education should be lifelong.

“I think what’s interesting, especially here in Poole, is we have quite an older population – including me – and the real challenge as you get older is to re-educate yourself. The education you’ve got won’t do,” he says.

He has been reading The 100-Year Life by Lynda Gratton and Andrew J Scott and refers to an actuarial table as he speaks.

“My 14-year-old granddaughter has a 50 per cent chance of becoming 103,” he says.

“So if you’re going to be 103, you’ve got to think about life slightly differently than ‘Off to school, do a job till I’m X and then be retired’ because you won’t have the money for a start.

“So there’s 101 interesting things about the 100-year life, which is far more pertinent to everyone even than Covid and Brexit.”

  • READ MORE: Mark and Mo Constantine on the 20-year success of Lush

As for his own later life, he intends to continue being involved in the business and getting his hands messy.

“As long as I’m making a contribution, I’d like to be here. Every now and then, I feel like they’re wheeling me off. There’s just that slight feeling that everything’s going on and you’re going to be dealt with in due course,” he says.

“I would like really, in my future, to be focused predominantly on product, because I’m a formulator and because I make products, perfumes. If I’m given an opportunity, that’s the job I’d like to do in Lush into the future.

“I always wanted that to be my, in a way, retirement job.”

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