LONDON — The British cosmetics brand Lush believes its colorful, natural and potently scented cosmetics deserve to be showcased in a similarly statement-making environment. It turns out that when they are, customers respond.
Paul Wheatley, global property director of Lush said experimenting with larger stores has been key to transforming Lush’s U.K. business from a loss-making entity to a profitable one.
In 2013 the company recorded sales of 57 million pounds, or $89.1 million, and a pre-tax loss. By 2016, thanks to spiffed-up stores and larger units, the company returned to profit.
“The problem was having a proliferation of stores in the 400- to 600-square-foot bracket,” said Wheatley. “Relatively cheap to run…but the question we had to ask ourselves was whether we were capping the upside, because the stores were too small.”
By relocating its stores to larger spaces — including a 10,000-square-foot store on London’s Oxford Street that opened in 2015 — Lush’s U.K. business turned a profit in 2016, with sales of 125 million pounds, or $169 million.
“It’s not about more stores — it’s about the right stores of the right size, in the right locations,” said Wheatley.
Among the new generation of Lush stores is one in Newcastle, England, which in 2011 moved from a 650-square-foot space to a 1,400-square-foot space.
It increased its sales from 580,000 pounds to 850,000 pounds, or from $930,000 to $1.36 million, in a year. In 2016, sales at that store stood at 1.8 million pounds, or $2.4 million.
In 2012, the brand also increased the size of its Edinburgh store from 620 square feet to 2,000 square feet, and its Liverpool store from 500 square feet to 2,700 square feet. Both stores doubled their sales in the year after they relocated.
It’s not just about size for Lush. The stores boast exciting elements to engage customers, such as a greenhouse growing the herbs that are blended into Lush’s cosmetics in the Manchester, England store. The Newcastle unit, meanwhile, has a “living wall” of plants.
“People get tired of uninteresting brands that never evolve, and staid environments that never change. So it’s up to us as retailers to make those changes,” said Wheatley.
The evolution of Lush’s stores reached a new height in 2015, when Lush debuted its 10,000 square-foot store on London’s Oxford Street.
It launched with 220 new products solely for that location, along with a spa and myriad demonstration stations. “We had no experience as a business of something of that scale. Just blind faith and enthusiasm and a belief that we could do it,” said Wheatley.
He said Oxford Street is about an experience and that it shouldn’t just be about sales. The store, he added, “allows us to get our messages and our products across to an audience that may not be aware of them.”
The brand is applying this strategy of fewer stores on a larger scale to its global property portfolio. In Japan, Lush is reducing its portfolio from 145 to 95 stores, with its new, grander-scale stores including a 2,200-square-foot store in Osaka and a 2,000-square-foot store in Harajuku.
It is also looking at larger units in Europe, as it expands its Via del Corso store in Rome, and is considering a 10,000 square-foot space in Paris. In addition, the brand has agreed terms on a 20,000 square-foot store in a U.K. city, although Wheatley declined to offer up any more details.
“This phrase ‘experiential retailing’…it’s just a new way of saying retailing properly,” said Wheatley. “It’s always been about providing customers with amazing products in a great environment with wonderful service. Couple that with the right store of the right size in the right location, and it’s that simple.”
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