L U S H

Cosmetics

an English company in France

Best in France Case Study

Research by: Regina Cordova Maria Isabel Le Meur Giusep Derleth

Presentation Outline
1. Company overview
History and location The LUSH Business LUSH Positioning

2. Presentation of Lush France 3. Conclusions

Best In France: LUSH Cosmetics 2

LUSH History and Location

 History
1978 : Supplier of The Body Shop 1994 : Creation of Lush in Poole (UK) 2005 : Still a small team but increasing sales : 120 M pounds

 A worldwide company
410 shops in more than 40 countries : UK : 83 shops Japan : 80 shops Canada : 4 factories: UK, Japan, Italy, Canada

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
3

The LUSH Business

 Strong Values
Handmade and fresh ingredients No test on animals No or simple packaging

 Products: A complete range of cosmetics

More than 600 different products Skincare, Hair care, Bath products

 Customer relationship
Quality customer relations / Advice / Customization

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
4

LUSH Positionning
Ethical Values Sabbys Lush Essentials

HANDMADE Cosmetics
Yves Rocher LOccitane Fresh Line

NATURAL Cosmetics
Bodyshop

Garnier

Dior

Chanel

RETAIL
Vichy LOral Paris

LUXURY
Guerlain Givenchy Customer relationship quality

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
5

Presentation Overview
1. Company Overview

2. Lush In France
Why France ? Paris history and performance Difficulties Faced Adaptations Implemented

3. Conclusions

Best In France: LUSH Cosmetics

Why France ?
A strategic market
 France reputation:

the spiritual home of cosmetics

 Paris = second worldwide cosmetics market  Constant new products: 300 launches yearly French Cosmetics Market

 No direct competitor in France  A great opportunity for Lush

 2005 skin care sales in France: 3.3 billion  2010 forecast: 4.2 billion  Retail Sales of Skin Care by Subsector* Subsector*

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
7

France Cosmetic Market

Retail Sales and forecast of Skin Care by Subsector: Value 2000-2005 EUR million Facial care Body care Hand care Skin care 2003 2,118.5 576.8 87.5 2,782.8 2004 2,277.0 660.1 93.7 3,030.8 2005 2,427.9 740.2 98.3 3,266.4 2006 2,520.7 810.9 100.8 3,432.5 2007 2,618.4 887.4 103.4 3,609.2 2008 2,735.2 968.9 106.2 3,810.3

Source: Trade associations (FIP, PLMA), trade press (Cosmtique Magazine, FaireSavoirFaire, LSA, Linaires, Points de Vente), company research, store checks, trade interviews, Euromonitor International estimates

Cosmetics (US $ mln): France 2001 2011

Year
2003 2004 2005 2006 2007 2008

France
654.22 667.52 683.92 717.82 756.32 796.87

% of Region
11.52% 11.57% 11.60% 11.57% 11.53% 11.49%

% of Globe
3.44% 3.43% 3.40% 3.37% 3.33% 3.30%

Source: Philip M. Parker, INSEAD, copyright 2005, www.icongrouponline.coma moment when

Best In France: LUSH Cosmetics

Why France ?
The natural trend
 Booming natural cosmetics market in France
40% increase from 2004 to 2005 ( (Organic Organic Monitor Study) The French market for natural cosmetics is the fastest growing in Europe

 Increasing awareness of the dangers of cosmetics

March 2005, 2005, Television documentary : possible dangers of substances used in cosmetics Best seller in France : La vrit sur les cosmtiques from Rita Stiens

 A comer market
23 23% % of adults would pay more for environmentally environmentally-friendly products and never buy toiletries and cosmetics tested on animals animals. .

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
9

French Stores
 History of Lush France
Creation in 2004 Only 2 shops :
 Paris (65th shop worldwide) = 6 800K  Lille = 450K

 Lack of a specific company strategy

No plan for the future Little knowledge about the french market No target clients, no marketing

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
10

Great Performance
 Simple Strategy Implemented
Educating the market
 Free samples, word of mouth marketing, customers resturned

 Established strong customer base

Strong Revenues (Paris = 6 800K euros) Customer satisfaction
 Moisturizing Cream Buvard (Cream day/night)
I () realized its effectiveness and I do not drop it any more, I'm sure I will buy it again!!

 Raz Raz-dede-mare
I like this rubbing rubbing-out very much because I really think it is efficient. () a real effectiveness on my skin ()

 French forum : Lush addicts blog

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
11

Difficulties faced & relative costs

DIFFICULTIES
Finding the right location
 Paris Store: 1.5 years  Lille Store: the right price at the right time  Paris Market: exigent customers  Customers are well educated  Location search costs  Delay costs

COSTS

Customers specificities
 Training costs

Legal constraints
 Key money  Seasonal employees  Hiring process  Franchise  Legal fees for hiring seasonnal employees  Employee releasement costs  Franchises legal fees  Franchises delayed process opportunity costs

Cutural differences
 Finding the right lawyer  Search for a new lawyer cost

Best In France: LUSH Cosmetics

12

Adaptations implemented
 Few adaptations has been made :
No specific strategy has been implemented Stores and Internet
 2 stores and a french website

The products are very similar to the english ones:

 Same products for all stores  Few adaptations on names and packaging
History LUSH in France
Best In France: LUSH Cosmetics

Conclusions
13

Presentation Outline
1. Company Overview 2. Lush in France 3. Conclusions
The LUSH Future Advice from LUSH France

Best In France: LUSH Cosmetics

14

The LUSH Future

 Future Plans for LUSH in France
Franchise Expansion
 30 to 40 new stores

 Risks identified for LUSH

 More and more competitors  Increasing costs  Some products may be inadequate in the french market

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
15

Advice From LUSH France

 Get information about the business
Distribution network Market

 Flexiblility is key  The need for strategy

- Have a set idea of where you are going

History

LUSH in France
Best In France: LUSH Cosmetics

Conclusions
16

Thanks & bibliography

 Thanks to Emilie (Communication Director of Lush France)  Bibliography
http://www.beaute http://www.beaute-test.com http://www.lush.com Data Monitor www.icongrouponline.coma Organic Monitor Study Euromonitor International

Best In France: LUSH Cosmetics

17