London Evening Standard
Lush founder and chief executive Mark Constantine is the first retail boss to guarantee staff the £7.85 an hour rate, lifting 200 workers out of poverty.
Mr Constantine said workers had "challenged him" to increase their wages, and he urged other stores to follow his example. "It's about fairness and good business practice," he said.
The decision to pay the amount at all 11 Lush stores in the capital was hailed as a breakthrough for the London Citizens group, which launched the living wage campaign 10 years ago.
Campaigners have signed up 140 organisations in the City and the public sector, lifting 8,865 working families out of poverty. But the retail sector - the biggest poverty-wage payer in the capital with 367,000 employees - is the "next frontier".
Mr Constantine, 58, said the move would cost his company £300,000 a year and was inspired by an article in the Evening Standard that compared wages paid to shop-floor staff by Oxford Street retailers - none of whom were prepared to sign up to the living wage.
He was also moved by "challenging conversations" with his employees who were paid £6.80 an hour.
"It made me search my conscience. But also, if I am honest, it makes business sense to pay a living wage because staff can deliver better service if they're not also worrying about the rent," he said. "At a staff party, one of my employees asked if I felt proud to have built up a 700-store worldwide chain, and another said, 'do you purposefully pay us badly because you know we like working for Lush?'
"I take pride in being an ethical retailer, but my staff were putting in a 40-hour week for me, and then having to moonlight because I was not paying them enough. In retail, it is obvious that the people at the bottom of the chain do the real work, putting in long hours, and that they get paid very poorly."
He added: "I had given [£50,000] to the Dispossessed Fund because I care about levelling the playing field in London, but I had to admit that the money I'd donated had, in reality, come out of the pockets of my employees."
London Citizens spokesman Matthew Bolton said: "This is a landmark move for our campaign. We've lifted 10,000 people out of poverty through the living wage, but all have been cleaners and catering contract workers. Lush is the first retailer to sign up.
"We'll be lauding Lush as well as the Evening Standard at our 10th anniversary assembly event to be attended by 2,500 people on May 2 at Methodist Central Hall in Westminster."
Last year, a series of articles in the Standard helped hundreds of cleaners at University College London win a living wage. Initially UCL provost Malcolm Grant, on a £404,000 package, had told the Standard: "Paying cleaners the living wage would cost UCL £1million a year - and I haven't got a spare million, okay? UCL has no plans to pay the living wage." But days after that article was published, he changed tack and said: "UCL will now support the London living wage of £7.85 an hour."
Since then King's College London and University of East London have signed up, bringing to 12 the number of university living wage signatories in the capital. "We believe the Standard's articles tipped the balance," said Mr Bolton. "We similarly hope the Lush initiative will provoke retailers like Marks & Spencer, John Lewis and Body Shop to become flagship living wage champions as well."
M&S and John Lewis have confirmed they are in "fruitful, ongoing discussions" with living wage campaigners.
Mr Constantine had a message for them: "Obviously this is a much bigger step for you because you have thousands more employees than we do, but at the end of the day, it's about fairness and good business practice. So c'mon fellas, for London, let's just do it."
Who pays what in London
£7.85 London living Wage
£5.93 National minimum wage
£5.96 French Connection
£7.82 Marks & Spencer
£6 Dorothy Perkins
£8.65 Body Shop*
£7 John Lewis
£5.93 Souvenirs of London
£5.93 Mad House
* Stores paying living wage in Oxford Street but not necessarily elsewhere