Gillette unveils new, cheaper razors to keep Dollar Shave at bay

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Gillette unveils new, cheaper razors to keep Dollar Shave at bay – Nov. 29, 2017

Here's how pricey razors led to innovation in men's grooming

Gillette is rapidly trying to transform its image from “the best a man can get” to a cheaper shave.

In a “very different approach for the brand,” Gillette said Wednesday that it’s introducing lower-cost razors and beefing up its disposable shaver collection.

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Gillette will start selling new three-blade and five-blade razors in January that will cost less than $10. It will also start selling disposable razors that will feature cooling technology.

The new $8 Gillette3 and $10 Gillette5 will feature a grippy handle and coated blades. The disposable Sensor3 Cool starts at $5 and includes cooling agents currently only found in Gillette’s high-end razors.

It’s Gillette’s latest response to subscription competitors eating its lunch. Until now, Gillette had focused most of its attention on its most-expensive razors, marketing itself as a top-tier brand. That strategy hasn’t been paying off.

In April, the company said it would slash price tags on razors by up to 20%. The following month, it expanded its “Gillette on Demand” home delivery service to allow customers to text when they needed new blades.

The brand is trying to fend off competition from online subscription services, including Dollar Shave Club, Harry’s and ShaveLogic, which have chipped away at Gillette’s stronghold on the industry. Last year, Unilever bought Dollar Shave for $1 billion.

How pricey razors led to innovation in men’s grooming

Gillette’s share of the U.S. razor market has dropped 11% in the past two years, according to a September report from Macquarie Research. Gillette now controls about 56% of the market.

Sales at Procter & Gamble’s (PG) grooming unit, which includes Gillette, slumped 6% in the most recent quarter.

The flurry of changes to Gillette also comes during turmoil at P&G. Activist investor Nelson Peltz is in the middle of an expensive proxy battle to force changes at the company.

The battle for the future of Tide

When Procter & Gamble purchased Gillette for $57 billion in 2005, then the largest acquisition in the company’s history, Warren Buffett called it “a dream deal.”

But P&G hasn’t launched a new razor in 12 years, instead opting to keep upgrading its Fusion series and betting on brand power to lure consumers to its higher-priced blades.

“Gillette was poorly positioned to defend share as consumers shifted to cheaper razors,” said CFRA Research analyst Joe Agnese.

It’s “playing catch up” in the subscription service battle, Peltz’s group Trian Partners said in a white paper outlining an overhaul of P&G. The “lack of innovation” and “lack of competitive response” have derailed Gillette, Trian’s report claimed.

It could be difficult for Gillette to win back customers it lost to the “onslaught of competition,” said Morningstar analyst Lash.

“Consumers aren’t willing to pay up when they don’t see the added value.”

CNNMoney (New York) First published November 29, 2017: 3:22 PM ET

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