At least Unilever sees the writing on the wall—or should we say the words on a foggy bathroom irror.
The giant consumer packaged
goods company is shelling out about
$1 billion in cash to acquire Dollar
Shave Club, the fledgling men’s grooming manufacturer that has turned the
razor blade category on its ear, and I
am sure, keeps many people at Procter
& Gamble and Schick up at night.
Trust me, those two kingpins of razor
sales are not putting out the welcome
mat to Unilever.
Actually, right now
they must be cowering in their boardrooms trying to figure out what to do
next, knowing full
well that Unilever
is about to ratchet
up the pressure a
bit more, simply by
putting its multinational conglomerate muscle behind
the Dollar Shave Club.
Started just four years ago, Dollar
Shave Club already has about a five
percent share of razor sales, with
most of that coming at the expense of
the two previously mentioned lead-
ing players in the field. The company,
which has recently moved into skin
care and aftershave products, has
about 3.2 million members, all looking
for a less expensive alternative to shav-
ing products that have reached the
stratosphere in terms of pricing.
As has been written here many
times before, the pricing structure of
the razor blade category has gotten
out of hand in recent years. Suppliers,
specifically Gillette and Schick, are
locked in a bitter war for market share
and see higher prices on more high-tech items as the only way to build
sales. Unstopped, I suspect one day in
the near future, they will be pitching
razors with 10 blades and a flashlight
Unfortunately for these companies, many shoppers are saying they
do not need better technology—they
want better prices. In some cases that
means that people are using an old
blade for much longer than they used
to. In other cases it means that they
are searching for lower-priced alternatives, including the Dollar Shave Club
and Ideavillage, the Wayne, N.J.-based
company that is making noise with its
Micro Touch blades that is also thriving
on a low-priced alternative strategy.
Either way, the razor category is,
pardon the pun, bleeding at retail and
Unilever’s move to buy Dollar Shave
Club is not going to help the existing status quo. The bet here is that
the company is going to continue to
push the direct-to-consumer angle of
Dollar Shave Club while also bringing
less expensive products to retail. And
Unilever is going to put a lot of money
behind what ever they do.
Gillette and Schick will have to react.
This time not with better technology,
but with lower price points that will
allow consumers to purchase a quality
razor blade without breaking the bank.
In the meantime, retailers will have
to play this out. Unilever’s purchase
should spur a new war in the razor segment that, in the end, could see sales
increase enough to cover the lower
cost of the product on retail shelves.
The publicity generated by the market
share war should also cause some serious buzz in the marketplace, which,
in the end, will get consumers more
interested in what is going on and lead
to more sales. Note: There is almost
no such thing as bad publicity, especially when selling products on store
Few business gurus saw this coming,
but it makes total sense for Unilever,
a company that wants to be more
involved in American retailing. The
razor category is about to get all rattled up… I cannot wait.
Unilever’s entry into the razor business is bound to change the category dynamic.
By Seth Mendelson
Seth Mendelson is publisher
and editorial director of Grocery
are saying they do
not need better
want better prices.