BLADES IN SPADES

In an event that has become almost commonplace, retailers are facing the challenge of the timely launch of a new shaving system and the reaction by competitors.The technology keeps advancing, and the marketing support keeps getting bigger. For example, the recent introduction of Gillette's new Fusion razor ups the ante to five blades in two configurations - electric-powered and non-powered - backed

In an event that has become almost commonplace, retailers are facing the challenge of the timely launch of a new shaving system and the reaction by competitors.

The technology keeps advancing, and the marketing support keeps getting bigger. For example, the recent introduction of Gillette's new Fusion razor ups the ante to five blades in two configurations - electric-powered and non-powered - backed by a marketing campaign said to be the biggest ever for a Gillette product, and perhaps the largest one of the year for the blade-maker's new parent, Procter & Gamble, Cincinnati. Super Bowl ads kicked off the product.

Bic Corp., Milford, Conn., followed a week later with a freestanding insert to support its latest men's and women's razors. Then the Schick division of Energizer Holdings, St. Louis, which recently launched a battery-powered version of its four-blade Quattro razor, said last week it will deliver two new women's offerings next month: the Quattro for Women Go! razor system, which includes a travel case and a shower hanger; and the Intuition Plus, which uses three blades surrounded by a skin-conditioning solid formula to shave and lather in one step.

"Now we have six Fusion [stockkeeping units] and my understanding is that Schick is coming right back with something," said Bill Martin, category manager, health and beauty care, Valu Merchandisers Co., Kansas City, Kan., who was interviewed before the Schick announcement. "How are we going to put all this on the shelf and how are we going to get it there quickly?"

Gillette's $200 million spending on the Fusion launch has gotten retailers' attention.

"When a razor company spends that much on TV ads, you'd better be there," said Sue Vodika,

HBC buyer/category manager, Bashas', Chandler, Ariz. "With this kind of excitement, I don't think it's a choice whether or not you have that product on time." Vodika said Bashas' had the product in stores days before the Super Bowl and timed her circular ads to run just before the big game. "You just have to have it," she said.

"Today's consumer might have three or four different systems that they've purchased just to stay up with the new technology," said Tony Harrington, business manager for HBC at private-label cooperative Topco, Skokie, Ill. "Consumers have developed a low resistance to changing shave systems," he said.

Supermarket retailers can take advantage of the money behind razor advertising campaigns by "thinking about foot traffic and capitalizing on incremental sales," said Ted Derose, purchasing supervisor for Promotions Unlimited, Racine, Wis., a provider of circulars, coupon books and value merchandise for supermarkets.

"The most immediate and important action for supermarkets with new shave products is just plain, hard exposure," said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill. Many consumers are early adopters and will want the latest shave system just because it is new, he said.

Retailers are concerned, however, that eventually demonstrable improvements in technology will drop as price points rise, and consumers' willingness to spend the money that supports these new systems will vanish.

"I think consumers have reached their highest price points with this category," said Sue Murtha, HBC/general merchandise buyer, Quality King Distributors, Ronkonkoma, N.Y. "The Fusion razor might just cannibalize on Gillette's Mach 3 and Mach 3 Turbo business, or consumers just aren't going to be willing to pay the high retail price on this."

There is a point where the industry will see a diminishing return, Harrington said.

"Shave companies are beginning to, in a real way, split hairs with the technology," Wisner said. "Eventually the consumer will say, 'I don't detect any shortcomings in the product I am using now.'"

But until then, the consumer will try anything, said Robert Passikoff, president, Brand Keys, New York. "Men don't like to shave, and because of that, hey will always look for better ways to shave," he said.

Data from Information Resources, Inc., Chicago, indicates that sales are down for razor handles but up for replacement cartridges. This no doubt reflected the maturity of the last product cycle, industry observers said.

During the 52 weeks ending Dec. 25, 2005, non-disposable razor sales in food, drug and mass merchandiser channels, excluding Wal-Mart Stores, dropped 14% to $172.3 million.

Razor blade cartridges, however, rose 4% for the same time period and channel to $741 million.

Meanwhile, disposable razors rose 7.7% for the same time period and channel to $426.7 million.

"I don't think the category can really go anywhere else. It is running on improvement for improvement's sake and differentiation for differentiation's sake," Passikoff said. "But if they just offer design differences, people will go for them."

The future of the market may lie in color and personalization, Wisner said. "What may happen next is, you figure out which system you like and you get a customized handle. You get something that is your own color, your own style, your own personality, and you pay an extra $5 for it," he said.

These constant redesigns provide a sizeable opportunity for private-label brands, Harrington said. "Because the prices of the newest systems have increased so dramatically, private label is more differentiated by price in this category than in any other nonfood category," he said.

The biggest challenge for private label is the lag time resulting from patents.

"One of the interesting things about this category is that everybody builds mountainous walls of patents around their new products," Wisner said.

Because the past five years have brought on a nonstop slew of improvements, razor companies have become so skilled at product development, "they patent everything from the way the product is constructed to the way the cartridge fits onto the handle," Harrington said.

Private label, therefore, is not able to design its own cartridges to fit onto brand-name handles. But in the past 18 months, Harrington said, private label has moved on to three-blade disposables, and a three-blade handle and replacement cartridge system that are "more functionally equivalent to brand products than the previous store products."

It may not take as long for private label to catch up to Gillette's Fusion because the battery-powered and manual versions of the five-bladed razor were released at the same time, contrary to the expectation of retailers and other industry observers.

"Last year, we would've thought that every other year a blade would be added to a manual style razor and on alternating years a battery-power system would be added to support that," Harrington said. "With the release of a five-count cartridge in power and manual, Gillette took a fairly big leap forward," he said.

"For the first time ever, Gillette broke its entire line at once," Vodika said. But making space for multiple products is usually a problem, she said, because she generally has small shelf sets.

With the development of new technologies, along with new shaving gels and related items, "there is an expansion of the itemization that is available," said Larry Ishii, general manager, HBC/GM, Unified Western Grocers, Commerce, Calif.

"As it relates to actual execution, lots of conventional supermarkets have a tough time taking full advantage of the grooming category simply because they don't have a lot of space for it. The category is also a little bit more cyclical and trend-driven, making merchandising more of a challenge," he said.

"You need space for a new product, but if the whole category is growing, you should give it more space," Wisner said.

Shaving as Skin Care

With razor technology at what supermarket industry experts think could be its peak, the ideal place for the grooming category may be with skin care.

"I think the next big thing for shaving will be for manufacturers to determine how they can expand on the concept of shaving and place it into the broader context of skin care," said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill.

With overall growth in the men's grooming area, including moisturizer, body sprays and other skin treatments, shaving is likely to become ingrained in the larger personal care concept, retailers told SN.

"Gillette just broke everything from shave balm to shave cream to refill cartridges with the introduction of its new Fusion line," said Sue Vodika, health and beauty care buyer/category manager, Bashas', Chandler, Ariz.

"An opportunity exists for shaving to become a part of an entire face and skin care regimen," said Tony Harrington, business manager for HBC at private-label cooperative Topco, Skokie, Ill. "Companies like Gillette and L'Oreal will have the chance to co-brand products in an attempt to capitalize on this."

There has been significant growth in the products that go along with shaving, Wisner said. "I think the integration of shaving into a larger skin care area is equally likely in both the men's and women's categories," he said.

"Even though in shaving, lots of women still use the men's versions of the products, there is a very distinct and substantial women's segment," said Larry Ishii, general manager, HBC/general merchandise, Unified Western Grocers, Commerce, Calif.

Regardless of gender, consumers are looking for an easier time shaving, said Robert Passikoff, President, Brand Keys, New York. "People hate to shave, so when they do, they want a good razor and good shaving and skin care products all tied into one."