SMOOTH AND SMOOTHER 2004-04-05 (2)

AL HELLER

Incessant new shaving technologies keep molding the grooming category into one of the biggest consumer magnets in health and beauty care.

Supermarket merchants, normally a skeptical bunch, give uncharacteristic praise when they liken new shaving product introductions to powerful Rx-to-OTC switches. They cite the massive promotional support, the well-known brand names, and a first-to-market mentality as the paths to repeated success with each product improvement.

"People don't mind spending the extra dollars for the extra comfort," said Mike DeJulio, manager, health and beauty care, Price Chopper Supermarkets, Schenectady, N.Y. "This is one area where they can still spend lavishly in this economy."

"Our buyers feel that in the same way the power-assisted toothbrushes brought new interest to a daily routine, the generation of battery-handled razors will bring new interest to shaving," added Lori Willis, director, communications, Schnuck Markets, St. Louis.

"New items are the pulse of our business in the category," noted Joe Ramirez, spokesman, Penn Traffic, Syracuse, N.Y. "Not only do we want new items. We want to be first to market with such products as the Gillette Mach3 Turbo and the soon-to-launch Gillette M3 Power razor. Gillette is spending $135 million on this launch alone in year one. Resets aren't a problem. When this type of money is being spent on advertising, a retailer has to be first, ready and well-represented. If it isn't, the competition surely will be."

Innovation lifts sales, and data from the Strategic Planner of ACNielsen, Schaumburg, Ill., indicates the time is right. During the 52 weeks ended Dec. 27, 2003, non-disposable razor sales in food, drug and mass merchandiser channels (excluding Wal-Mart) slid by 11.6% to $121.5 million on a 14.7% unit fall. Razor blades edged down by 1.5% to $752.9 million on a 6.2% unit decline.

By comparison, supermarkets (excluding supercenters) posted a 9.2% drop in non-disposable razor sales to $50.8 million on a 13.7% unit slide, and a 2.0% slip in razor blade sales to $331.4 million on a 7.0% decline, according to ACNielsen.

Sources credit Gillette and Schick for priming the pipeline with new concepts that raise average tickets for razors and blades, and getting people to abandon perfectly functional stock in their vanities and medicine chests simply because they want what's new. "The category gets a nice ratchet effect in the short term, and settles into a steady-replacement mode at a higher price level over the long term," said Jim Wisner, president, Wisner Marketing Group Inc., Libertyville, Ill. "It's a way for the category to create its own inflation."

Despite ample evidence of intense competition, both companies deny they're in a technology race.

"We've pushed performance and technology for more than 100 years. It's part of our culture," said Paul Fox, director, global external relations, Gillette Co., Boston. "For us, this isn't a technology race. It's about bringing better-performing products to market that have meaningful advantages that consumers recognize. One characteristic of our brand portfolio is that once people try a new item, they show significant loyalty to it."

Similarly, Amy Roman, senior brand manager at Schick, Milford, Conn., said, "We don't feel we're in a race. The Quattro razor is the result of Schick's commitment to bringing men a technologically advanced shave. As a consumer-driven organization, our goal was and still is to bring high-quality, technologically innovative, new products to retailers and consumers."

However, there's no denying the positive effect of their advances on the category, the timing of their releases, and the perceptions of chain buyers.

Last September's introduction of Schick Quattro, a four-bladed razor with two conditioning strips each with aloe and vitamin E, escalated the competition in men's shaving. It raised the blade count over Gillette Mach3, on the market since 1998, and Mach3 Turbo launched in 2001 with anti-friction blades, a protective skinguard and a lubrication system.

The upcoming May debut of Gillette M3Power will bring to market the first product that merges the company's three businesses: Gillette blades and razors; Duracell battery power; and Braun small motors. Its pulsing action stimulates hair upward and away from the skin, making it easier to shave. Its blade cartridge is infused with aloe and vitamin E. Later in 2004, Gillette will launch its Complete Skincare premium product line, joining a market that's been developed over the past year-and-a-half by Adidas, Nivea and Universal Razor.

Both companies expressed commitment to their complete portfolios, so retailers can expect continued supplies to meet customer demand.

"Gillette is the leader in bringing new products to market, but both are doing a terrific job at this point. When Schick was part of Pfizer, [it] spent a lot of money on R&D, and had great items in the pipeline when it was sold to Energizer," said Price Chopper's DeJulio. "[It] did really well advertising and promoting Intuition [women's shaver]. Gillette countered with Venus Divine. Soon Schick came out with Quattro, and now Gillette is launching M3Power. It's always a race of who will maintain market share."

Gillette claims a 72.5% global share of the men's blade and razor market, and noted that the Mach3 family alone accounted for 34% of blade category dollars in North America in 2003. While the impact of Schick introductions may be less than Gillette's -- Penn Traffic reported that Mach3 drove 18% of its stores' category dollar volume during its launch, vs. Quattro's 4% contribution when it came to market -- the company's brands bring innovation and promotional energy to store aisles.

Chains are leveraging that dynamic. Price Chopper attains a first-to-market image with "Coming This Week" features in its weekly circulars and in-store signs denoting "New Item" and promotional prices. "We have excellent execution at the stores," added DeJulio, noting that floorstands and counter units of shaving items are up within a day of launch, and in-line displays are cut in within two to three days.

Willis of Schnuck Markets called shaving "another good nonfoods reason for people to come to the supermarket. HBC is a must-stop on the grocery trip. Products like these ensure it stays that way. I'm amazed at the type of variety we're able to offer in shaving tools, to serve different customers, or the same customers for different work and travel applications." She intends to post new shaving products on the "New Items" portion of the chain's Web site.

Know the Customer

Supermarkets benefit from another tie-in: The brands' marketing not only appeals to men, but to the women in their lives as well. The women actually make most of the purchases.

"Women account for 92% of the money and time spent, and 70% of the customer base, in supermarkets," said Jim Wisner, president, Wisner Marketing Group Inc., Libertyville, Ill. "How does the decision get made to change what you use? Either the guy thinks it's cool, or the woman influences the purchase or buys it as a gift."

Wisner also sees a bigger picture in which shaving technologies play a significant role. "The grocery mind-set has to change. Channel destinations are being driven by nonfood as much as anything else, and perhaps more so. Other trade classes carry so many items that used to be core for the supermarket. What's driving them to the other channel is usually nonfood, and they're walking out of those stores with consumables baskets in excess of $100 that supermarkets would otherwise get," he noted.

"Retailers would have the truck with the latest flavor of Jell-O pull up to the door at midnight, but there's not the same urgency in nonfood. Drug owns the reputation for being first-to-market, and people think food stores are high-priced. It's unfortunate for supermarkets because nonfood is more exciting to consumers," Wisner added. "The shaving category is very consumable, and can be trip-dependent."

Retailers should "look to the category leaders who understand their consumers better than anyone else," or risk making HBC too complex for people to shop easily, said Paul Fox, director, global external relations, Gillette Co., Boston. "People stand in front of displays such as oral care, and are unclear about which products to choose. Clearly, innovation can help people make the right decisions, and improve their shopping experiences."