Gillette faces new challenges in the razor wars

The Boston-based shaving giant is working hard to avoid any more nicks to its market share

Gillette's King C. Gillette line is focused on beard-trimming products.jason leiva/Photo courtesy of P&G

It can get lonely at the top. Just ask Gary Coombe, the Massachusetts executive who runs Gillette and the rest of Procter & Gamble’s formidable grooming business.

The P&G veteran had received a challenging task in 2018 when he was promoted to lead the $6 billion-plus Global Grooming division: Defend the throne amid increasingly fierce competition. Under Coombe’s watch, the empire that King Camp Gillette started more than a century ago has been fortified after years of market-share erosion. It’s even showing signs of growth.

But Coombe faces two new challenges as P&G looks to hold on to its crown as the world’s No. 1 razor maker.

The Federal Trade Commission filed a lawsuit this week to block P&G’s acquisition of Billie, a three-year-old startup in New York that designs and sells blades and other body-care products targeted at Generation Z and millennial women. Billie sells directly to consumers. The FTC argues that the startup also is poised to expand into brick-and-mortar stores, and to pose a “serious threat” to P&G and its Venus and Joy shaving brands. Taking out the much-smaller competitor, the agency says, could cause prices to go up for consumers.

Meanwhile, Dallas startup Shavelogic, which has several former Gillette executives on its team and runs its research and design center in Foxborough, is preparing for a nationwide advertising push in 2021. The company began selling its five-blade razors in October after a decade of development, as well as legal tangles with P&G. Shavelogic has done only limited digital marketing, in its home markets of Dallas and Boston, so far. That’s about to change.

Gillette once held a solid 70 percent market share in the US. But upstarts Harry’s and Dollar Shave Club nicked and sliced away at that customer base over the past decade. While Gillette remains in control, its share of the market has shrunk to closer to 50 percent. The rise of the bearded hipster hasn’t helped matters, in terms of demand.

A turnaround seems to be taking shape, though. Boston-based Global Grooming just reported its best quarter — as measured by year-over-year sales growth — in five years. P&G’s shaving sales rose 6 percent from the same quarter a year ago — even amidst a work-from-home wave in which the morning shave has become a more infrequent ritual. P&G can thank the huge growth in sales of its Braun electric shavers and trimmers and Impulse Pulse Light hair-removal devices as more consumers seek in-home alternatives to barbers and salons. The company also has new, fast-growing lines, such as the King C. Gillette suite of beard-trimming products.

But no one knows just how much the COVID-19 pandemic will have permanently increased remote work, once it’s deemed safe to go back to the office. And those younger rivals continue to nibble away at P&G’s supremacy.

Coombe and his team at the South Boston world shaving headquarters have seen this scenario play out before. Their largest rival, Schick parent Edgewell Personal Care, inked a deal last year to acquire subscription-focused competitor Harry’s for $1.4 billion. If you can’t beat ‘em, buy ‘em.

But the FTC had other plans. The agency sued to block the transaction in February, roughly one month after P&G announced its Billie deal. A week later, Edgewell surrendered, and backed away from Harry’s.

It’s hard to blame P&G executives for thinking this time might be different. Billie is younger than Harry’s, with only about 50 employees. The deal price was low enough that P&G didn’t even need to report it to investors. Maybe P&G had found a startup early enough in its life to avoid antitrust concerns, as was the case with its 2018 purchase of the Bevel brand geared for Black men. Guess not.

Will P&G follow Edgewell’s lead, and walk away? If the execs at Global Grooming know, they’re not saying. Their public statement is limited to this: They are disappointed in the FTC’s decision, and are weighing their options.

Now, Shavelogic enters the mix. The 30-person startup, backed by about $40 million in equity investments, is selling a premium experience: a better shave, with better-looking gear. Chief executive Rob Wilson knows that many men have tried Harry’s and Dollar Shave Club, only to give up and return to Gillette. Wilson wants to offer those defectors another option: the S5 starter kit that sells for $25 and includes a stylish handle and four cartridges, enough for two months of shaving.

But lining up a factory in the US proved to be more complex than expected; the products will be made by an unspecified contract manufacturer in Illinois using machines designed by Shavelogic. And a court fight with P&G consumed valuable time and resources: In 2017, a Superior Court judge threw out P&G’s lawsuit accusing four Shavelogic employees of taking company secrets to help launch the startup. The two sides settled later that year.

Will Shavelogic take a meaningful slice of P&G’s market share? Harry’s and Dollar Shave Club were small once, too — not that long ago. Activist investor Nelson Peltz famously chastised P&G management for apparently not taking seriously the threats posed by these direct-to-consumer options. No longer. Gillette beefed up its own late-to-the-game subscription service in 2017. But the real focus under Coombe’s leadership has been on innovation across the entire portfolio: the King C. Gillette line for beards, for example, or the SkinGuard products for men with sensitive skin, or the super-premium Gillette heated razor. The message: We can’t ensure a successful future by resting on our past success.

Every empire comes to an end, eventually. But the ones that are run thoughtfully and with foresight can still reign for quite a long time.