The Razor Wars continue…
aka…The 800 lb gorilla doesn’t always get to sit where he wants.
Gillette has always been the 800 lb. gorilla in the razor wars. They were first to the market with modern replaceable blades (see history of the modern safety razor) and continued their market dominance by spending barrels of money on R&D and advertising. A decade ago, the US razor market was firmly owned by Gillette with about 70%. Schick was a far away number 2 at about 19% and the rest was filled in by Bic and a few others. But then things changed. These market leaders have lost significant ground to upstarts and things have gotten more complicated.
Ten years ago, the existing razor market was the picture of vulnerability – minimal players and fat margins. Dollar Shave Club originated in 2011 and was soon followed by Harry’s in 2013. They both offered low-price cartridge razors for direct shipment to your home in a reoccurring membership program. I consider Dollar Club and Harry’s good examples of disruptive innovators. They significantly affected the market and forced the other established entities in the market to adapt. Which they did. Gillette and Schick later started their own deliver-by-mail programs.
Dollar Shave Club was purchased by Unilever in 2016 in a reported $1 billion deal. Seem like a lot of money? It is. But remember that this market is quite large and Proctor and Gamble had about $6.1 billion of sales in their grooming division in 2018 (mostly Gillette).
Gillette annual report here.
And because I like numbers here is another…P&G purchased Gillette in 2005 for $57 billion.
Where does it all stand now? In the US, Gillette has less than 50% of the razor market, Schick has about 14%, Dollar Club 8% and Harry’s 3%. Gillette still has the majority of the market but has lost a lot of its strength. Gillette net sales have decreased in the last couple years and in 2019 took a $8 billion writedown on P&G’s books.
Ignoring the numerous lawsuits that these companies keep trading back and forth, the next major move was made by Schick (or more specifically, its owner Edgewell Personal Care) in May 2019 when it attempted to buy Harry’s. Perhaps this was a way to finally get an edge (pun intended) on the market and get something Gillette did not have. The deal was set to close in 1Q20 for a reported $1.37 billion. Cue the Fed. The purchase was stopped by the United States Federal Trade Commission because they said it would result in “serious harm to consumers.”
Here is a link to the written legal decision of the Harry’s lawsuit. It is redacted by the FTC but still fun to read.
Edgewell was forced to scrap their plans to purchase Harry’s and now the world waits for the next move in the ongoing razor wars.