For a long time Gillette has been dominant in the international market for razors. The business is generates high margins and has been a cash machine for P&G shareholders. But new competition is upending this long-time reality. Startups like Dollar Shave Club and Harry’s are eating into market share and have driven Gillette to lower prices on its razors to compete. Like Netflix, Amazon, and Google did to movie rentals, shopping and advertising respectively, technology is upending yet another staid business model. Sharon Terlep reports at The Wall Street Journal:
New data show Gillette has lost U.S. market share for six straight years. Its share of the men’s-razors business fell to 54% in 2016, down from 59% in 2015 and more than 70% in 2010, according to figures released Tuesday by data-tracking firm Euromonitor. P&G says its internal numbers show a lesser decline.
Gillette razors and blades are important, high-margin products for P&G, which bought the business for $57 billion in 2005. The Cincinnati giant finds itself under the microscope after Trian Fund Management, one of the biggest activist investors, announced in February it had built up a stake in the company. Trian has yet to say what changes, if any, it will push for at P&G.
“We are very aware of what happening in the North American landscape and we are very focused on addressing some of the challenges that we face,” Gillette spokeswoman Kara Buckley said.
The decision on pricing, she said, came as the company realized the drawbacks of its singular focus on creating evermore sophisticated razors with higher and higher prices. “We need to do a better job of telling guys we are available for them at a multitude of price points,” she said.
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