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After years of adding more blades and more features to its razors to justify higher prices, Gillette will begin selling blades that offer lower prices. Gillette is being forced to compete with online startup companies Harry’s and Dollar Shave Club. Gillette could be cutting prices by as much as 20% on some razors. Sharon Terlep reports at The Wall Street Journal:
The move is sure to further aggravate some of the company’s critics. Activist investor Nelson Peltz, in his campaign to win a seat on the P&G board, has bashed P&G for lowering Gillette prices and failing to develop another major new razor that could command more money.
Before it was acquired by P&G in 2005, Gillette was an “aggressive organization,” Mr. Peltz said in September. “They were fast on their feet. I don’t think anybody is accusing P&G of doing that today.”
Gillette typically spent about $1 billion every seven or eight years to develop a new razor system, backed by a massive marketing campaign and accompanied by a price increase. There was the two-blade Sensor in 1990 and the Mach3 in 1998, followed by the Fusion5 in 2005.
The brand long enjoyed dominant market share despite having the priciest products. But in recent years online razor companies stole customers with cheaper blades, home delivery and cheeky marketing, forcing Gillette to defend its turf.
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