P&G Buys Art of Shaving Retail Stores

Giant Looks to Boost Profile in Men's Prestige Personal Care, Increase Direct Contact With Consumers

By Jack Neff
Published: June 03, 2009

BATAVIA, Ohio (AdAge.com) -- Undeterred by recession or getting into a retail business with which it has little experience, Procter & Gamble Co. is buying the Art of Shaving, seller of pricey men's shaving products at upscale shopping malls.

Gillette's relationship with the Art of Shaving goes back to 2007, when it began selling high-end Gillette-branded chrome products there.

P&G is looking to get more direct contact with consumers and exposure to men's prestige personal care through the deal, said spokeswoman Kelly Vanasse. Gillette's relationship with the 36-store retailer goes back to 2007, when it began selling high-end Gillette-branded chrome products there.

Even before that, Ms. Vanasse said, Art of Shaving designed all of its razor handles to fit only Gillette products. That's one reason she said the company expects little backlash from mass retailers, since razor handles sold at the mall stores will still create demand for replacement blades.

P&G beauty rival L'Oreal has long run a mass business in addition to major retail operations such as the Body Shop and Kiehl's.

Recession or no, P&G's long-term strategy is to compete in every personal-care channel, increasingly including salons and prestige, where the men's business is underdeveloped. Ms. Vanasse said P&G already operates salons through last year's acquisition of Frederic Fekkai. P&G also runs retail boutiques for its ultra-prestige SK-II skin-care brand globally.

"The Art of Shaving is an excellent strategic match for P&G, building our global leadership in men's grooming and broadening our portfolio to reach high-end male consumers," Chip Bergh, P&G group president of global male grooming, said in a statement. P&G also has a major presence in prestige men's fragrance with such brands as Hugo Boss, where it's been gaining share while losing sales in the recession.

To be sure, all those things are counter-trend, even for P&G, which is testing Tide Basic, a stripped-down, value-priced version of Tide detergent, according to a report today from Consumer Edge Research. But Art of Shaving "is a strong business, and they are maintaining well in the economic environment," Ms. Vanasse said. "Guys who are buying at this price point are doing it because they have a need, so they're willing to spend the money."

Strength in e-commerce
Besides its own stores, Art of Shaving distributes products through about 700 Sephora stores, and it's particularly strong in areas such as e-commerce and developing one-to-one relationships with guys. "We certainly are stepping up our online presence in e-commerce," Ms. Vanasse said. "Art of Shaving brings with them a large e-commerce program."

The recession, meanwhile, has taken a nick out of mass shaving, as sales fell 11% for razors and 2% for refill blades last quarter in food, drug and mass-merchandise outlets excluding Walmart, club stores and dollar stores, according to Information Resources Inc. data cited by Deutsche Bank. Sales of lower-priced disposables, however, rose 2.6%.

Art of Shaving is just one new way P&G is trying to get men to shave more. In recent weeks, the company has released viral videos to teach men how to shave everything from their backs to their genitalia and a new iPhone app to give the bearded a virtual look at how they'd look clean-shaven. Omnicom Group's BBDO and Proximity handle.

8 Comments

By Rodney33 | FRISCO, TX June 3, 2009 05:48:39 pm:

Bravo! P&G does it again.

This time lifting a very cerebral strategy straight from the book of "what works with men."

You see, Inbev and several other leading global brewers have taken a similar approach, where legal, by owning their retail accounts.

In the case of Inbev, they created a custom designed glass for each style of beer they served, and trained their staff on the most appropriate way to pour each one.

Once they established the practice in their accounts and had it down to a science, they brought it to other parts of the world, where they couldn't own or control the retail environment. Their original work enabled them to demonstrate the value, specialness, authentication and distinctness of each brand. It got the retail trade excited and implementation took off.

So much so, that InBev just took over AB.

What's the relevance here? Inbev's target is men who prefer finer beers. Not a stretch at all.

Rodney Mason, CMO
Moosylvania
The Great State Of Design
www.moosylvania.com
www.twitter.com/rodmoose
www.twitter.com/moosylvania

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By AHRL | CHICAGO, IL June 3, 2009 09:42:20 pm:

Another quick turn Procter "innovation"
Can anyone there steward a great idea that needs longer term care? I may like their efforts, but won't be buying the stock.

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By Rajiv | New York, NY June 4, 2009 01:00:59 am:

P&G is indulging in a very smart strategy. The are ultimately getting to the very root of the relationship - the end user.They will get a lot of consumer insight by using the retail channel. I recently read that P&G, is also getting into the Car Wash business, by opening it's own locations.

This multinational giant is definitely going the Retail Way!

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By Prabhakar | Lexington, KY June 4, 2009 08:11:09 am:

This would give them a small incremental boost at best. Why would anyone in their right mind adding more Op Ex.

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By stevenstark | Fairfield, CT June 4, 2009 10:28:33 am:

To answer Prabhakar's question, companies like P&G aren't moving to small retail stores like this to drive volume; they are looking to create quality experiences that convert people, one at a time, to brand loyalists.
P&G is working a niche like this because they understand the long-term ripple effect it can have. Relatively speaking, it's a small expense with the potential for a much larger return.
www.stevenstark.net
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By rleavitt | Lincoln, MA June 4, 2009 02:32:01 pm:

I'm with Stevenstart on this one; it's a smart strategy for P&G to get closer to their customers to learn more, build customer advocacy and word of mouth, and give a small boost to an upscale image. It also fits with the larger "ActVertical" trend of vertical integration, which is mostly coming from retailers moving into product development and design, but has also been incredibly successful for Apple with its retail stores.

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By MARK | MIDDLETON, WI June 4, 2009 06:16:32 pm:

I think you are going to see more efforts from the CPG industry to establish a direct consumer relationship. One driving force behind this is the threat of private label goods. CPG manufacturers simply can't sit back and let their retail channels chip away at their market share with increasingly valuable store brands. They've got to step up to the plate and innovate.

If interested, my most recent post on the Alice.com blog is here: http://tr.im/nsSN

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By jhopelain | Mill Valley, CA June 4, 2009 08:13:07 pm:

Great move by P&G! Not for direct revenue generation, of course. But, there's nothing like having your own lab to discover what works. P&G's consumers as well as its retail accounts should benefit from better P&G new product development, more effective P&G in-store marketing, better training for retailers' sales associates on P&G products, and more. To win with consumers, more brands are going to have to have direct access to them and offer them more compelling purchase and usage experiences. This is one, smart way to do it.

www.retailhitsandmisses.blogspot.com
www.twitter.com/judyhopelain

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