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Gillette nicked by Schick
Tensions escalate in the shaving wars as the world awaits the arrival of the four-blade razor.
August 8, 2003: 2:04 PM EDT
By Gordon T. Anderson, CNN/Money Contributing Writer

NEW YORK (CNN/Money) - In the arms race some know as the razor business, Gillette has made a pre-emptive strike.

The company just announced two new products: the Sensor 3, a three-blade disposable, and the Venus Divine, an anti-chafing razor for women.

The news comes none too soon for Gillette (G: Research, Estimates), because next month its rejuvenated rival, Schick, will introduce the first four-blade razor, the Quattro.

Schick's big promotional push will begin in mid-August, with a series of publicity events. Soon after, the airwaves will be cluttered with what Ad Age magazines estimates to be $120 million worth of commercials.

Is it the hydrogen bomb of the War on Stubble? Probably not. But Schick does say the four-blade razor is the greatest thing since, well, the ones with three blades.

Two blades, three blades, four -- what's next? The answer is obvious, and from the outside, perhaps a bit daffy.

Put simply, this is a mature industry's cash grab. To quote the philosopher Dave Barry: "Quattro is Italian for 'costs more money.'"

A competitor emerges

Gillette is dismissive of battlefield metaphors. "If the premise is 'the razor wars,' I'm not sure there's much to say," says spokesman Eric Kraus. "We have more than 70 percent market share, after all."

For Gillette – which has for years dominated the business without any strong rivals – a competitor's emergence is no laughing matter, even if Schick remains far distant any way you measure it.

"Schick has been a subsidiary of larger companies that have ignored it a little," says Jackie Burwitz, a spokeswoman for Energizer (ENR: Research, Estimates), its parent company. "It hasn't been a core asset."

That changed in March, when Energizer paid Pfizer $930 million for Schick-Wilkinson Sword. Suddenly, Schick was no longer a drug company's mismatched subsidiary. It became a centerpiece of a consumer products marketer that already competed with Gillette in one area, batteries (Gillette owns Duracell).

"We didn't buy Schick to go after Gillette," Burwitz says. "But batteries and razors have a lot of overlap in their distribution channels. Most of the places they're sold are the same."

One of the things that attracted Energizer was a research pipeline Schick had developed. Indeed, two weeks after the purchase was finalized, the company rolled out the Intuition, its most innovative new product in years.

Targeted at women, the device is an all-in-one combination of razor and shaving cream.

Intuition  
Intuition

Since its April launch, Intuition has grabbed an 8.5 percent share of the market for non-disposable razors, or "systems," according to Information Resources Inc. (IRI). That drove Schick's total market share up nearly three percentage points, to 17.9 percent.

Investors have noticed. Energizer stock is up more than 50 percent since its mid-February lows. Gillette, with a market capitalization more than 10 times as big, has traded within a relatively narrow range for most of the year.

"I kind of felt like an idiot because I didn't focus on it before," says Jeff Matthews, a hedge fund manager at RAM Partners in Greenwich, Conn., who owns no stake in either company. "Schick had been out of it for so long, it was easy to forget about them."

The money manager says he should have paid closer attention to his two daughters and their friends.

"Hordes of teenage girls are always hanging around our beach house," Matthews says. "And they all kept leaving these big fat razors lying around the bathroom."

Rising tide

What both companies are trying to do is expand a market that has existed since the first caveman discovered a sharp rock could solve the problem of an itchy beard.

Indeed, market share has risen also for Gillette's Venus. Before the Intuition launch, Venus controlled 13.8 percent share of the market for non-disposables, according to IRI. Now, its market share is 17.2 percent.

With the battle drawn in women's razors, Schick is now opening a second flank: the men's market, a much larger arena.

Though Quattro's four blades have drawn attention, in the sea of shaving it's not the number of boats but how they float.

Venus  
Venus

"Simply slapping on another blade doesn't make it a better shave," acknowledges Schick's Burwitz. "There's more to it than that."

Why, then, are we about to learn more about the four-edged sword than we ever thought we could know?

"New products generate a lot of trials, especially when they come with big marketing budgets," according to Gillette's Kraus.

Gillette's response is guarded. "We've tested multiple blades and razor elements for decades," Kraus says. "The simple addition of another blade does not itself improve a shave."

But what if the four-blade works? "We've tested razors with any number of blades," he says, ignoring the five-bladed machete hanging overhead.

Of course, a soldier never wants to reveal what's in his arsenal.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.