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Gillette in a lather over Schick's challenge for $1.7 billion razor market

By Steven Gray
The Washington Post

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Now, nearly a year after being bought by Energizer Holdings, a company better known for its batteries, Schick has embarked on a strategy that has the market leader in a lather.

In September, it introduced Quattro, the world's first four-blade razor, claiming it gives men the deepest, nick-less shave. Schick's sleek, hypermodern razor is a direct challenge to Gillette's premium Mach3 line, which since its introduction six years ago has boasted in television and print ads that its three-blade razors, tipped with irritation-minimizing aloe and vitamin E, offer "the world's closest shave."

At stake in this war of the razors is the market for one of the most profitable consumer products in the world.

In 2002, U.S. men spent $1.7 billion on razors and blades, much of it on premium "shaving systems" such as the Mach3.

For Gillette, which controls about 70 percent of the U.S. market, the Mach3 has been enormously successful, and the company is fighting to maintain its position on several fronts: on store shelves, in advertising and in the courtroom.

In August, Boston-based Gillette filed a federal lawsuit alleging that Schick stole one of the 50 patents protecting the Mach3 concept — the "progressive-blade geometry" that Gillette contends gives its razor its face-contouring sharpness. Schick filed a countersuit, charging that Gillette falsely advertised that its razors offer "the best a man can get" and "the closest, most comfortable shave."

"It's somewhat of a classic situation of a market that was stable, where people had agreed on their roles," said William Bishop Jr., a consumer-retail consultant in Chicago. "Now," he added, "Schick is out to change that. So this is something the people at Gillette have to take seriously."

Gillette's founder, King Camp Gillette, invented the safety blade in 1901. Seven decades later, the company introduced the first twin-blade razor. Schick, meanwhile, cultivated a niche in disposable razors, which came to be viewed as cheaper and more prone to leaving nicks.

The race was relatively quiet until 1998, when Gillette introduced Mach3, the first three-blade razor, an attempt to tap into the growing interest in premium grooming products for men.

By stepping beyond lower-end disposable razors, Energizer, Schick's St. Louis-based parent company, is attempting to broaden its fortunes beyond the battery business.

As the men's grooming market grew, and inched toward high-end products, Schick in 2002 introduced the $6.49 Xtreme3, a three-blade razor. Then, early last year, Schick introduced Intuition, a three-blade "systems" razor for women that typically sells for $7.99.

"Then, we thought, how do we bring the next best thing to the men's segment?" said Amy Roman, Quattro's brand manager.

Blades lined with strips

The Quattro blades, like those in Mach3 models, are lined with strips containing aloe and vitamin E. The first blade, Roman said, stretches the skin so as to prepare it for the closeness of subsequent blades.

As the blades cross the contours of the skin, the "synchronized dynamic blade pack" pulls away from the face. "The pack allows the blades to move in unison, so it will control the skin flow," Roman said in a telephone interview, describing the razor's stubble-removing process with fervor.

Energizer has capitalized on its vast distribution network to quickly move Schick's various men's and women's lines, especially the Quattro, onto store shelves.

But Schick's success will hinge not on price, since Quattro's price, at $8.99, is nearly identical to Mach3's. Rather, it must convince Gillette's well-cultivated base of loyal customers, who have grown accustomed to spending a bit more on premium blades, that four-blade razors offer a closer shave than three-blade razors. And it needs to persuade its disposable-razor users to trade up.

Gillette has taken Schick's challenge seriously. It has vastly boosted its advertising and promotions budget.

In some markets, stores have given away free samples of Mach3Turbo Champion, an update on the Mach3Turbo that some analysts think was rushed onto store shelves in September as a counterpoint to Quattro.

But Michele Szynal, a Gillette spokeswoman, dismissed the notion that the company rushed to introduce Champion, which she described as "a very sexy, racing red car."

"Holidays start coming in September," she said, explaining what prompted Champion's introduction.

Both companies declined to give sales numbers on individual products. But each reported healthy overall sales growth in the third quarter. Energizer reported sales of $703.5 million, a 59 percent increase from the same period last year. Gillette had an 11 percent increase over the same period, with reported sales of $2.41 billion.

Analysts said, however, that Quattro's success could force Gillette to sharply discount its Mach3 line. That, in turn, could diminish Gillette's earnings and possibly prompt the company to introduce new lines much sooner than it had planned.

Schick is betting that the market for premium-priced men's grooming products will continue growing as it has since Mach3's strong introduction. Some analysts, however, expressed skepticism, noting that in the tobacco market, for example, sales of premium cigarettes have been stymied by their higher prices.

"Clearly, when you go up another blade, you'll charge for it," said Bishop, the Chicago consultant. "Six years ago, buyers loved Mach3. But Mach3 was introduced in a very different economic climate."

Gillette's dominance

Some analysts, such as Carl Sibiliski, who covers consumer products for Morningstar in Chicago, say Gillette's dominance and size will counter even the most potent Schick marketing strategy. "Gillette has all the advantages to win. It's a David versus Goliath kind of battle."

The outcome of various court cases also could affect the balance of power.

Gillette is awaiting a ruling from a federal judge on its request for an injunction to stop Schick from selling the Quattro.

Gillette filed a second lawsuit against Schick, claiming that its Intuition razor for women also infringes on Gillette patents. But Gillette suffered a legal setback in Europe last month.

The magazine Marketing Week reported that a German court granted an injunction against Gillette that means the company cannot continue to claim in ads in Germany that its Mach3 razor shaves closer or better than Quattro.

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