Be more appealing

Shaving care is a challenging sector for retailers’ private brands. National brands with a loyal customer following dominate the razor category, and a large portion of shoppers seek only the lowest priced shaving creams, making it increasingly difficult for retailers to profit from store brand shaving care items.

Currently, private label accounts for about 6 percent of razor sales, 7 percent of blade revenues and 6 percent of shaving cream sales, reports Information Resources Inc. (IRI), a Chicago-based market research firm.

Within the shaving category as a whole, razor cartridges, with a 39 percent share, generate the most category sales, notes Mintel, a global market research firm, in its September 2014 “Shaving and Hair Removal Products — US” report. Next are disposable razors (32 percent), shaving cream (13 percent), cartridge razors (11 percent) and depilatories (5 percent).

The shaving and hair removal product market grew by just 4.5 percent between 2009 and 2014, largely as a result of consumers trading down to more affordable disposable razors and away from cartridge razor systems, Mintel notes.

“To foster category growth, manufacturers will need to launch compelling product innovations that are worth the premium price,” Mintel states.

Retailers that are interested in growing private label profit within the shaving care category could benefit most by modernizing current shaving care products with new features, interesting packaging and functional ingredients.

Go modern

Because most consumers are staunch buyers of the well-known national brands, Bruce Barnett, national vice president of sales for Filo America, a Vernon, Calif.-based supplier of private label razors, says private label products tend to be lower-priced “me-too” items.

“We just copy whatever Gillette does,” he states. “We emulate; we don’t innovate. The majority of national brands dictate what the customers want in the blade rack.”

Many private brand products, Barnett says, are as functional as the national brands’ items, but the store brands suffer because they do not have the same deep-pocketed advertising support as the category leaders.

Nevertheless, private label blades and razors still could generate healthy revenues for retailers due to the huge size of the market, Barnett states.

For instance, the blade sector had sales of $2.9 billion for the 52 weeks ending Sept. 6, IRI reports.

“Retailers can make a lot of money and sell a decent amount of product by giving consumers the choice of an item with a lower price,” Barnett says. “Private label rides on the coattails of the national brands and their advertising.”

However, it is important for retailers to update their store brands to maximize profit potential within the category, states Jeffrey Frantz, president of Tella-Tech Inc., a Hollywood, Fla.-based supplier of branded and private label razors.

“Store brands tend to be basic razors,” he says. “A lot of private label razors are a generation behind the national brands. For private label to grow it needs to modernize.”

Modernization could mean offering consumers store brand razors and blades that shoppers perceive as both useful and economical, Frantz states. If retailers aren’t already introducing some new national brand product features such as razors that respond to facial contours, they might want to consider doing so sooner rather than later.

Indeed, expansion within the private label razor sector will primarily be driven by innovation, says Paul Guippone, senior manager, category development and shopper insights, for Edgewell Personal Care, a Cedar Knolls, N.J.-based razor supplier.

“Razor and blade systems with upgraded technology offer the largest growth potential opportunity for store brands,” he notes.

Be different

Cost-conscious shoppers, meanwhile, are having a major impact on shaving cream sales.

Most consumers select shaving foams by price, so profit margins are small, says Derrick Sutton, president and CEO of Quality Home Products, a Vaughan, Ontario-based supplier of shave gels and foams.

“Retailers should make their brand the opening price point,” Sutton notes. “But shave is a challenging sector because you are dealing with a very, very low cost base to begin with. It is hard to convince consumers to move into a premium private label category.”

There also is little that can be done to improve foams and gels, he states.

“All private label offerings are persistently high quality, and most are as good as the current technology allows,” Sutton says. “There is very little to truly innovate. There can be minor improvements to ammonias. But virtually all private label brands have identical technologies.”

But Steve Berry, president and founder of Greenblendz Inc., an Auburn Hills, Mich.-based supplier of shave foams and gels with natural ingredients, believes retailers still have opportunities to innovate and differentiate here through functional ingredients.

Offer unique varieties at an attractive price point; for example, a shave cream that acts as a skin treatment, he recommends.

“The concept of [just] providing a cheaper national brand equivalent doesn’t lead to a lot more market share,” Berry says. “Offering a similar product with added ingredients such as aloe and vitamin E enables retailers to call out extra benefits.”

And retailers could create a greater shelf presence by offering shave creams in different varieties, Sutton adds. Such options might include shave creams that are tailored for men or women with sensitive skin.

Retailers also could use packaging to help boost brand awareness.

Shave creams that are sold in cans with unique shapes, bright colors and clear messaging will enable products to standout on shelves, Sutton notes.

For shave creams and gels in tubes — which offer fewer chances for packaging differentiation — retailers could incorporate colors that create a higher-end appearance and differ from the national offerings, Berry states.

Raise awareness

When it comes to merchandising razors, blades and shaving gels and creams, it is important for retailers to raise awareness of their private label selections, Guippone says.

“Retailers must break through the clutter with clear communications about the quality and value equation of store brands,” he says. “Gaining store brand shopper insights and understanding their path to purchase is a critical step.”

Developing the appropriate selections, meanwhile, requires effective collaboration between retailers and suppliers. Both parties need to be aware of market trends and decide together how best to respond, Frantz says.

“Retailers can get comfortable with their suppliers and just rely on old and past-generation products,” he states. “They need to get the manufacturers to update and expand their horizons.”

Both retailers and manufactures could best optimize sales and margins by working together on product assortment, placement, pricing and promotion, Guippone adds.

And when selecting their proper shaving cream supplier, retailers should analyze product quality and not single out the company with the lowest prices, Berry says.

“Just picking the lowest price cheapens the brand,” he states.

Do offer razors with national brand product features such as pivoting heads.

Do offer shave gels and creams with added functional ingredients such as aloe vera and vitamin E.