July 15, 2015•Blog
Retail is Facing a Hairy Situation: Shave Club Shenanigans Foreshadow Big Changes Ahead for Traditional Retailers
Retailers should prepare for big changes in the way consumers source staples and consumer packaged goods says AP President, Nancy Smith
Recently, while watching TV, I saw a commercial from one of the world’s biggest consumer goods companies selling directly to consumers. The advertising was for the “Gillette Shave Club”:
Procter & Gamble, owner of the Gillette brand, is promoting a service thatcircumvents traditional retailers to sell directly to consumers. P&G is circumventing the distribution model that has made its brands household names for over 175 years.
Clearly, this is in response to the success of Dollar Shave Club, with their viral videos and memorable commercials:
The battle for shares of the men’s $3.6 billion U.S. shaving market is fascinating in itself. The industry is also experiencing the consequences of beards becoming fashionable. However, the bigger picture question is whatGillette Shave Club means to traditional retailers like the Walgreens, Walmarts, and Safeways of the world.
The popular Dollar Shave Club commercials are striking a cord by likening the in-store retail experience to a unpleasant encounter with the TSA:
Subscribe & Save service which provides additional price discounts and free shipping when consumers subscribe to a regular delivery schedule for staples. With Amazon moving to a same-day delivery model, and testing out drones for delivery, the traditional retail model is being disrupted from all directions. If Uber’s forays into the local delivery business are any indiction, there will be new on-demand delivery services sprouting up. The quantity and quality of well-capitalized companies seeking to bring goods to consumers is increasing.
If the industry predictions are right, and the Internet of Things will begin to monitor how much milk you have in your refrigerator, and will know your stocking preferences, and will order milk for you as you need it, will the supermarket and the check-out counter be a relic of the past?
Traditional retailers are going to have some tumultuous years coming up. The smart ones will diversify, innovate, and modify their business models. Those retailers that stick the program that has worked fine for the last century risk getting Shack’d.