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Can Gillette Regain Its Edge?


Watch out: the razor wars are heating up again. Industry leader Gillette Co. (G), after months of losing ground to No. 2 Schick, is getting ready to slash back. On Jan. 15, Gillette was set to unveil what will be the world's most expensive mass-market wet razor: a $14.99 battery-powered upgrade to its flagship Mach3 line. Dubbed the M3Power, it's Gillette's answer to Schick's much ballyhooed Quattro, the first four-bladed razor for men, and the Intuition, an all-in-one system that enables women to lather and shave in one stroke.

Is Gillette about to offer the killer app in razors? Hard to say. A battery-powered razor is certainly different -- users will press a button on the handle to activate a small motor, producing what Gillette describes as a "gentle pulsing action." That's intended to stimulate hair upward and away from the skin for a closer shave. But it may not be enough to regain the momentum it has clearly lost. In the year ended Nov. 30, sales of Schick razors soared 149% in the U.S., even as Gillette razor sales slipped 13%, according to market researcher Information Resources Inc. (IRIC). "Schick has caught Gillette by surprise and forced them off their game plan," says Gary M. Stibel, founder and principal of the New England Consulting Group.

At $14.99, M3Power is pricey: That's a staggering 67% premium over the suggested full retail price for both the Quattro and the Mach3 Turbo, which are routinely discounted. In this highly competitive environment, "even $10 is a major barrier," warns Stibel. What's more, Schick may soon offer a cheaper battery-powered alternative of its own.

Still, given the success of battery-powered toothbrushes, a significant number of men will no doubt be willing to try Gillette's first battery-powered wet shaving system. And Gillette brings formidable competitive advantages to the fight. It claims 74% of the $7 billion global wet-shaving market, vs. just a 12% share for Schick. That gives it plenty of marketing muscle, some of which will be exercised during Gillette's first Super Bowl ad in a decade.

Nor is the new M3Power Gillette's only move. On Mar. 15, the Boston-based company will launch an upgraded women's razor, Venus Divine, as well as a new line of skin care products for men. "There's a ton of room for growth," argues William H. Steele, an analyst at Banc of America Securities (BAC). "Aging baby boomers want to look their best for as long as possible."

Gillette is clearly on the move again. But whether its M3Power can beat back the Quattro remains to be seen. The only certainty: With the razor wars picking up steam, American ingenuity and engineering prowess will continue to push the envelope of a smooth shave. Stubble beware. By William Symonds in Boston


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