SHAVE Trends in men s facial hair impact sales

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1 BeautyCARE SHAVE Trends in men s facial hair impact sales The shave category is trying to get its groove back. With the exception of razors, where sales are up a healthy 10.6% for the 52-week period ended Sept. 4, 2016, as tracked by IRI across multi-outlets, all of the other categories in shave are down. In particular, disposable sales are off 6.8% and cartridges declined 7%. Among cartridge vendors, only private label and Van der Hagen were in the black as far as growth rate. The latter is getting a boost from renewed interest in more traditional double-edge, safety razors. These items make shaving a ritual instead of a chore. Private labels showed the only positive growth among the Top 5 disposable blade vendors. There are several reasons for dull sales. Of course, most retailers are quick to mention the encroachment from the online shave clubs. According to Euromonitor, online sales of men s shaving products hit $342 million last year, mostly racked up by razors and blades. But experts also tick off such reasons as the ongoing trend of men s facial hair, a move to higher-end razors instead of toss-away options at one end of the spectrum, but also the trading down to less expensive products that produce lower cash register rings at the other end. That trend is supported by the double-digit inclines in many categories of private labels. Continued on page 58 Despite dull sales in the shave category, Unilever acquired Dollar Shave Club for $1 billion. For complete interview, visit DrugStoreNews.com/shave-edgewell The irony about the growth of online shave clubs is that traditional retailers offer equivalent or better value in their stores, but just aren t overt about calling it out. Michael Law, senior director, customer strategy and planning, Edgewell Personal Care Top 10 razors Gillette Fusion Proshield $45.4 NA 8.8% 8.8% 3.5 NA $12.89 NA Private label % % 5.60 $0.38 Schick Hydro Gillette Venus Embrace Gillette Fusion Proglide Flexball Gillette Venus Swirl Gillette MACH Schick Xtreme Gillette Fusion Gillette Venus Spa Breeze TOTAL $ % 100.0% NA % $9.69 $ OCTOBER 2016 DRUGSTORENEWS.COM

2 Unilever turns heads with Dollar Shave club acquisition, extending reach in male grooming category Unilever s $1 billion purchase of Dollar Shave Club was an eyeopening deal. While Unilever has been on a buying spree, snapping up companies such as REN, Kate Somerville, Dermalogica and Murad all premium skin care brands the deal with Dollar Shave represented growth in a different market. Now the industry awaits Unilever s next move. To be sure, it s no industry secret that Unilever wanted in on the shaving business. And, it continues to sharpen its competitive stand against other global powers, such as Procter & Gamble and L Oréal. Unilever s CEO Paul Polman addressed questions about Dollar Shave Club during a financial analyst conference in August. In these environments that we operate in, the strategic changes we are making to continue to build our business are obviously very important, and they focus on driving agility and resilience, he said. Secondly, we continue to evolve our portfolio, including the adoption of more flexible models for some parts of our business that operate on the edges of our traditional model, he said. And the Dollar Shave Club acquisition that we announced is a good example of that. He outlined that in the past seven years, Unilever has expanded its personal care business from 28% of company sales to now nearly 40%. Why is he excited about Dollar Shave Club? First and foremost, it takes us further in the male grooming category, where Unilever, if you exclude the shaving segment, is the outright No. 1, he said. This is much more than just a razor company. Their portfolio and their dialogue with consumers extends across male grooming into hairstyling, skin care and skin cleansing, he said. The company noted that male grooming, pegged at a $40 billion market, is expanding faster than overall personal care. Dollar Shave Club boasts 3.2 million members. The marketer added categories such as hair care over the past few years, so that it could bundle sales of shave items with other profitable goods. Its product range extends beyond shaving to include Wanderer personal wash, Big Cloud skin care, Boogie s hair styling and One Wipe Charlies daily wipes. Dollar Shave gathered traction with whimsical brand messaging and a tag line Shave time. Shave Money. Quirky messages also included: Your mother-in-law should be irritating, not your razor. Unilever has expanded its personal care business from 28% of company sales to nearly 40% in the last seven years, and has now added shaving. Change your blade every week. Pricing ranged from $1 to $9. Last year, the company claimed a 16% market share of the U.S. blades category overall and a 69% share of that segment online. That compares to Gillette s 65% global market share in blades and razors. Gillette (with Fusion, Mach3, Prestobarba and Venus) holds over 20% of the male shavers market and almost 50% of the female epilators market worldwide. Polman likes what he sees in Dollar Shave Club, an innovative and disruptive brand with a cult-like following, he noted. The deal ushered Unilever into the $4.5 billion shave category. And for Unilever, the investment stretches beyond shaving. We are able to acquire the knowledge that they have built very quickly and undoubtedly will apply it also on other brands, Polman said. Dollar Shave Club, run by its founder Michael Dubin, will continue being built up in the United States, its core market. But we ll also look at other expansion opportunities beyond that, and then [leverage] the knowledge that we have acquired here across some of our other businesses, Polman said. The industry is rife with questions. Will the brand expand to brick and mortar? Or will it be an exclusive with one major trade partner? No matter what, industry experts expect a showdown between Unilever and the other shave powers especially Procter & Gamble s Gillette. Last year, Gillette launched a Shave Club allowing people to sign up for blades at a pace they wanted as a move many saw as competing with Dollar Shave Club. The purchase also underscores just how much online-only retailers seek other opportunities, especially those that can expand to physical doors. It was just one of many acquisitions in the personal care and beauty industry to date in There was even another deal in online shaving with ShaveMOB.com, an online retailer of razor blades for men and women, acquiring 800Razors, a U.S.-based personal care products company. ShaveMOB.com said the acquisition will drive further e-commerce growth by expanding the company s customer base and brand equity. 800Razors invested millions of dollars in the development of its brand, creating strong relationships with customers and building a media footprint through partnerships with famous athletes, according to ShaveMOB.com. DRUGSTORENEWS.COM OCTOBER

3 BeautyCARE SHAVE Continued from page 56 A final barrier that a few retailers pointed out is the climbing prices of systems requiring them to put them under lock and key at service centers to prevent theft. The overall category isn t getting a boost from shaving lotions or shaving creams either those sales dropped 2.5% and 1.4%, respectively. To be sure, there is undoubtedly potential in shave as witnessed by the eye-opening $1 billion acquisition of Dollar Shave Club by Unilever. (See story on page 57.) They ve wanted to be in the shave business for years, said one seasoned industry veteran. I won t be surprised to see them ink an exclusive with a major retailer. Target also put its confidence in the category For complete interview, visit DrugStoreNews.com/shave-beebald Many retailers continue to embrace the status quo, notwithstanding the success of so many smaller, quirky companies like ours that are the ones actually driving growth in this category right now. Dennis Fisher, founder and CEO, Bee Bald with its exclusive partnership with Harry s, starring a 4-ft. razor on an end-cap display. (See story on page 60.) For those not looking for an exclusive partnership with an online resource, there are other strategies to sharpen sales. Acknowledging the trend of facial hair and stubble has put pressure on the core-shaving segment. Companies are doing their best to adapt products and the way they court customers in fresh ways. According to Howard Brauner, VP new product development at Universal Beauty Products, 30% of men have facial hair ranging from stubble to lumberjack beards. Zeroing in on those between the ages of 18 to 34 years, the percentage soared to more than 50%. The recent New York Men s Fashion Week illustrated the trend with men having everything Continued on page 60 Top 10 cartridges Gillette Fusion $ % 13.7% -2.0% % $23.83 $2.01 Gillette MACH Gillette Fusion Proglide Gillette Fusion Proglide Power Schick Hydro Gillette Fusion Power Gillette Venus Embrace Gillette MACH3 Turbo Gillette Venus Private label TOTAL $1, % 100.0% NA % $18.54 $0.36 Top 10 disposables Private label $ % 16.4% 3.8% % $3.24 -$0.19 Gillette MACH BIC Silky Touch Gillette Sensor 2 Plus Custom Gillette Sensor Gillette Sensor 2 Good News Gillette Venus Schick Quattro For Women BIC Soleil Twilight Gillette Custom Plus TOTAL $1, % 100.0% NA % $5.41 -$ OCTOBER 2016 DRUGSTORENEWS.COM

4 #1 GROOMING MicroTouch IS IN MEN S #1 SKU IN DRUG STORES * MicroTouch TOUGH BLADE A Year of Shaves for $19.99 Half the Price of Big Brand Razors Smart Blade Spacing Teflon Coated German Engineered Lasts Up To 4X Longer Than Ordinary Blades WORLD S #1 MEN S PERSONAL TRIMMER * MicroTouch MAX Precision Hair Remover for Ears, Nose, Neck and Brows Safe to the Touch Built-In Light BRETT FAVRE RETIRED NFL QUARTERBACK #1 SELLING SINGLE BLADE RAZOR * MicroTouch ONE ONE BLADE for a perfect shave! Precision crafted Modern version of a timeless classic Simply twist for easy cleaning *Latest 52-week Nielsen ending July 2, ideavillage.com

5 BeautyCARE SHAVE Continued from page 58 from five o clock shadows to full out beards on the runways. To refocus the category for a new landscape, marketers are launching new campaigns and products that address the myriad shaving styles that men are addressing, and debuting niche products that augment shaving, such as beard washes. Edgewell has a multi-pronged approach to help brick and mortar recharge sales. First on tap is the upgrade of the Hydro cartridge. It s the only product on the market with a hydrating gel reservoir that provides skin hydration for up to an hour after shaving. This technology provides 40% less friction than a lubrication strip, said Continued on page 62 For complete interview, visit DrugStoreNews.com/shave-beiersdorf Men are shaving less frequently than they used to, and when they do shave, more often they are opting for facial hair styles that require less grooming, and therefore, less shaving cream. Jennifer Delaney, marketing director, Beiersdorf NIVEA Harry s debut at Target attracts majority of customer base Not too long after Unilever s blockbuster deal with Dollar Shave Club was announced, another online razor company made its own news. Harry s inked a deal to sell through Target, complete with an inline presentation and an endcap decked out with a huge Harry s signature razor. Cooper Classic Cars, a showroom in Manhattan s West Village, was transformed for the launch of Harry s at Target complete with coolers filled with razors and blades. John Butcher, Target s SVP beauty and personal care, was on hand to explain why the chain broadened an already sharp shaving department with an exclusive line. Harry s fills a unique niche for us, Butcher said. We re bringing cool to shave. Harry s also delivers a subscription business to Target with an offer on target.com. The company believes that introducing Harry s at Target will grow Target s digital men s shave sales, including boosting the number of shoppers using its subscriptions for grooming products. Currently, the vast number of men s shaving products are purchased in stores with only about 9% of sales chalked up online. That s expected to expand to 25% by Harry s has more than 2 million customers, and this marks its foray into mass retail. The marriage looks promising since 75% of Harry s customers have shopped Target in the past year. All 1,800 Target doors launched Harry s in August to such success that the endcaps were quickly sold out of the collection, which included razors, blade refills, face wash and skin care, such as a wash and face gel. Prices range from $5.99 to $ Target edited slower-moving items and duplicate SKUs to find the space for Harry s. What s really nice about Harry s is it complements our existing mix, Butcher said. We made it a priority to find the space. We have our powerhouse brands, which are really the foundation of our assortment, and then we have some niche brands that fulfill needs around the changing and shifting needs of males. According to Target, shaving is the second-largest category within personal care at the chain behind dental hygiene. Target launched Harry s at all 1,800 stores last August with an end cap. The company reported data showing that Target has held the No. 2 market share positions for male shave systems in the United States for the last year. Research done by Target suggests that the male customer has become more discerning in his personal-care preferences in recent years. Target took a bold move a few years ago after sensing market shifts when it segregated men s products, including shave and deodorants, away from the women s assortment. It was provocative at the time, noted Butcher, who said it challenged traditional shopping patterns. We saw nice results, and it got us thinking that more men are making their decisions. Target s research, which includes going into homes for first-hand observations of how consumers use personal care products, suggests 40% of men s products in its stores are purchased by men much higher than four or five years ago. He s becoming more specific in his choices, said Butcher, who noted that the market also is becoming more saturated with choices for men. Target is just scratching the surface for shave. As part of its plan to serve those men s product needs, Target is looking to specialty products, such as Bevel Shave System, formulated for men with coarse hair. The line was launched in February on Target.com and in about 150 stores. Target uses its online site to monitor fledgling brands, such as Man Cave, Solo Noir, Biotherm Homme, Bulldog, Maestro s Classic and 145 Intelligent Skincare. In stores, other another newcomer is Every Man Jack. 60 OCTOBER 2016 DRUGSTORENEWS.COM

6 Best thing ever invented! Myl35, Orlando, FL* Unique cutting-edge technology Unlike anything that is in the market. CJSnyder, Palm Beach* A shaving revolution. #philipsnailedit Anonymous, Minneapolis, MN* Trim, edge, shave any length of hair Philips is a technology company that cares about people. We drive category growth through innovation which is rooted in consumer insights. Learn more about OneBlade and what consumers are saying. Philips.com/OneBlade *Source: Philips.com reviews

7 BeautyCARE SHAVE For complete interview, visit DrugStoreNews.com/shave-ideavillage It appears that all players in the shaving market are significantly increasing their advertising spending and promotional activity in a move to acquire new customers. IdeaVillage is aggressively facing the competition with new TV commercials, increased media spend and a ramping up of our FSI coupon schedule. Ron Boger, president and COO, IdeaVillage Continued from page 60 Michael Law, senior director, customer strategy and planning at Edgewell Personal Care. He said Schick Hydro is the only technology delivering growth in the United States, according to Nielsen data. He also is helping retailers understand how to better compete with online clubs. Ironically, he said, online isn t always the best bet for the dollar and most transactions are still accomplished in retail stores. Retailers should offer an omnichannel approach so that consumers have the convenience of buying when and where they want. One idea is to offer automatic repleneshment based on usage, but with availability to pick up the items in stores Top 10 shaving creams instead of by mail. Philips Consumer Lifestyle, according to Ray Larney, VP U.S. retail sales, is beefing up its communication with consumers through traditional ads fortified with social media. As far as products, the company unfurled OneBlade, a product that helps trim a beard or remove all facial hair. It eliminates the need for multiple steps and multiple tools. Van der Hagen, which is now owned by Universal Beauty Products since late last year, is offering mass marketers the ammunition to compete with specialty doors, such as The Art of Shave. In addition to its throwback safety doubleedge razor and shave tools, the company s Continued on page 64 Edge $ % 18.4% 1.4% % $3.37 $0.11 Skintimate Skintherapy Barbasol Private label Gillette Series Skintimate Signature Scents Gillette Foamy Gillette Fusion Proglide Pure Silk Gillette Fusion Hydra Gel TOTAL $ % 100.0% NA % $2.73 $0.03 Top 10 shaving lotion/cologne/talc Axe $ % 18.9% -1.4% % $4.28 $0.05 Parfums De Coeur BOD Man Old Spice Nivea For Men Old Spice Refresh Red Zone Collection Old Spice Refresh Wild Collection Brut Drakkar Noir Curve For Men Coty Stetson TOTAL $ % 100.0% NA % $6.51 $ OCTOBER 2016 DRUGSTORENEWS.COM

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9 BeautyCARE SHAVE Continued from page 62 lineup includes elegant shave brushes, shave soaps and shave bowls. The line is featured at Walgreens, Walmart, Target and Rite Aid, among others. Interestingly, more women are eyeing double-edge razors for not only shaving but facial planing shaving faces to remove dead skin and generate cell growth. Retailers also are seeking out unique lines to make up for the falloff in some categories. A case in point is Bee Bald. Quirky companies like ours are driving growth in the category, said Dennis Fisher, founder and CEO of the company, which sells items to maintain bald heads. With the increase of U.S. men growing and keeping longer beards, Universal Beauty Products launched the Beard Guyz brand of men s products last year with great success, said Brauner. The lineup of Daily Wash 35, Deep Conditioner 25, Balm for Course Hair, Balm for Fine Hair to Medium Hair and Bear Oil 25 builds incremental volume rather than cannibalizes from other shave items, he added. These aren t me too products. We are line extending this year because our retail partners tell us we are filling white space, Brauner said. Two new products will debut this year, including a serum to be applied at night to help spur hair growth, which Brauner said is a common request. Another is a scent to help eradicate odors in facial hair. The line debuted in Walgreens, and distribution has widened to doors that include CVS, Meijer, Wegmans and Publix. To help expose consumers to the line, Beard Guyz does extensive sampling, such as the 50,000 products handed out at Daytona Beach for Bike Week. And a spark of good news has come from the tools needed to maintain facial hair, such as those from IdeaVillage, Conair and Wahl. To maximize sales of such items, Ron Boger, president and COO of IdeaVillage that makes MicroTouch, a personal trimmer, suggested added sales come from added exposure. In addition to boosting its promotional activities, the company sees bigger movement with its MicroTouch brand in off-shelf displays and secondary locations in As Seen On TV departments. Creating a place where a man feels comfortable shopping also is key. Rite Aid and Walgreens are among those culling space out of the store for specific men s grooming areas. While women buy a great deal of the shaving and grooming products, more and more men are selecting their own, especially as they find a home in the store curated for them. Nivea Men s marketing director Jennifer Delaney said merchandising the category should be thoughtful, especially as they compete against online. The category should be merchandised so as to make the in-store experience as clear and easy as possible for men to navigate. Retailers should be merchandising the shave category by brand and by pillar for example, products made for sensitive skin, hydration, etc., and by Top 10 men s gift pack/sets For complete interview, visit DrugStoreNews.com/shave-philips The trend among men to maintain facial hair or stubble has put a great deal of pressure on the core shaving segment. Philips recently upgraded its entire shaving portfolio to provide consumers with the very best shaving experience. Ray Larney, VP u.s. retail sales, Philips Consumer Lifestyle For complete interview, visit DrugStoreNews.com/shave-unilever Men are becoming increasingly engaged in their personal care routines, meaning they are seeking out more information on the products they use and ingredients they need and want. Matthew McCarthy, senior director men s personal care, Unilever product group, shave, aftershave, and facial cleanser, then moisturizers. Again, it s all to make the in-store experience more convenient, she said. Axe $ % 36.8% -3.8% % $10.07 $0.45 Old Spice 16.7 NA NA Old Spice Warrior Pack 13.7 NA NA Dove Men Plus Care Coty Adidas 7.3 NA NA Axe White Label 7.2 NA NA Gillette Fusion Proglide Parfums De Coeur BOD Man Curve For Men Gillette Fusion Proglide Flexball 4.7 NA NA NA TOTAL $ % 100.0% NA % $9.95 $ OCTOBER 2016 DRUGSTORENEWS.COM

10 UNILEVER IS THE LEADER IN MEN S PERSONAL CARE Men s Grooming is driving personal care growth with winning brands leading the way. Partner with Unilever, the men s market maker, to accelerate men s personal care category growth in your stores. #1 Men s Fragrance Brand in the World* #1 Deodorant Brand in the World* Fastest Growing Men s Personal Care Brand in the USA Contact your Unilever Representative for details. *Source Euromonitor International Limited; Beauty and Personal Care 2015ed, Men s Deodorants & Mass and Premium Men s Fragrances retail value sales combined, as per umbrella brand name classification, 2014; Lynx includes all AXE/Lynx/Ego sales 2016 Unilever XTM16000