Bargaining Power of Buyers (Customers) High/Medium/Low
1. With more Americans practicing social distancing and working from home, consumers are taking a more relaxed approach to their grooming routines, as removing facial hair is not perceived as a necessity in today’s society. Beards are also seeing a rise in popularity, negating the need for shaving products altogether for many consumers. Due to these reasons, consumers do not feel a strong pull to purchase shaving products, leading to more supply than demand. (High)
2. Due to Covid, professional hair removal services are not an option in many areas, as spas and salons across the country have closed their operations. Even though many are reopening, salons and spas will have to work diligently to convince consumers that it is safe to come back and receive services, as people will likely be cautious about returning. Some consumers who would otherwise choose to use professional services, will for the time being be forced to use at-home grooming products instead. (Low)
3. Although nearly all shaving and hair removal products experienced a slight increase in usage, that does not mean that adults are actually using these products more frequently. In fact, consumers are more likely to use products as needed, as opposed to using them on a regular/daily basis. Occasional usage of products results in longer purchase cycles, contributing to the market’s sluggish sales performance, which also leads to more supply than demand. (High)
Bargaining Power of Suppliers High/Medium/Low
1. The vast majority of razor steel (a special type of stainless steel designed specifically to be used as a razor blade) is produced by a single supplier, Jindal Stainless in India. Having a near monopoly in the industry, Jindal has a great deal of bargaining power. (High)
2. The plastic portions of a razor (mainly the handle and blade cartridge) are typically molded from a number of different plastic resins including polystyrene, polypropylene, and phenyleneoxide based resins as well as elastomeric compounds. Theses resins are considered raw inputs, and their price depends mainly on the price of oil, which the producers do not have control over. (Low)
3. After water, the main ingredient in virtually all shaving creams is Stearic acid, which is a waxy solid derived from animal fat. It acts as an excellent binder and thickening agent for numerous products. Soaps and detergents are the largest application segment, accounting for over 25.0% share of the total demand, while shaving creams represent a relatively small amount of the market. This translates into Stearic acid producers not needing the shaving cream industry as much as the shaving cream industry needs Stearic acid. (High)
Threat of Substitutes High/Medium/Low
1. Although most consumers remove unwanted hair at home, those who do use professional hair removal services are more likely to use them on a regular basis, as opposed to reserving them for special occasions. Frequent usage of professional hair removal services lessens the need for at-home hair removal products, creating challenges for the market. (Medium)
2. Currently accounting for only 20% of men’s personal care sales, shaving product sales have declined over the last five years and are expected to continue to decline moving forward. Changes in style norms, which now favor facial hair above a clean shave, are a clear threat to the industry. 33% of men in America maintain facial hair instead of shaving. (High)
3. Instead of purchasing shaving creams, some consumers are instead turning to alternatives such as baby oil, coconut oil, or body lotion. There is a convenience factor, as many already have these products on hand for other purposes. These alternatives function much the same as shaving creams, leaving some consumers little incentive to purchase them. (Medium)
Threat of New Entrants High/Medium/Low
1. Disposable razors experience the heaviest usage among shavers, underscoring the value-driven nature of the category. The convenience and affordable prices offered by disposable razors provide minimal incentive for adults to opt for higher-end razors. This will make it harder for premium entrants, but also creates an opening for entrants who are able to compete on price. (High)
2. Innovations designed to maintain and/or prolong service results will garner strong interest and also lessen the threat from professional hair removal services. Entrants who offer an innovative product will likely be able to capture market share. (High)
3. Men who regularly shave are often highly invested in their shaving routine. Among these consumers, brand recognition plays a pivotal role, and they will be more apt to remain with known brands than venture into trying a new entrant. (Low)
Intensity of Industry/Competitive Rivalry High/Medium/Low
1. New subscription razor services are closing the value-gap between disposable and non-disposable razors with high-quality yet affordable non-disposable offerings, which could influence adults to trade in their traditional disposable razors for the new subscription services. (High)
2. Although disposables are the most used razor, the segment experienced a 3.7% decline in sales from 2018-19. Meanwhile, the non-disposable razors and refill cartridges segments both experienced sales growth, indicating that these segments are cannibalizing disposable razor sales. (High)
3. The razor market is hungry for innovations, so companies feel pressure to continually produce new innovations, while also fearing that they will lose market share to innovative entrants. (High)
