P&G turns to retail

21 July 2009

CINCINNATI: Procter & Gamble, the consumer goods giant, is increasing its presence in the retail sector, as the world's biggest advertiser seeks to drive revenue growth through a diverse range of channels.

It has been argued that P&G has a uniquely successful track record when it comes to innovation, and, as evidence of this, the company is currently redefining its ad agency and production models.

With regard to the retail market, the owner of Braun and Gillette recently bought The Art of Shaving, the high-end male grooming brand, which operates 36 stores across the US, as part of its broader push to increase sales among male consumers.

Products stocked by the premium shaving operator include razors priced at $150 (€105; £91), hair brushes retailing at $100, and oils costing $70, alongside a range of co-branded Gillette goods.

Karen Grant, an analyst for NPD Group, said this purchase "seems like more of a strategic, long-term investment. There's good – potentially strong – opportunities in retail."

This view was echoed by Kelly Vanasse, director, P&G grooming external relations, who said the "focus will be on doing retail sales. We're assessing all the possibilities. We're just going to learn about this area."

Last year, the FMCG firm acquired Frederic Fekkai and Co., which manufactures premium haircare products and has salons in wealthy areas such as Palm Beach and Beverly Hills.

Having bought 14 car washes from Carnett earlier this year, P&G is now also seeking to develop a franchise in this market, operating under its Mr. Clean banner and offering a "gold standard" service.

Similarly, it opened three dry-cleaning outlets in Kansas in September 2008, all carrying Tide branding, although the company said at the time this ventures was "very much a test."

Procter & Gamble has previously made some low-key investments in the retail space, launching a home laundry service in 2001, which was later closed, as well as a "gourmet cooking" chain called Culinary Sol, which met the same fate.

Estée Lauder already runs its own stand-alone retail outlets, while many other brands, such as Starbucks and Burger King, have been aiming to introduce their products into supermarket stores.

Ali Dibadj, an investment analyst at Sanford Bernstein, said entering the retail sector is "a strategic move a lot of the consumer packaged goods companies are making. They're doing anything they can to get growth."

"It remains to be seen whether these consumer packaged goods companies can run a retail outlet successfully," he adde

Data sourced from Cincinnati Enquirer; additional content by WARC staff