Remington’s European business is bleeding profits and staff while struggling against the shaver heavyweights. Is it time it cut and run? asks Caroline Parry
If Remington Products’ late owner Victor Kiam, who liked its shaver so much he bought the company, was in the same position today, he might not be so eager to snap up the company.
For the Connecticut-based Remington is going through turbulent times in Europe, continuing last week with the departure of European marketing director Richard Rietjens after just six months in the job (MW last week). His departure is the latest of many from the troubled company.
Last September, European marketing director Peta Thorniley, whom Rietjens succeeded, quit (MW September 12, 2002). Shortly before that, UK managing director Simon Russell left after a reported rift over brand strategy. UK managing director Kay Downs, who replaced Russell (MW November 21, 2002), is now reviewing the company’s internal structure.
Remington continues to perform well in the US, but in Europe it competes against Dutch electronics company Philips and The Gillette Company-owned Braun. Successive marketers have had difficulty throwing off the legacy of Kiam and Remington’s image as a product for older men, which is the challenge facing Remington’s European marketing team and its creative agency Grey Worldwide.
The Kiam family still owns 52 per cent of Remington. An overall sales increase in 2001 to $393.6m (£246.3m) from $365.1m (£228.5m) in the previous year is largely due to a strong performance by its North American division. But profit over the same period dropped from $38.3m (£24m) to just $1.8m, (£1.1m); the company partly attributes this drop to $11m (£6.8m) exceptional costs in the UK, including changes to stock and distribution.
E Remington & Sons started life as a gunsmith before it developed the first commercial typewriter in 1873. The typewriter division, and the Remington name, was sold to the Standard Typewriting Company in 1886, and then to office product company Rand Kardex in 1927. It is this company that set up the electric shaver division in 1936. The division caught the eye of former Lever Brother’s toothpaste salesman Victor Kiam, and he bought it in a leveraged buy-out in 1979, renaming the company Remington Products.
The main focus of Remington’s business remains its range of men’s and women’s electric shavers, which account for about 40 per cent of its business. But sales of its products in the UK have dropped. In 1999, 19 per cent of its net sales were from the UK but by 2001 this slipped to 14 per cent. The brand also includes a range of haircare, personal grooming and health products, although they do not have the profile of the shaving range.
The UK electric shaver market is still growing through product innovation – for example the Braun Freeglider, which releases skin conditioner as it shaves. These products tend to be sold at premium prices and are behind much of the growth in the dry shaver market, which accounts for 25 per cent of the total shaving market, while wet shaving has the remainder.
Pete Zillig, Lowe’s global account director for Braun, says that between the ages of 16 and 20, boys regularly change their shaving habits, but from about 20 years old they tend to stick with one method and brand, which is why, he says, the challenge for all brands in this market is to target males when they are young in the hope that their’s will be the brand of choice when they are older.
An agency insider says that Remington’s marketing strategy lacks the same level of consistency as rivals Philips and Braun, and it has failed to target the younger market effectively. He adds that Remington has been preoccupied with fighting copycat cases in the courts, leading to a lack of marketing focus.
In the late Eighties, the Israeli Improver Corporation accused Remington of copying its Epilady shaver with its Smooth and Silky. But the High Court decided there were sufficient significant differences between the two products. Remington was also sued by Philips in the UK courts for selling a copycat version of its three-headed rotary razor that it had registered as a trademark in the Sixties. The case ended in 2002 after the European Courts of Justice ruled that companies cannot register the shape of their product as a trademark if it is essential to how the product works.
The electric shaver market, for men and women, is a seasonal one, with twice as many sales being made in December, compared with the rest of the year. The UK men’s market in 2002 was dominated by Philips, which has about 60 per cent of the market. Braun is in second place with 17.6 per cent and Remington in third place with 14.4 per cent (GfK Marketing Services).
In 2002, the women’s depilation sector proved there is still room for growth when the electric epilator sub-sector experienced a 14 per cent increase in volume sales, and electric shaver sales increased 8.6 per cent. The growth is attributed to the fact these products are now bought for women as gifts, and Remington has benefited from this with a 51.9 per cent increase in volume sales of its women’s electric shavers over the year to December 2002. Philips’ and Braun’s sales dropped by 4.4 per cent and 39.4 per cent respectively.
An agency insider says that Remington has failed to make its mark in Europe despite lower pricing because it hasn’t taken a brand-led approach. But he claims that Remington is working on updating its image and advertising. It appointed Grey in 1993 to its £15m advertising account, but spent only £1.6m last year on a number of initiatives, including a TV campaign to target younger users. It appointed Spirit last September to work on a campaign to promote its Big Shot hairdryer.
Remington still has a long way to go in redeveloping the brand so that younger consumers will follow Kiam’s example and feel compelled to buy the product.