Like fading celebrities, brand owners fear one thing most of all: irrelevance. “I think my mom/dad/grandma/grandpa uses them.” The horror.
Edgewell Personal Care’s most recent annual report is all about that horror. In so many words, it acknowledges that its primary men’s grooming brands — Schick and Wilkinson Sword razors, among others — are grandpa brands. And it repeats the word “urgency” three times in reference to the need for change. As it should: It’s fading in at least one market — men’s grooming in North America — that’s booming.
It turns out that “urgency” translates to approximately $1.37 billion at today’s rates. That’s what Edgewell paid (in cash and shares) to buy Harry’s, a men’s grooming brand that started in 2013.
Much will be made of the parallels in Edgewell’s acquisition of Harry’s and Unilever’s acquisition of Dollar Shave Club in 2016 for a billion. And it should: Edgewell, like Unilever, is paying for growth by acquiring brands and teams that have demonstrated the new rules of brand-building emerging under the “direct-to-consumer (DTC) rules”.
That brand-building according to DTC rules is in the ascendant is the important takeaway for anyone owning a brand today.
The DTC rules are more or less as follows:
- The bar for starting a brand, in any category, has dropped significantly, leading to a Cambrian Explosion of new brands.
- The profusion of new brands explores a maddening number and combination of product variations, appeals, and stories.
- These brands invest in the full spectrum of brand-building tactics, including conventional ones, but with a bias for digital.
- Then, because they sell direct, they can treat everything with the data-driven rigor of a performance marketer.
- And this is all generating a new generation of brands (the evolutionary winners), especially among the newer generations (Millennials, Gen Y, Gen Z, etc.), and a new kind of brand-building.
What Edgewell is buying — like Unilever before it — are growing brands, but, more importantly, a new strain of commercial DNA that’s all about innovation: innovation of product, innovation of promotion, innovation of placement (direct and online), and innovation of pricing (subscription models). Teams that can execute innovation successfully don’t come cheap.
This doesn’t mean that every DTC brand startup will be a huge success. But it does mean that the brand successes of the future will emerge under DTC rules.