Edgewell Personal Care, the company that owns the Schick and Wilkinson razor brands as well as Hawaiian Tropic, plans to announce on Thursday that it will buy Harry’s for about $1.37 billion in stock and cash. The deal will lead to Harry's co-founders Andy Katz-Mayfield and Jeff Raider running Edgewell’s operations in the United States. Harry’s sells razors, face washes and lotions, as well as the Flamingo line of women’s razors and waxes, directly to consumers over the internet, offers subscriptions, and has struck a collaboration with the clothing retailer J.Crew.
Total Retail's Take: This is the latest example of a large corporation opting to purchase a growing digital-native startup that's causing disruption within its industry, and more specifically its product category. From Walmart buying Bonobos to Unilever acquiring Dollar Shave Club (both competitors of Harry's), the precedent had been set. Executives from Edgewell and Harry’s saw a chance to form a big, new consumer products company infused with both global reach and new ways of marketing to customers — and one that can be a more serious threat to Procter & Gamble, the clear leader in the category. Harry's gains global resources and reach in the deal, while Edgewell acquires a brand that has been effective at creating the types of customer relationships the CPG company has lacked.
“The acquisition of Harry’s signals a clear message to the rest of the industry: DTC brands are here to stay and they will be integral to the success of larger CPG brands that want to capture share of the e-commerce market," says Patrick Tripp, vice president of product strategy at RedPoint Global, a customer data platform and engagement hub. "Selling directly to consumers and providing the details they need to easily make a purchasing decision, Harry’s has built consumer trust through its DTC model. These types of acquisitions reinforce the point that CPG brands of all types and sizes are trying to win over consumers who want to be personally recognized across channels and devices, receiving offers that are relevant in their moment of need. Selling directly to consumers is something large CPG companies have struggled with. The ability to create direct, branded relationships with consumers that enables them to collect customer data is what makes DTC brands enticing. Large CPG brands that want to survive — and thrive — will need to upend the existing engagement model, tapping into the established relationships DTC brands have built with consumers.”