1 post tagged “razor blade rip-off”

Link to today's Daily Mail article here

Reprinted below
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Gillette marks up razor price by 4,750%

Men are paying over the odds for a clean shave because of a huge mark-up on razor heads.

Faces of the brand: Gillette can afford to hire sports stars Roger Federer, Thierry Henry and Tiger Woods to advertise its products

The products sold by Gillette and other companies cost as little as 5p to make, industry insiders have revealed.

But consumers are charged up to £2.43 a piece - a mark-up of more than 4,750%.

The price of shaving products at leading supermarkets is under investigation by the Office of Fair Trading.

The Government watchdog is involved in a long-running inquiry into alleged collusion between manufacturers and retailers.

It is alleged that salesmen from Procter & Gamble, which bought Gillette for $57bn (£35bn) in 2005, urged retailers not to cut the shop price of its brands.

A check of Tesco, Asda and Sainsbury's found the UK's three biggest supermarkets are selling Gillette's Fusion Power cartridges at the same price.

A pack of eight costs £18.53, and the replacement razor heads are so expensive that they are now the most shoplifted product in the High Street.

Special security measures have been introduced, including sealing the packs in boxes with an electronic tag which sets off an alarm if it is not removed before leaving the store, and CCTV that activates if the product is removed from the shelf.

A pack of four Fusion Power cartridges costs only 20p to manufacture, plus 8p for packaging. But they are sold for £9.72 - a mark-up of £9.44.

An industry insider said Gillette takes the lion share - £6.28 - to cover its operating costs and make a profit. Some £1.90 goes to the retailer and £1.26 to the Government in VAT. The insider said: 'I know as a matter of fact that it will not cost more than 5p to produce a refill cartridge, it is a question of pennies given the bulk involved, yet Gillette is charging a wholesale price which is much higher.

'The figures tell you why it can afford to use stars such as Tiger Woods on its payroll (for advertising) and how it could afford to give David Beckham a diamond-encrusted mach3 razor for Father's Day some years back costing $54,000.

'With the Gillette products, the company is so dominant that it is able to spell out the terms of sale, including the price they want to see, to retailers.'

As well as Beckham and Woods, Gillette has splashed out large amounts of money on tennis star Roger Federer and footballer Thierry Henry to help market its products.

A recent Which? survey praised Gillette's products but gave a 'Best Buy' rating to the King of Shaves Azor.

Its four cartridge refill pack comes in at a much cheaper £4.88.

Tesco's Matrix system, which has a triple blade head, has also won plaudits. A four cartridge refill costs only £2.20. A spokesman for Procter & Gamble said the retailers, rather than manufacturers, set the price paid by customers.

She said: 'Delivering value to our consumers is critical to our business.

'P&G determines the (wholesale) prices at which we sell to customers primarily based on covering our costs - the cost of product development, raw materials, processing, packaging, transport, general-expenses and marketing.' She said that the company also needed to earn 'a sufficient return to sustain our business' and argued that its products provide good value in terms of performance in relation to price.

She said the company was unable to comment on the OFT investigation, but added: 'Our policy is to comply with the letter and spirit of the law everywhere we do business'.