Darien Butler
26 April 2020
MGT 580
Harry’s Case Study
Introduction
This case will discuss the Harry’s shaving startup company and its future place amongst the bigger shaving company brands. First, the case will describe Harry’s founders, Andy Katz-Mayfield and Jeff Raider, and their strategic leadership, and discuss the qualities and effectiveness of their strategic leadership. The case will proceed to discussing Harry’s unique value proposition in the shaving and men’s care industry, and then analyze how the shaving and men’s care industry is being disrupted. The case will go on to outline the competitive landscape, identifying Harry’s main competitors and recommendations to deal with those competitors. The case will end by discussing Harry’s key future strategic challenges, and the recommendations that Katz-Mayfield and Raider should follow to address these challenges.
Company overview of Harry’s
Harry’s is a shaving startup founded in March 2013 byAndy Katz-Mayfield and Jeff Raider because they were tired of overpaying for over-designed razors, and of standing around waiting for the person in the drugstore to unlock the cases so they could actually buy them.This company offers customized subscription plans based on the frequency that one shaves, as well as other male health and beauty products that are needed. Customers can also purchase their products on a one time basis. In late 2013, Harry’s opened a corner shop in New York as it served both as a barbershop and a retail location, with a collection of Harry’s shaving products and lifestyle items. The shop helped to extend the Harry’s brand experience from online to offline, providing the opportunity to cross-sell products as barbers give advice or recommendations to customers.
Harry’s mission is they believe that you shouldn’t have to compromise when it comes to the products you use, so their products are designed to be effective and to provide a great experience. Their team of more than 600 engineers, designers, craftsmen, and chemists make their products from the finest materials and ingredients to ensure they perform as well as they possibly can.Every year, Harry’s donate 1% of their sales, and a lot of their employees' time to charitable organizations.
Evaluation of the strategic leadership and qualities of Harry’s founders
Harry’s founders may be considered strong strategic leaders because of their innovation and foresight. First, Harry’s founders correctly assessed that the shaving and men’s care industry were ripe for disruption as it was filled with complacent incumbents such as Schick and Gillette who were retailing razors and shaving kits expensively to consumers. This inspired Harry’s founders Katz-Mayfield and Raider to launch a business model that would rely on scalable social media marketing, strong branding and a direct-to-consumer subscription model to offer a high-quality shaving experience at an affordable price. As entrepreneurs, they successfully identified an unmet need and niche in the market and moved rapidly to exploit it.
Harry’s founders also exhibited strategic leadership in the form of the acquisition of an old factory Feintechnik in Eisfeld for $100 million, which allowed Harry’s to obtain established razor blade manufacturing expertise from a long-running factory at an affordable price. This gave Harry’s a strong advantage over other disruptors such as the Dollar Shave Club, as it equipped Harry’s with a manufacturing base that could not be disrupted by adverse economic circumstances.
Finally, Harry’s founders exhibited strategic leadership in the form of their meticulous research and design process, which invested in the use of reheating technologies to harden the nanostructure of the razor, and the crafting of the raw steel ribbon into high quality blades that would give consumers a superior shaving experience. Furthermore, the founders made strategic decisions to save on costs, such as the outsourcing of the non-essential handle component to China to save on costs.
However, Harry’s founders could have been more strategic in their leadership in a number of areas, such as the cultural adaptation to the German factory’s working style. Raider’s overly agreeable and consensus driven style of management may also inhibit the decisive confirmation of strategic choices as a leader.
Harry’s unique value proposition in the shaving and men’s care industry
First, Harry’s was able to offer a novel business innovation model in the form of a better-designed shaving kit for a reasonable price. Secondly, Harry’s was able to leverage social media to create a strong brand around a direct-to-consumer subscription model that was affordable and trendy, through promotions such as a year of free shaving products awarded to customers who invited fifty or more friends. (Feloni, 2015) Harry’s brand was also developed through word-of-mouth recommendations and reviews by leading fashion publications such as GQ, who lauded the brand’s high quality and strong consumer value. Harry’s was also able to provide highly affordable razors and shaving kits to consumers through their direct-to-consumer sales model. (Feloni, 2015) Finally, Harry’s was able to develop all products, such as foaming shave gel and after shave lotion, in house, which allowed Harry’s to create an affordable and elegant full-suite kit of shaving products that served as a convenient one-stop solution for customers.
Disruptions in the shaving and men’s care industry
Harry’s was successful in disrupting the decades-old razor-and-blade model of the shaving and men’s care industry, by providing low-cost, high quality razors and blades directly to consumers through a subscription service, and breaking the 90% market share controlled by oligopolistic companies such as Schick and Gillette. Comparing prices, titans such as Schick and Gillette sold a three-week store of razors for $20, while new disruptors such as Harry’s were able to offer the same quantity of razors at half the price or cheaper. (Pandey, 2019) This led to rapid growth of disruptors such as Harry’s, and allowed Harry’s to rapidly scale to a customer base of one million people, with a 60% retention rate. (Feloni, 2015) Furthermore, Harry’s was able to leverage scalable and affordable social media marketing to launch a selective influencer model for the rapid adoption of its services by customers. In other words, Harry’s used social media to get existing customers to recommend Harry’s to their friends, family and colleagues, which proved to be an effective way to grow rapidly. (Feloni, 2015)
Harry’s competitors and recommendations to address competition
In terms of the competitive landscape, Harry’s should watch out for established incumbents such as Schick, Bic and Gillette (Proctor and Gamble), who have demonstrated willingness to engage in a price war and lower prices in order to capture market share from disruptors such as Harry’s and the Dollar Shave Club, and who have greater economics of scale and research and development capabilities to rapidly pilot and scale the deployment of disruptive new product lines. (Esty and Fisher, 2019) For example, Proctor and Gamble was able to launch the new ball-hinged ProGlide model as a superior shaving experience. (Petty and Nichols, 2018)
Harry’s should also watch out for Dollar Shave Club who have been successfully acquired by Unilever, and therefore possess both unique capabilities such as savvy marketing and a direct-to-consumer subscription model of distribution, as well as the larger supply chain capabilities and branding capabilities offered by a large consumer goods conglomerate such as Unilever. (Petty and Nichols, 2018) This runs the risk of Harry’s being rendered obsolete as a small-scale, independent subscription-based razor company. Furthermore, Harry’s own inability to be acquired by larger companies such as Schick owner Edgewell Personal Care suggests that investors lack confidence in Harry’s business model of low-cost direct to consumer razor sales. (Fickenscher, 2020) This may prevent Harry’s from benefitting from the intellectual property, economies of scale and strong supply chain capabilities of a larger incumbent. Harry’s should address this by exploring other options for acquisition, while also trying to develop in-house economies of scale in order to expand their distribution scale organically.
Harry’s future strategic challenges and recommendations
Harry’s key strategic challenges moving forward are its choice of whether to be acquired by larger incumbents, and the concerns that this would dilute the authenticity of its low cost model in order to acquire much needed capabilities and economies of scale to drive its growth. By accepting an acquisition by an incumbent such as Schick or Unilever, Harry’s might be perceived as a sell-out by loyal consumers who viewed them as disruptors of the original incumbents, which may weaken their brand value and result in a contraction of their market share. To manage this issue, Harry’s founders should pursue both options (acquisition and organic growth), and evaluate the projected growth for each model, before making their decision.
Conclusion
Harry’s is a successful innovator and disruptor of the men’s care and shaving industry, and its founders were able to exercise strategic leadership to successfully identify a market niche and unmet need in the form of affordable, high-quality shaving kits to create a new business model for the razor and shaving kit segment. However, Harry’s founders should carefully evaluate the decision to be acquired by a larger incumbent.
References
Chase, C. (2019). How the Digital Economy is Impacting the Supply Chain. Journal of Business Forecasting, 38(2).
Esty, B., & Fisher, D. (2019). Gillette: Cutting Prices to Regain Share. HBS Case, (720-378).
Feloni, R. (2015, December 17). The CEOs of shaving startup Harry’s explain how they acquired a million customers in 2 years. Retrieved from https://www.businessinsider.com/harrys-ceos-explain-how-they-acquired-a-million-customers-in-2-years-2015-12
Fickenscher, L. (2020, January 20). Shaving startup Harry’s tries to soothe worries about razor deal. Retrieved from https://nypost.com/2020/01/20/shaving-startup-harrys-tries-to-soothe-worries-about-razor-deal/
Pandey, E. (2019, May 11). Shaving giants sweep up the disrupters. Retrieved from https://www.axios.com/shaving-giants-schick-gillette-harrys-dollar-shave-club-acquisition-fba1b15b-ee9e-4e5a-a37b-2e530162f15e.html
Petty, C. D., & Nichols, K. S. (2018). The Razor's Edge: Harrys. com Takes on the Shaving Market. Business Case Journal, 25(1).
Warner, B. (2019, May 9). Why This Shaving Startup Made a $100 Million Gamble on a 100-Year-Old Factory. Retrieved from https://www.inc.com/magazine/201605/bernhard-warner/harrys-razors-german-factory.html
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