Colgate Palmolive is nearing an agreement to buy a minority stake in contacts subscription startup Hubble, the Wall Street Journal reports. Colgate did not immediately return Retail Dive’s requests for comment, and Hubble declined to comment.
Hubble would develop subscription operations for the consumer products juggernaut, including oral care and teeth whitening, and potentially other areas as well, such as pet care, according to the report.
A generation ago, consumer products giants could depend on limited competition, as most consumers threw their loyalty behind one or the other of, usually, two big names: Colgate/Crest, Coke/Pepsi, Skippy/Jif.
These days, though, they face competition from several fronts, including niche brands offering natural products and private labels from mass merchants, including e-retail giant Amazon. And, while millennials do adhere to brands, they're willing to try new things, and their loyalty is mercurial, according to Matt Sargent, senior vice president of retail at consulting firm Magid.
"Growing up we were a Crest family — that was the binary world I grew up in. If I saw Colgate at a friend's house, that was weird," he told Retail Dive in an interview. "The barrier for millennials to switch to Tom’s or 12 other brands out there is much less than our generation that had a lot of choices — but binary choices."
Colgate itself now owns Tom's, and that diversification of its brand portfolio protects it somewhat, but it's late to the subscription model. Subscription and replenishment services like Amazon’s Subscribe and Save and Dash buttons have many shoppers ditching their usual shopping trips for online orders. And startups like Harry’s have challenged the "razors-and-blades" pricing model in men's grooming and other personal care areas.
But the subscription model, even with the replenishment typical of consumer goods services, comes with its own challenges. It can be frustrating for consumers who end up with items they don't yet need or don't have when they unexpectedly run out, and that leads to cancellations, Luke Starbuck, vice president of marketing at customer care automation firm Linc, told Retail Dive last year. In fact, nearly 40% of subscribers of any service type eventually cancel, according to research from McKinsey and Co.