Dollar Shave Club plans vending machines in high-traffic areas
Dollar Shave Club next week will debut vending machines with trial-size versions of its products, the company told Retail Dive in an email. The machines will feature six kits, for $12 each, of various products including shave, shower, hair care, skin care, freshen up and "greatest hits," with the most popular product from each product line. Dollar Shave Club members will get an app notification when they're near a machine, the company said.
The machines will be installed in high-traffic areas, including mass transit hubs like airports and train stations and "hyper-retail" shopping centers like malls and stadiums that feature entertainment and dining as well as retail, the company said. Locations include the Mall of America in Minnesota, the Transbay Transit Center in San Francisco, and Roosevelt Field in Long Island and LaGuardia Airport in New York, a spokesperson told Retail Dive in an email.
The move comes as parent Unilever is shifting the brand to depend less on monthly subscriptions, according to comments from Chief Financial Officer Graeme Pitkethly to analysts last month. Dollar Shave Club is still adding subscriptions but growth is slowing, he said, according to a transcript from Seeking Alpha.
Dollar Shave Club is still in growth mode, but in a segment with a lot of competition and some challenges in the subscription replenishment space.
The business grew about 10% year-to-date, but growth in new subscribers is slowing, according to Pitkethly. And expansion isn't turning out to be a slam dunk, considering the brand's launch in the U.K. earlier this year. "On the U.K. launch in particular, we launched that in January 2018, is off to a good start, but it's definitely going to take some time to scale," Pitkethly said. "And you can see the activity as a lot of advertising in the marketplace right now behind Gillette and you see a lot of activity from our alternative model such as Harry's et cetera."
Replenishment would seem to be the easiest model to execute among retail subscriptions because customers need a regular supply, but it hasn't turned out that way. "The subscription sounds convenient, but the consumer experience of a subscription can be frustrating and feel like control of purchase decisions has been lost," Luke Starbuck, vice president of marketing at customer care automation firm Linc, told Retail Dive last year. "Worse yet, customers end up with back-stock of product in the cupboard. And that's why customers cancel."
That may be why the brand is shifting its emphasis, and adding enticements like vending machines to its marketing plan. "What we're doing in the business more fundamentally is moving to a more flexible business model where it's easier for the subscribers to Dollar Shave [Club to] have more control over the basket size, is easier for them to add non-razor products into their mix and to really appreciate whilst they're getting the online experience," Pitkethly said, and that's meant "a fairly fundamental rewrite of the data management platform for Dollar Shave [Club] and quite a different business model for it."
The brand's new advertising campaign, targeting a broad base of consumers, is part of that shift, he also said. Dubbed "Get Ready," the ad, which preserves the brand's cheeky vibe, is resonating, according to YouGov data emailed to Retail Dive. Since its July launch, the percentage of U.S. consumers 18 years or older, men and women, who report seeing a Dollar Shave Club ad has gradually increased from 19% to 24%.
Follow Daphne Howland on Twitter