Well Played: Proctor & Gamble Goes Upscale with "New" Art of Shaving Stores

Last Updated May 5, 2010 2:39 PM EDT

P&G Art of Shaving Barber SpasProctor & Gamble's (PG) Pacman course led it to acquire Zihr and the Art of Shaving -- both makers of premium men's grooming products -- last year. Now P&G's unveiling the first of many revamped Art of Shaving stores. So what's the world's largest maker of consumer goods -- whose portfolio is packed with hundreds of drugstore brands including Old Spice and Gillette -- doing buying and renovating a 39-store, high end men's brand? Call it a calculated move to capture some cachet.

Five years ago, P&G gobbled up Gillette in a $57 billion stock deal that Gillette shareholder Warren Buffett predicted would "create the greatest consumer products company in the world." Though that dream deal ensured P&G would have even more control over prime shelf space at national retailers such as Walmart (WMT) and Walgreens (WAG), purchasing the brand's Fusion ProGlide razor ($12.99) off their shelves is about as exciting as picking up milk and bread at the A&P.

Enter the Art of Shaving. The relatively small company is big on luxury from its handsomely packaged balms and unguents to its old-school, gentleman's club implements. Take, for example, the Art of Shaving's version of the Fusion. It's a weighty chrome affair, replete with handcrafted details such as the beaded grip surface and an accompanying badger brush and stand. The entire shebang is just north of 300 Benjamins. Hardly the kind of purchase one is likely to make in a rush to replenish refrigerator essentials.

P&G knows that. The Art of Shaving adds the chi-chi to the company's growing share of the men's grooming market by snagging a coveted upscale demographic. And in addition to revamping and expanding the "barbershop" boutiques, P&G gains a foothold at retailers which carry Art of Shaving such as Nordstrom and Bloomingale's (M).

And while giant P&G assumes the cloak of a mom and pop shop at Art of Shaving stores, its strategy is ringing in mega bucks. Net sales in the grooming segment grew 11 percent for the quarter to $1.8 billion on a six percent increase in unit volume in the first three months of 2010. Guess what led the pack? Gillette Fusion with double digit growth, while overall volume in Male Blades and Razors increased by high single digits. Shave, anyone?

Image via Art of Shaving