Costco now sells its own razors - and it's terrible news for Gillette

Getty/Justin Sullivan

Costco is now selling Kirkland Signature razors at a significantly lower price than Gillette.

• Costco is now selling its own private-label Kirkland Signature razors for men.
• A razor and pack of 14 Kirkland blades sells for $20, about 24% cheaper than the Gillette razors Costco also sells.
• Stifel Nicolaus analyst Mark Astrachan called the move "modestly negative" for incumbent razor seller Gillette.

Costco has just started selling razor kits under its private-label brand, Kirkland Signature.

The kits come with a handle and 14 blades, all for $20. That's 24% cheaper than the Gillette Mach 3 razors the store sells alongside the new razor kits, notes Stifel Nicolaus analyst Mark Astrachan via Bloomberg.

That's bad news for Gillette, which still sells the most razors in the United States but has been rapidly losing market share to upstarts like Harry's and Dollar Shave Club. Kirkland's new razors will have a "modestly negative" impact on Procter & Gamble-owned Gillette, according to Astrachan.

Gillette once claimed an estimated 70% market share in North America but is now somewhere in the 50% range, according to the Wall Street Journal, which cited data-tracking firm Euromonitor. Harry's and Dollar Shave Club combined for a 12.2% market share in 2017, up from 7.2% in 2015, according to the same data.

Gillette has been taking drastic steps to staunch its bleeding market share in recent years. In 2017, the brand cut the prices of its razors by as much as 20%. The average discount was around 12%, and many of the brand's flagship products, like the Gillette Fusion Cartridges, were discounted.

Gillette has previously responded to challenges from competitors with concepts like Gillette On Demand, which mimics the direct-to-consumer models of Harry's and Dollar Shave Club. It allows customers to either buy blades as needed or build a custom subscription.

Costco's low-cost private-label Kirkland brand has become a massive hit for the company since it launched in 1995. Kirkland goods now make up about 20% of the products offered in the warehouse store. You can find Kirkland products in any category from groceries to household products and clothing.