GNC rebranding aims to leave 'old, broken model behind'

Dive Brief:

Vitamin and supplements retailer GNC Holdings, Inc. announced on Thursday that its 4,464 U.S. owned and franchised stores will close on Dec. 28 and re-open with a new look the next day as part of its “One New GNC” rebranding effort.
Among changes, the company will replace its multiple pricing structures across channels and membership levels and begin offering the same prices in store and on it is website,
A new loyalty program dubbed “My GNC Rewards,” which replaces the old "Gold Card," will be supported by a GNC mobile app available on or before Dec. 28 in the iTunes app and Google Play stores. New POS terminals will also speed checkout and guide customer decisions based on purchase history and manage loyalty programs.

Dive Insight:

These changes are the result of a 90-day review of GNC's business undertaken by interim CEO Robert Moran, who took his post in July following the abrupt resignation of previous CEO Michael Archbold. That review revealed a floundering strategy, what Moran in October called “a badly broken business model in need of change.”

Moran previously identified the customer experience, pricing, loyalty initiatives, product innovation and e-commerce enhancements and marketing improvements as opportunities to better target profitable customer segments.

"As we said on our last conference call, we're making these investments because we believe in this business, its future and our ability to return to growth and deliver shareholder value," Moran said in a statement. "The New GNC leaves the old, broken model behind. We're confident it will have a positive impact on the business, but it will take time for the changes to take hold and translate to improved financial results."

The retailer will also introduce new brands and new products throughout the coming year, and is making changes to its supply chain to ensure in-demand products are in stock. Responding to research that shoppers found its stores “intimidating," GNC CMO Jeffrey Hennion, told Natural Products Insider that shoppers visiting the revamped stores will encounter a “more inclusive and warm presence" thanks to their new colors, signage and layout. Store associates will use tablets that support their training and empower them to answer customers' questions and recommend products and wellness regimens, the company said.

Some of GNC’s problems, however, start with the products themselves: Supplements in general are under scrutiny from public health officials and state attorneys general. Faced with mounting concerns over the effectiveness of its signature dietary supplements that culminated in a damning New York State attorney general’s office probe, Archbold had shifted GNC’s emphasis to its vitamin business.

But his efforts were undermined by cuts to the company’s marketing budget, and in late April, GNC announced plans to sell and refranchise 84 of its stores to franchisee Sun Holdings for $17 million. At the time, GNC said it was looking to sell a total of 200 company-owned stores this year and another 1,000 in total over the next several years.