GNC, Walmart in 'exclusive' tie-up in stores and online

Dive Brief:

GNC on Monday announced "an exclusive agreement with Walmart" to sell a selection of its product assortment through the retail giant's stores and website.
Men's and women's vitamins and nutritional products are available through more than 4,000 Walmart stores and online; the supplements retailer also plans to add sports nutrition and weight management products to the mix, according to a GNC press release.
GNC has had an exclusive 20-year partnership with Rite Aid stores that in 2019 was extended through this year. GNC didn't immediately return requests for more information about how its new Walmart tie-up affects that agreement.

Dive Insight:

GNC seems to understand the value of brick-and-mortar stores. The supplements retailer last year worked hard to define itself as an essential retailer in order to keep its locations running, over the concerns of many employees. The company says that it runs more than 4,800 retail stores throughout the U.S., including more than 1,000 franchised locations and 1,200 of the Rite Aid shop-in-shops, plus franchise operations in 46 international markets.

That's after a concerted effort two years ago to downsize, when the company said it would close up to 900 stores, mostly at malls, plus further closures during last year's bankruptcy. One way to make up for all the resulting lost sales would be to team up with the world's largest retailer and take advantage of what GNC on Monday called "Walmart's impressive national footprint." The partnership also exposes GNC to a different consumer, according to Josh Burris, GNC's newly minted CEO.

"The future of the wellness industry has a place for everyone, and GNC is making a healthy lifestyle more accessible than ever by delivering quality products to consumers via Walmart's expansive network of stores," Burris said in a statement.

That is likely very important for GNC, which is at a large enough scale that it needs to expand its market to grow, according to Matt Sargent, principal at consultancy Sargent Up North. Wellness aficionados who have long been dedicated to their health, workouts, diet and supplements are difficult to reach and hang on to because their loyalty is fractured and weak, he said.

The health and wellness market is already enormous, and growing, especially after the pandemic, according to Sargent. While many more people may be interested in improving their health, a large segment is unlikely to go to a GNC store or spend much time researching options online. However, they might be inclined to try a known product like GNC if they find it on the shelves of a retailer they already trust, he said.

"The key to this space, the nutritional space in general and supplements, wellness, is the discoverability," he said by phone, noting that organic food similarly went from availability only at specialized grocers to Walmart and others. "The ability to connect with a customer in this nutritional space is much different than a traditional packaged good where they rely on the retailer. And so I suspect that GNC is somewhat struggling because this space is so fractured."

In selling GNC products online, Walmart is also now competing with several of its own third-party sellers on its marketplace, of which GNC itself is one. Neither GNC nor Walmart immediately responded to requests for comment on how their new agreement might affect third-party marketplace sales.