Gnc- Retail Management Application Report Essay Example

marketing position by being more than twelve times larger than the nearest specialty retail competitor. Its brand awareness is highly recognizable by 94% of consumers surveyed and the brand is highly trusted with all of its products being FDA approved. Franchising, #1 Nutrition retail franchise: GNC domestic franchising, 2011) GNC’s easily recognizable slogan “Live Well” has been used since 1995 and is a major contributing factor to GNCs 94% brand awareness. “Live Well” is used to recognize GNC stores as well as the products they sell. The strength of the GNC brand, combined with its stores and website, gives it access to consumers and uniquely positions the company to benefit from the favorable growth in the nutritional supplements industry and the health and wellness sector. Reuters, 2011) To increase the strength of the brand, GNC has entered strategic alliances with Rite Aid to further promote the brand with its “store-within-a-store” franchise retailers, which help reach a more difficult consumer market that rarely shops at specialty stores. In 2010, GNC also entered into an agreement with PetsMart in connections with the development, manufacturing, and distribution of nutritional supplements for pets, enabling us to extend the GNC brand into the pet care market. (Reuters, 2011) Merchandise and services offered

GNC sells products that are reported in four major categories including; sports nutrition products, diet products, VMHS (vitamins, minerals and herbal supplements) and other wellness products. The variety in supplements, including over 1,800 SKUs (stock keeping units), is designed to provide customers with an extensive selection of products that fit to their specific needs. (Reuters, 2011) Sports nutrition products are designed to be taken in conjunction with an exercise

and fitness regimen. These products include: proteins, mass gainers, pre-workout supplements, during-workout supplements, post-workout supplements, and gluten free products.

In total, the sports nutrition sector generated approximately 43% of GNC’s retail sales for 2010. (Reuters, 2011) VMHS products include whey, casein, protein blends, ready to drink products, protein bars, herbs, and natural remedies. In total, they generated approximately 40% of GNCs retail store sales in 2010. (Reuters, 2011)  Other products offered by GNC account for 7% of its sales and include: cleansing and digestion products, sexual health products, energy and endurance products, and beauty care products. In addition to the core products, GNC also offers exercise equipment and accessories.

Our product mix, which is focused on high-margin, value-added nutritional products, is sold under our GNC proprietary brands, including Mega Men®, Ultra Mega®, Pro Performance®, Total Lean™ and Preventive Nutrition®, and under nationally recognized third-party brands, including Muscletech®, EAS® and Atkins®. Pricing GNC offers a variety of different products that are tailored to fit into just about every consumer’s price range. From its top of the line brand named products to the generic less expensive products, GNC customers are given an ption for what they want, depending on how they value the product. For example, advanced body builders are more likely to perceive more value by purchasing the more expensive protein powders than a consumer who is less knowledgeable and just beginning to work out. Many consumers view GNC as too expensive and undervalued which has led to many consumers purchasing their nutritional supplements elsewhere.

But, in 2005 GNC launched a new pricing strategy that lowered its prices to be more competitively priced within the industry. Johnsen, 2005) Despite

its prices, all GNC products are required to pass 150 quality checks before they are put for sale. This allows GNC to assure that all of their products quality exceeds its perceived value of what the consumer has paid. (Franchising, GNC Business Strengths, 2011) Although prices at GNC will continue to be around the top of the industry, GNC will still be able to set the standard high by demanding truth in labeling, ingredient safety, and product potency for all of their products. Releases, We're committed to exceeding your expectations, 2011) To reward loyal or repeat customers, GNC offers an option to purchase a Gold Card membership. Gold Card memberships require a yearly payment of $15 and are available for purchase at your local GNC or online at GNC. com. Some of the many benefits of being a Gold Card member are that customers receive Member Pricing which takes 20% off the initial purchase after a Gold Card is purchased as well as 20% off each purchase made during Gold Card Week, which is the first week of every month.

Gold Card members also benefit from personalized emails regarding nutritional information as well as special promotional offers. (MyGNC, 2009) Advertising and promotions We market our proprietary brands of nutritional products through an integrated marketing program that includes internet, television, print and radio media, storefront graphics, direct mailings to members of our Gold Card program and point of purchase promotional materials. (Reuters, 2011) Within this integrated marketing program, GNC participates in the modern social media scene.

We established a Facebook page (http://www. facebook. com/GNCLiveWell), a Twitter page (https://twitter. com/#! /GNCLiveWell), and a YouTube channel (http://www. youtube. com/gncvids) where

consumers can stay informed on current GNC promotions in their geographic area as well as online. In 2001, GNC began using a National Advertising Campaign which would in turn save money for franchise owners because it eliminated the need for regional advertising. From 2001 to the present, GNC has focused its advertising on promoting GNC brands.

The National Advertising Campaign will allow for more national exposure on television and in popular magazines and newspapers. (Releases, GNC Lowers Ad Costs for Franchisees, 2001) Since 2009 GNC has begun to focus its advertising more towards women because sales to women are lower even though approximately 50% of GNCs customers are women. GNC began launching products that were made specifically for women and created ads that were more appealing to women. The ads featured black and white photos of healthy women to promote products like anti-wrinkle creams and vitamins.

According to Beth Kaplan, president and chief merchandising and marketing officer at GNC, The goal was to “create a brand that looks like it was designed for women, by women” (Newman, 2009). GNC offers many different promotional deals every day on the Promotions page of GNC. com. They offer many discounted items as well as deals such as buy one get one free on certain products. As a Gold Card Member, promotions are personalized and sent to your email based on different products that you purchase with you Gold Card.

Gold Card members also receive 20% off their entire purchase during Gold Card week, and military veterans receive 15% off by using their Veterans Advantage Card. (GNC, 2011) Store design and atmospherics GNC retail stores are most commonly 1,000 to 2,000 square

feet units, usually a part of a strip mall or shopping mall. Inside the store, products are segmented by the type or benefit that the customer is looking for. For instance, vitamins are all sold in one area and muscle building supplements are sold in another.

Throughout the retail store are many point-of-sale advertisements and special discount offerings. (Reuters, 2011) In 2009, GNC introduced a new concept store layout that would increase the size of the stores to approximately 3,000 square feet with a wider array of offerings and a new modern design. The CEO, Joseph Fortunato, believes “the new concept store focuses on improving the quality of life for our customers by inspiring healthy and active lifestyles through not only innovative fitness n nutritional supplements but also a wider assortment of natural and alternative treatments for holistic wellness. ” (VMSD, 2009) This new concept store’s layout is divided into four sections that showcase different product categories which maximizes the stores use of floor and wall space efficiently as well as simplifying navigation for the customer. The front space emphasizes managing healthy lifestyles and provides customers with products addressing health, diet, and wellbeing. The second area is the vitamins headquarters, which includes new health and beauty products.

The two back rooms are for GNC’s avid fitness and sports enthusiasts with products assorting from accessories, books, and scales to blood pressure monitors. (VMSD, 2009) Location As of December 31, 2010, there were 7,260 GNC stores globally, of which, 2,748 company-owned stores were in the U. S. (all 50 states, District of Columbia, and Puerto Rico). There are 169 company-owned stores in Canada, 903 domestic franchise stores, 1,437 international

franchise stores in 46 countries, and 2,003 GNC franchise “store-within-a-store” locations under strategic alliance with Rite Aid Corporation. Reuters, 2011) Most of our U. S. stores are located in shopping malls and strip shopping centers. GNC. com offers a store locator for customers who are looking for a store nearest to them. Customer service Our employees working in retail stores are highly educated on all products offered and will help you find the best product to fulfill your needs or wants based on benefits sought and the price range desired. The GNC website offers a 24/7 customer service help desk that will answer any questions about shopping on the site, your order, payment options, and more.

If any customer is unsatisfied with their purchase, GNC offers a 30 day refundable or exchangeable program which allows the customer to return their product used or unused for cash, store credit, or exchange for another product. (GNC, 2011) Use of Technology GNC is vertically integrated with manufacturing and quality assurance facilities. They have three distribution centers in the United States, which are located in Pittsburgh, Pennsylvania, Anderson, South Carolina and Phoenix, Arizona.

To deliver inventory from the distribution centers to the retail outlets, GNC uses their own private fleet of vehicles which consists of 87 over-the-road tractors and 121 temperature-controlled trailers. (Franchising, #1 Nutrition retail franchise: GNC domestic franchising, 2011) GNC uses a piece-picking technique for 90 percent of the inventory volume that they handle at their distribution centers. Piece picking is a tedious way to move and organize inventory that requires a picker to go through the warehouse and manually pick the inventory items required for each order that

is placed by each of its individual retail locations. Holste, 2010) GNC has developed its own method in-house to make the piece picking system called the “pick cart system”, which is a more efficient and accurate method. The company has developed their own picking cart, which is equipped with a monitor that tells pickers which inventory items are needed for the order, where the items are located, and even drives the picker through the warehouse in the most efficient path to pick up all of the items in the correct order (Holste, 2010). The carts use electric cabling to power the PC and scanner which navigate the cart.

The cart actually moves on overhead runners that are networked throughout the warehouse allowing the cart to move down any aisle. The runners provide assisted movement of the carts, enabling associates to move them up and down the aisles at high rates of speed. The carts are also equipped with barcode scanners which help insure the accuracy of orders. If a picker scans an item that does not belong with an order, it displays the mistake on the cart’s monitor and does not let the picker proceed with collecting until the mistake is reversed. Holste, 2010) Along with coming up with innovative ways to make it easier for employees process orders, GNC has also used technology to make it more convenient for regular customers to make purchases. GNC’s Gold card loyalty program offers special deals and discounts to their customers and GNC gold cards are used on 80 percent of purchases made at GNC (Deatsch, 2011). Recently GNC has released its smartphone app for Gold Card members. The

app can be presented in the store as the customer’s gold card, includes links to GNC. com for online shopping, and even has a bar code and Quick Response, or QR, which is two-dimensional bar code scanner that enables customers to scan a product in the store to instantly access ratings, reviews and product information directly from GNC’s e-commerce site (Deatsch, 2011). The app also tracks customer preferences and order history to help the company keep track of changing consumer trends (Deatsch, 2011). GNC utilizes new technologies in all aspects of its business from distributing inventory to how customers complete face to face transactions in the store. By doing this, GNC has been at the forefront in innovation in the retail industry and has been successful doing so.

By incorporating new technologies, the company has created an incredible advantage over its competition and has contributed to their continuous success. Performance Evaluations Participants in our industry include specialty retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations, online retailers, mail-order companies and a variety of other smaller participants. Our main competition as far as retailers of health and wellness products is Vitamin Shoppe, while Wal-Mart and other discount superstores are our secondary competition.

As stated earlier, the GNC brand has a dominant marketing position by being more than twelve times larger than the nearest specialty retail competitor, making GNC the leader specialty retailer of health and wellness products. This claim is supported by comparing financial statements between Vitamin Shoppe and GNC. For the year ended December 31, 2010, we achieved revenue growth of 6. 8%, operating income growth of 18. 4% and net income growth of 41. 0% from

the previous year. Our annual report states that we have experienced steady progression in operations, which is encouraging despite the current situation of the U.

S. economy. The recall of Hydroxycut in 2009 forced us to experience a short-term reduction in sales revenue, but that reduction was followed by growth contributed majorly from increases in new sports nutrition products sales. Our redesigned website has also made it simple and convenient for customers to purchase products, contributing to the overall steady growth of GNC. Net income for GNC was $98. 2 million during the year of 2010, compared to $69. 6 million during the year of 2009. (GNC 10-k Annual Report, 2010) Vitamin Shoppe is next in succession of retailers of health and wellness products, making a net income f $29. 2 million during the year of 2010, compared to $12. 7 million from the previous year. According to their annual report for the year 2010, “the increase was the result of an increase in our comparable store sales, as well as sales from our new non-comparable stores. ” (Letter to Shareholders, 2010) Vitamin Shoppe needs to continue to have positive growth and aim to increase their market share in order to potentially gain a competitive edge over GNC. Wal-Mart did not have information in their annual report regarding net income or sales specifically of supplement items.

Because these retail items are not what Wal-Mart is notorious for, GNC and even Vitamin Shoppe have that competitive advantage over Wal-Mart. Also, employees of GNC, as stated earlier, are highly educated on all products offered in the store and are knowledgeable about the best products for what each customer needs.

Wal-Mart is a discount superstore, so has the advantage of providing generic supplement products are a price significantly less than that of GNC. With the lower price comes lower quality, which is something consumers must take into account.

The financial statements of GNC and Vitamin Shoppe along with the knowledge of Wal-Mart show that health and wellness products are an industry that is constantly growing. GNC is the dominant retailer of these products, but in the future Vitamin Shoppe could become a greater threat. Wal-Mart will never be the leading retailer for these specific products because of their inability to target a specific population seeking products for body building, nutrition, weight loss, and athletic performance enhancements or any person who is interested in starting or maintaining a healthy lifestyle.

Actual consumers seeking these products may buy them from Wal-Mart or other discount superstores, but are most likely to buy them from a specialty store such as GNC or Vitamin Shoppe. Works Cited Deatsch, Katie. Feb 9, 2011. GNC Supplements its m-commerce Site with Mobile App http://www. internetretailer. com/2011/02/09/gnc-supplements-its-m-commerce-site-mobile-app GNC 10-k Annual Report (2010). Retrieved November 28, 2011, from GNC Live Well: http://phx. corporate-ir. net/phoenix. zhtml? c=88669=irol-sec Franchising, G. (2011). 1 Nutrition retail franchise: GNC domestic franchising. Retrieved November 23, 2011, from GNCFranchising. com: http://www. gncfranchising. com/ Franchising, G. (2011). GNC Business Strengths. Retrieved November 25, 2011, from GNC Live Well: http://www. gncfranchising. com/dom_power_strengths. asp GNC. (2011). Returns of an online purchase to a GNC retail store. Retrieved November 25, 2011, from GNC Live Well: http://www. gnc. com/helpdesk/index. jsp Histories, G. D. (2011). General Nutriona Centers. Retrieved November 24, 2011, from Answers. com: http://www. nswers. com/topic/general-nutrition-centers Holste, C.

(2010, June 2). Logistics News: GNC USes In-House Developed Pick Carts to Turbocharge Piece Picking. Retrieved November 26, 2011, from Supply Chain Digest; Your first stop for supply chain information: http://www. scdigest. com/ASSETS/ON_TARGET/10-06-02-2. php? cid=3501 Johnsen, M. (2005, May 2). Price strategies get back into shape. Retrieved November 27, 2011, from Life ; Health Library: http://findarticles. com/p/articles/mi_m3374/is_6_27/ai_n13718015/ Learning, C. (2011, November 25).

Highbeam Business. Retrieved 2011, from General Nutrition Centers Inc. : http://business. highbeam. com/company-profiles/info/287954/general-nutrition-centers-inc MyGNC. (2009). Become a GNC Gold Card Member. Retrieved November 24, 2011, from GNC Live Well: http://www. gnc. com/helpdesk/index. jsp? display=account=group Newman, A. A. (2009). A Brand Favored by Muscle Men Wants to appeal to More Women. The New York Times, 1. Release, G. P. (2009, September 29). GNC Unveils Revolutionary New Retail Experience as It transorms Brand.

Retrieved November 23, 2011, from GNC Live Well: http://gnc. mediaroom. com/index. php? s=43=207 Releases, P. (2001, May 22). GNC Lowers Ad Costs for Franchisees. Retrieved November 24, 2011, from GNC Live Well: http://gnc. mediaroom. com/index. php? s=43=96 Releases, P. (2011). We're committed to exceeding your expectations. Retrieved November 25, 2011, from GNC Live Well: http://gnc. mediaroom. com/ Reuters, T. (2011). General Nutrition Centers, INC. Pennsylvania: Thomas Reuters Accelus. VMSD. (2009). GNC Debuts New Concept Store. vmsd: Experience Retail Now, 1.