Analysts unpack the challenges and opportunities for the vitamin retailer as it launches a new experiential store, complete with dietitians and a smoothie lab

The age-old saying that necessity is the mother of invention certainly applies to specialty health-and-wellness retailer GNC, which has seen its revenue fall for 11 consecutive quarters.

The invention GNC hopes will help it put a stop to the downward revenue spiral is its new experiential store, which opened December in Pittsburgh, PA.

The new store incorporates several distinct offerings to allow consumers to customize their wellness regime. “We are focused on providing a personalized approach to wellness and now GNC consumers have the opportunity to experience this firsthand and connect with us in a truly customized way,” said executive vice-president of operations Joe Gorman, in a statement.

GNC refers to the store as a “one-stop shop” for all health-and-wellness needs, which is a pretty bold mission statement. To meet that mission from a retailing standpoint, the experiential store will feature three key “installations,” along with other features.

These include a Smoothie Lab where shoppers can order healthy drinks, grab-and-go snacks and prepared meals made with high-quality ingredients and top GNC products, the company says; the InBody Body Composition Analyzer, which delivers insights on consumers’ health to find the right solutions for their lifestyle; and free, in-house consultations by registered dietitians who develop customized plans tailored to specific health goals.

“This store gives us an opportunity to learn from our customers and get a better understanding of their engagement with specific concepts. We hope to leverage these insights to inform our retail strategy in other locations,” said GNC CEO Ken Martindale, in the statement.

The New Customer Playbook: From Transactional To Experiential

The strategy behind GNC’s experiential store is right out of the new customer-experience playbook. Retailers are realizing that surviving today in both physical and online retail increasingly means offering shoppers an experience that goes beyond the transactional product sale.

A good merchandise mix priced decently is no longer enough for many shoppers. It’s product mix and price meets “tell me a story” in today’s brave new world of retail.

The sixty four thousand dollar question for GNC: Is the experiential store concept and initiative enough to bring it into 21st century health-and-wellness retailing? And is it bold and strategic enough to help reverse GNC’s revenue loss? The answer is complicated, sources said.

Neil Stern, senior partner at McMillan Doolittle, said, “It’s clear from GNC’s results, which include declining same-store sales and a fairly rapidly shrinking store base, that their future as simply a vitamins and supplements store will not be enough. It is easy enough to buy these products from any number of places, most dramatically, online.”

Stern says the initiatives with the new experiential store “are certainly the right ones, as those offers are much harder to duplicate by online retailers.” For one, “adding services such as in-store dieticians and body composition analysis align the GNC brand more closely with consumers’ end goals, which are better health and nutrition.”

Stern cautions though that with any of these ideas and features, scalability is the number one issue. Even if successful, “can they be successfully rolled out?”

Life-Stage Merchandising?

Michelle Weisberg, a Chicago-based retail industry consultant, agrees. GNC must move beyond being primarily a retailer of vitamins and supplements, she said.

Weisberg, who’s held senior level positions with major retail chains from Tesco to Big Lots, suggests GNC needs to aggressively differentiate itself in order to expand its customer base and stem revenue declines.

The retailer might want to look more closely at generational merchandising and marketing, she said. For example, “create shopping experiences tailored to the specific age-range of consumers … separate departments within a store, or create an entire store format tailored to different generations.

“Consumers’ health-and-wellness needs change as they age and they also frequently shop differently,” Weisberg said. “This would be one way of addressing this phenomenon and creating an interesting customer experience at the same time.”

Differentiating In A Crowded Market

GNC finds itself in a tough spot. It was once a favored retailer for vitamins and nutritional supplements.

But retailers of all kinds — from Walmart and Dollar General to Kroger and Whole Foods — along with Amazon and other online retailers, are selling GNC’s core product offering.

“GNC is not only competing with other specialty vitamin supplement retailers, both brick and mortar and online, it’s also competing against a large number of other retailers, including supermarket and mass-merchandise chains that are promoting health and wellness in their stores,” Weisberg said.

Don Gordon, director of global marketing for packaged goods and retail groups for SAP, says it’s going to take something extra to get more people into GNC’s stores.

“Given all their current challenges —underperforming stores, business migrating online — it makes sense that GNC is rethinking the store experience,” he says. “However, I’m not sure a smoothie bar and health consult will do the trick.”

Gordon suggests GNC might want to open a fitness center where people can learn about the specific nutritional needs associated with a given exercise program.

The idea is to brand GNC with an experiential element. “My sense is that consumers are more focused on a health outcome — losing weight, getting fit — than on products in isolation,” he says.

GNC

 

The age-old saying that necessity is the mother of invention certainly applies to specialty health-and-wellness retailer GNC, which has seen its revenue fall for 11 consecutive quarters.

The invention GNC hopes will help it put a stop to the downward revenue spiral is its new experiential store, which opened December in Pittsburgh, PA.

The new store incorporates several distinct offerings to allow consumers to customize their wellness regime. “We are focused on providing a personalized approach to wellness and now GNC consumers have the opportunity to experience this firsthand and connect with us in a truly customized way,” said executive vice-president of operations Joe Gorman, in a statement.