GNC and TheVitamin Shoppe are two of the biggest “wellness” brick-and-mortar retailers, with over 4,000 stores collectively in the U.S. They’re also two of the oldest retailers in the category: GNC was founded in 1935 and The Vitamin Shoppe in 1977. They’ve both experienced battering and bruising over the years by sleeker, quicker and more luxurious wellness companies and have ultimately come away with two different stories and strategies in a year assailed by Covid-19.
Both GNC and The Vitamin Shoppe have locations at malls and strip shopping centers, so they’ve both been impacted by the decline in foot traffic. GNC ultimately succumbed to Covid-19 pressures and filed for Chapter 11 in June, with total debts of $895 million and total assets of $1.4 billion. It also has more than 100,000 creditors, according to its bankruptcy filings. China-based Harbin Pharmaceutical Group bought the nutritional supplements retailer for $770 million in October. Harbin Pharmaceutical Group previously invested $300 million in GNC in Feb. 2018 and was already running GNC’s Asian business in Shanghai. Meanwhile, The Vitamin Shoppe concluded its selling to Franchise Group Inc. in Dec. 2019, affording the company a better sense of protection as it navigated the global health crisis.
“There’s no question that, with everything going on in retail right now, it’s helpful to not be quite under the [same] public scrutiny that we were when we were a [standalone] public company,” said Sharon Leite, The Vitamin Shoppe CEO. “Needless to say, we can tap into things and try things a little faster than we could when we were public.”
In Oct. 2019, Glossy first reported The Vitamin Shoppe’s new store concept, which was positioned to boost the retailer’s relevancy and premium positioning. Since then, the new store concepts are on hold except for the five already planned for 2020 and now open, said Leite. Another 29 stores have permanently closed. However, Leite explained that the “experience” of the new store concepts are being integrated into existing stores. This includes digital integrations like contactless payments and improvements to mobile checkout.
In 2019, e-commerce made up 15% of The Vitamin Shoppe sales. In 2020, e-commerce grew to 20% of sales, with buy-online, pick-up in-store accounting for 27% of e-commerce sales. Additionally, The Vitamin Shoppe partnered with Instacart in August for same-day delivery.
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On Monday, The Vitamin Shoppe announced its latest brand partner, Martha Stewart, through a new CBD product line. The brand will roll out across 580 of its 720 stores.
“CBD is a category that is very relevant in today’s marketplace, and it’s taken a little bit of a backseat because of what’s gone on with Covid-19 and immunity products — but CBD is still a very strong category for us,” Leite said. However, The Vitamin Shoppe declined to share sales figures for the category.
In addition to expanding its CBD assortment, the company hired Muriel Gonzalez as evp and Chief Marketing and Merchandising Officer in August — she previously worked at companies like Estée Lauder, Macy’s and Bergdorf Goodman.
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According to the Global Wellness Institute, beauty accounts for nearly 25% of the $4.5 trillion wellness economy as of 2018, and there are no signs of a slowdown. In fact, Covid-19 has prompted wellness categories like the beauty-adjacent categories of sleep and sex products to grow even faster. It has also caused some interesting shifts in purchasing habits.
Rachel Jones, GNC’s vp of global brand, said that online customers are moving away from sports supplements and performance products and toward wellness offerings like collagen supplements and multivitamins. GNC’s wellness category has experienced more than 50% year-over-year sales growth online. And instead of attracting 18- to 35-year-old males online, e-commerce is seeing more 25- to 45-year-old female shoppers. Based on these shifts and developments, GNC is looking to develop its beauty vertical further, Jones said.
“Historically, health and beauty category sales have been less than 10% of our [U.S. sales], relative to our overall sales,” said Jones. “With our growth initiatives for the next 2-3 years, we see that business rising to 15-20% of our total business.”
Jones said a big portion of that growth has to do with private-label products like GNC’s new ingestible beauty and wellness brand Luster & Lūm launched in September. The brand also has wholesale disruption through Amazon, Target.com, Kohls.com and Dick’s Sporting Goods.
Other emerging merchandising trends that GNC has leaned into include health and wellness testing kits. That includes its GNC4U program, offering a DNA kit for $89.99, a personalized monthly vitamin subscription and a Covid-19 test kit launched Dec. 3 for $129. GNC’s approach to blurring health and wellness is reminiscent of Hims Inc.’s own launch of a Covid-19 kit in May and plays into the merchandising blur between beauty, wellness and health care, which has caused some criticism.
Jones said that before the Chapter 11 bankruptcy, GNC had plans to boost its e-commerce and wholesale distribution. As part of its Chapter 11 restructuring, it will close 800-1,200 stores out of its more than 5,000. Jones said that by moving away from non-profitable stores toward e-commerce and successful stores, those channels can become “more modern, relevant, solution-oriented and interactive” next year.
“A lot of consumers prefer to shop online, but will make a special trip into a store environment if there’s something unique from an experiential perspective,” said Jones. “In addition to our in-store health coaches, we’re looking at ways to take personalization to the next level, so consumers can find a product better and build their baskets better.”
