GNC

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The story of GNC is not only the story of a highly successful and innovative retailer, it is the story of one of the fastest-growing specialty retailing segments in the world – health and wellness products, including vitamins, minerals and herbal supplements, sports nutrition and diet products.

Founded nearly 80 years ago, GNC’s dedication to healthy living has expanded its reach in health and wellness retailing around the world. From a humble beginning in 1935, as a single store in downtown Pittsburgh, to today’s more than 7,900 retail locations throughout the U.S. and in 58 international markets, GNC is truly the leader when it comes to helping consumers Live Well.

Unlike many other retailing segments, specialty nutritional supplements retailing has grown substantially, year after year, over the last ten years. There are several key factors behind that growth: first, an aging population, particularly with health-conscious Baby Boomers; second, consumer concerns about rising healthcare costs; third, broader consumer awareness of health and wellness issues in general as well as a desire among consumers to live longer, healthier lives; and fourth, an increasing focus on fitness among consumers of all ages– particularly those interested in sports nutrition products, to increase energy, endurance, strength and speed of recovery from workouts.

Industry Leader

Today, GNC’s U.S. store base is more than 12 times larger than that of its nearest specialty retailer competitor, making it the largest specialty retailer of health and wellness products in the world. The proof of GNC’s success can easily be seen in its financial results. For the third quarter of 2012, the most recent reported, retail segment revenue grew 15.5%. Franchise segment revenue for the same period grew 19.7%. In fact, third quarter 2012 brought the company its 29th consecutive quarter of same store sales growth.

What sets GNC apart is more than just its longevity, number of stores or even superior financial results – it’s the power of a strong brand, notes Darryl Green, Senior Vice President of International and Domestic Franchising. “GNC has a brand recognition rate of more than 80 percent, which is exceptional,” he says. “That’s right up there with some of the largest and most successful companies in the U.S., and it demonstrates the strength of our relationship with consumers.”

GNC has developed a reputation for producing quality products, as well as providing superior customer service. From a product perspective, the introduction of innovative, high-quality, clinically proven and superior-performing products is a key driver for the business. GNC maintains excellent quality in all of its products by adhering to strict FDA and international standards. Every product undergoes numerous quality tests, and every lot of raw materials that enters a GNC manufacturing facility is tested. This process ensures that a GNC Brand product is synonymous with a trusted product.

From a customer service perspective, GNC is equally driven toward perfection. At every store, GNC franchisees and employees are dedicated to creating a positive shopping experience, assisting their customers in finding the right products to help them meet their goals and maximize their results. “When someone comes in looking for a diet product, for example, we don’t just offer them a weight loss product. We ask them about their lifestyle and their goals to help them build a program specific to their needs,” Green says.

In addition to product assortment, the GNC store experience includes access to knowledgeable, trained associates, with 1/3 of shelf space dedicated to education and product information for customers, as well as targeted and effective promotions and in-store programs that drive add-on sales.

“The whole idea is to create a shopping experience that is very different than that of our competitors. We don’t just sell product, we tailor the shopping experience to the customer. If we’ve done our job right, each customer should leave feeling like they just hit the first step to achieving their goals,” he adds.

A critical component of the unique shopping experience is product, however – particularly first-to-market products. Because GNC understands the health and wellness industry and the consumer trends that drive it better than any other company in the segment, and because GNC has its own product development and manufacturing capabilities, it is always ahead of the product development curve. This is certainly true with GNC Brands like Pro Performance®, the largest sports nutrition brand in the U.S. but it’s equally true with major third party product launches as well because of GNC’s strong vendor relationships and ability to leverage its national footprint.

Strong product development and branding go hand in hand. In sports nutrition, as in other product popular categories like Vitapaks and Diet, proprietary flagship brands support the development of a wide range of sub-brands that build and sustain GNC’s category growth. In sports nutrition, for example, the strength of the Pro Performance brand has driven GNC’s share of the fitness/sports category to over 25%.

Franchising’s Role

What draws perspective franchisees to GNC is not only its strong brand, but also a low-starting capital investment that runs between $165,000 and $200,000 for domestic locations. The investment includes a brand new, fully-stocked store, as well as complete training in all facets of the business. “One of the reasons we’re so successful is because it’s an affordable investment to get into a GNC franchise store and own your own business,” Green says.

According to Entrepreneur Magazine, GNC is ranked the 33rd best franchise system in the world.  When GNC went public as a traded company (GNC Holdings, Inc. (NYSE: “GNC”) in 2011, it was named the Best IPO of the Year by Forbes Magazine and earned CNBC’s IPO Star of 2011.

When looking for a franchisee, GNC searches for people who have both an interest in wellness and nutrition and a genuine desire to help people Live Well. “This is a customer service business, and outstanding customer service drives the franchisee’s success,” Green says.

GNC supports new franchisees with an initial multi-phase training program. This program includes spending time at a GNC corporate store to learn all facets of the business, as well as attending a week of classroom training at GNC headquarters in Pittsburgh to learn about business operations. It also includes having a GNC representative spend time with them on-site at their location – helping them to launch their new store.

Support and training doesn’t stop once the store opens. There are additional training opportunities, including support for new product launches and education on new products and ingredients. “Our goal is to coach our franchisees on a consistent basis, so that they can maximize their return on investment,” Green says.

Looking to the Future

GNC’s store base currently includes more than 930 franchises across the U.S. The company’s franchise segment is growing rapidly, having opened more than 250 franchise locations in 2012. Green says that trending growth will continue into 2013 and beyond. “The growth machine of GNC store development is International Franchising,” he notes. “We are setting a record pace with sales and store openings, which proves that GNC is a great place to be a franchisee.”

GNC plans to continue down the same path of consistent growth fuelled by innovative products and a strong brand. Green adds, “This is a company that is incredibly committed to the best products and the highest levels of customer satisfaction. Franchising is an important component in our ability to deliver on that commitment.”