The Pittsburgh Business Times reports that nutrition-and-supplement retailer GNC has announced its intention to sell 84 of its locations to one of its franchisees, and it plans to sell off as many as 1,000 additional stores as a way of dealing with sales issues.
According to the story, "GNC is also working with existing franchisees to get them to more quickly adapt the company's new initiatives, including an expanded assortment of products that has been showing success at the company-owned stores. The expanded assortment isn't as widely adopted among franchisees, a trend that has concerned GNC executives who are already smarting from lower same-store sales. Franchisees have been leery of additional expenditures."
Bloomberg writes that "part of the problem was that unsold vitamins sat on GNC shelves so long the company had to discount them heavily to get people to buy them before they expired. It's almost a metaphor for the company and the industry. GNC's sales have been falling as customers pull back on vitamin purchases. Fewer of GNC's franchisees are adopting its new product lines or participating in national promotions, causing sales to fall further. Meanwhile, the FDA and Justice Department are scrutinizing the dietary supplement industry for allegedly selling products made with illegal ingredients, which isn't helping matters."
GNC is looking to persuade franchisees that by investing in additional merchandise they can move the needle on sales, and that standing pat with current approaches won't generate improved results.
According to the story, "GNC is also working with existing franchisees to get them to more quickly adapt the company's new initiatives, including an expanded assortment of products that has been showing success at the company-owned stores. The expanded assortment isn't as widely adopted among franchisees, a trend that has concerned GNC executives who are already smarting from lower same-store sales. Franchisees have been leery of additional expenditures."
Bloomberg writes that "part of the problem was that unsold vitamins sat on GNC shelves so long the company had to discount them heavily to get people to buy them before they expired. It's almost a metaphor for the company and the industry. GNC's sales have been falling as customers pull back on vitamin purchases. Fewer of GNC's franchisees are adopting its new product lines or participating in national promotions, causing sales to fall further. Meanwhile, the FDA and Justice Department are scrutinizing the dietary supplement industry for allegedly selling products made with illegal ingredients, which isn't helping matters."
GNC is looking to persuade franchisees that by investing in additional merchandise they can move the needle on sales, and that standing pat with current approaches won't generate improved results.
- KC's View:
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I could be completely wrong about this, because I'm certainly not GNC's target customer, but its stores always seem like anachronisms to me. From the outside, at least, it would appear that to be brought into the 21st century, they need a lot of investment, not a little.
