It’s been a rather bumpy ride, fiscally speaking, for GNC Holdings in 2016. As the nation’s largest specialty retailer of health, wellness, and sports nutrition products, GNC finds itself in a precarious situation where it needs to redefine its brand customer experience to drive more positive customer behavior and customer loyalty.
GNC Interim CEO Robert F. Moran didn’t mince words one bit about the brand’s performance during its Oct. 27 third-quarter earnings conference call.
“I want to start by saying our financial results continue to be unacceptable,” Moran said. “GNC is on a journey and will not be turned around overnight. It starts first with fixing the customer in-store experience, which has been subpar for some time. We must first earn back the trust of our customers, suppliers, and associates. To do that, we were making investments in technology, training, and management, which I will outline. We also realize that once the store experience is fixed, we need to improve our omnichannel strategy.”
Moran noted that initiatives are underway toward that end, but “our focus in the short term must be on that one-to-one interaction in-store. I have spent the past ninety days doing a deep dive into the details of the business. And, together with the team, we assessed all aspects of it. And, frankly, what we found was a badly broken business model in need of change in particular across five key areas that require our immediate attention and will set us up to launch the new GNC late in 2016.”
Here are Moran’s five key areas:
Improving the overall retail customer experience and ensuring “we provide them with great products and trusted advisers.”
Pricing. “We have had to change how we price and promote our products to eliminate channel conflict and customer confusion about our value proposition.”
Revamping the loyalty program: “Our outdated Gold Card Program did not drive the customer behaviors we wanted. Our new loyalty pilot collects more customer data and better leverages the existing customer data we have to drive customer behaviors.”
Enhancing product innovation with both private-label and third-party vendors and extending the aisle with its e-commerce platform.
Improving marketing in multiple ways: “Shifting from mass to digital, being more focused on traffic-driving initiatives, better targeting profitable customer segments, which will result in an improved marketing ROI. Across each of these areas, we need to fundamentally change the way we operate as a company. We are moving forward with urgency to implement necessary changes, but there is no silver bullet or quick-fix solution.”
Third-quarter consolidated revenue fell 8.1 percent, to $628.0 million; same-store sales decreased 8.5 percent in domestic company-owned stores (including GNC.com sales); in domestic franchise locations, same-store sales decreased nearly 9 percent in the third quarter of 2016.
Net income was $32.4 million, compared with $45.8 million in the third quarter of 2015.
Confirmit VP Karine Del Moro told Loyalty360 that she is encouraged by GNC’s corporate moves regarding its fiscal situation.
“It’s encouraging to see GNC looking at making better use of customer data to drive their loyalty program forward, and to see it’s identified several key elements of the customer experience that it needs to address,” she explained. “As it is able to resolve the immediate in-store and supply chain issues, I’d expect to see the company begin to combine client data with a program to capture more insights about the customer experience in a structured way. While turning things around won’t be an overnight job, a focus on listening to customers will help to uncover new ways to help GNC create experiences that drive loyalty.”
Meanwhile, Clutch COO Brad Marg isn’t so sure GNC is making the right moves to right the ship.
“The concern for GNC is that damage has been done,” Marg told Loyalty360. “The brand is aware of it, which is positive, but its approach seems backward in my opinion. It needs to think and focus on the omnichannel strategy first. The store experience is important, but customers shop via several channels and fixing only one in the short term may not be enough to change its current trajectory. GNC needs to look at its online business, its franchisee and partner channel, and its company stores. Focusing on the stores alone may only affect a third of its total CX.”