GNC Officials Hold Steady on Commitment to One New GNC and Enhanced Brand Loyalty

Although the numbers don’t reflect it yet at GNC Holdings, Interim CEO Robert Moran remains confident amid the brand’s major transformation that launched during the final days of 2016.

GNC, the nation’s largest specialty retailer of health, wellness, and sports nutrition products, underwent a major rebranding in late December designed to magnify customer experience and customer engagement.

First-quarter results are in and the numbers aren’t pretty for GNC:

Same store sales decreased 3.9 percent in domestic company-owned stores (including sales)

In domestic franchise locations, same store sales decreased 4.6 percent

Net income of $23.9 million was well below $50.8 million in the same period last year

On a brighter note, though, transaction growth continued in the first quarter, up 9.3 percent.

At the end of the first quarter, five million consumers had joined the myGNC Rewards Program and there were approximately 78,000 PRO Access members. Over the course of the year, the company will begin leveraging the CRM information to better reach and more cost effectively speak to its customers.

“The One New GNC represents a fundamental change in our business model and, in the first quarter of 2017, we saw those transformational changes begin to bear fruit,” said Moran. “We’re encouraged by positive trends in transactions and by the early performance of our new loyalty programs, which are demonstrating their power to increase consumer frequency and spending.”

GNC closed every one of its stores on Dec. 28, 2016 and reopened the following day as a New GNC, launching the Fundamentally Transform Business Model, a model that is built around our its core strengths and the customer needs, wants, and aspirations that are designed to generate profitable growth.

Since the launch of the One New GNC, transactions have increased in company-owned stores. Online sales are beginning to improve, with the Jan. 12 launch of the GNC store on Amazon.

Moran has said of the One New GNC that the company is “no longer asking customers to sort through up to five different prices for the same product. Now, customers will find standardized competitive pricing across all our platforms. We have not set out to be an everyday low-priced player, but are pursuing unknown value-added pricing strategy. We’re sharply priced on categories that drive consumer price perceptions and where we have more pricing flexibility we're working on protecting our margins. We’re also pleased with the initial performance of our new free loyalty program. myGNC Rewards replaces our outdated Gold Card, which simply was not doing enough to build loyalty or grow revenues.”

The myGNC Rewards loyalty program is designed to grow both frequency and basket size. Members earn a point for every dollar they spend at GNC and get cash-back rewards when they hit 150 points.

Chirpify CEO Chris Teso told Loyalty360 that as engagement grows, so too do repeat sales, loyalty, and customer lifetime value.

“Our research supports this specific to social media engagement and, as GNC continues to evolve its loyalty program to engage more deeply with its myGNC Rewards Program members, the company should explore ways to connect its social media engagement, loyalty programs, and current CRM efforts for greater top line impact,” Teso explained. “Knowing more about a company’s most loyal customers in social media has shown to increase sales by this group by as much as 2X.”

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