GNC makes a bet on their own health…..

VP Market Insight

On Wednesday, December 28th, 2016, GNC closed almost 4,500 stores to do a “re-boot” intended to streamline in-store and online pricing, calling it “One New GNC”. They also launched a revamped loyalty program and installed new cash registers to make the customer checkout experience smoother.

The real question is—did any of it work? Well, as “they” say (who are “they” anyway?), time will tell. Based on our insights at 1010data, all the early signs are indicating that this strategy worked!

Using a pure-play competitive set within the vitamin & supplement space (representing both online and physical retailers) 1010data compared the 30 days before and the 30 days after GNC’s “reboot” to measure performance. Based on our findings, it appears that GNC has outperformed competitors in brick-and-mortar spend as a result of “One New GNC”.    

 

This seems like good news for GNC, but what is driving this growth? Was it through customer acquisition or did average basket size increase?  

Let’s answer the latter first. GNC’s average basket for physical stores was the same before and after the re-boot at $48, while their online basket size experienced a drop in price. Overall, basket size does not seem to have significantly driven GNC’s in-store growth, and the rest of the competitive set had minimal shifts in basket size post reboot.  

 

 

So that leaves us with customer acquisition. GNC experienced a substantial lift in distribution of unique shoppers after closing their doors on December 28. It’s likely that foot traffic to GNC’s stores drove the increase in spend in the post period, but was it old customers returning? Or did GNC attract any new customers as a result of their reboot? Based on our analysis, 50% of customers who made a purchase in the 30-days post reboot were first-time GNC customers, which is a great signal for GNC. Furthermore, the chart below shows that GNC’s competitors didn’t benefit as much from the day of store closures as GNC did.

 

While GNC closing all their doors for one day is not an instant fix, it does lay the foundation for potentially building a great story. Is this sustainable? Well as “they” say, time will tell. In the meantime, we will be watching this very closely at 1010data.

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