A new year, a new you. But it isn’t just health-conscious consumers who are hitting the reset button in 2017 reports CNBC.
GNC, the Pittsburgh-based chain of nutrition stores, has temporarily shuttered all 4,464 of its U.S. locations, as it rolls out its revamped pricing strategy.
The one-day closures come two months after the retailer admitted that inconsistent prices on its website and in stores — as well as discrepancies over what it charged loyalty members versus casual buyers — were making its locations confusing to shoppers.
The one-day closures come two months after the retailer admitted that inconsistent prices on its website and in stores — as well as discrepancies over what it charged loyalty members versus casual buyers — were making its locations confusing to shoppers.
They also come during the busy post-Christmas stretch, when shoppers exchange unwanted gifts and spend money they received on gift cards.
Investors didn’t appear to be sold on GNC’s strategy, which was designed to stem a slide in revenue. They sent the company’s shares 3 percent lower on Wednesday, contributing to a nearly 64 percent drop over the past year.
“The new GNC leaves the old, broken model behind,” interim CEO Robert Moran said in a news release. Moran, who joined GNC’s board in 2013, was appointed to the interim role in July, when Michael Archbold exited after two years.
GNC tested its changes in seven markets, and said it was “encouraged by the improvements” it saw. The cost consumers pay for its products will go down on about half of its items; stay the same on about a quarter of them; and go up on another quarter.
While GNC expects its new, simplified pricing structure will bring more shoppers into its stores, there will be repercussions — at least in the short term. When the company raised prices on its website to better align with what shoppers pay in stores, the changes sparked a 30 percent quarterly decline in same-store sales.
“It will take time for the changes to take hold and translate to improved financial results,” Moran admitted in a news release.
GNC isn’t the only retailer to learn how difficult it can be to wean shoppers off of discounts. In the first full quarter after Tailored Brands eliminated the famous Buy-One-Get-Three Free sales at its Jos. A. Bank label, that brand’s same-store sales plummeted 32 percent. J.C. Penney is still trying to recover from a failed strategy under former CEO Ron Johnson, who did away with coupons.
In addition to reworking its prices, GNC is upgrading its cash registers and supply chain so that it can move customers through the checkout line quicker, and keep more items in stock.
“We’re making these investments because we believe in this business,” Moran said.
In May, GNC began working with Goldman Sachs to review its strategic options, including a potential sale of the company.
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