General Nutrition Center, headquartered in Pittsburgh, Pennsylvania, was established in the year 1935, offering health and wellness products and services to customers. There are different brands under which it sells its products, such as Total Lean, Pro Performance, Mega Men, Ultra Men, and other third party brands. Different products of the company include herbal supplement products, minerals, vitamins, diet products, sports nutrition products and other wellness products, offered under three segments; manufacturing/ wholesale, retail, and franchise.
On April 6, 2011, GNC completed an initial public offering (the “IPO”) pursuant to which 25. 875 million shares of Class A common stock were sold at a price of $16. 00 per share. Holdings issued and sold 16 million shares and certain of Holdings’ stockholders sold 9. 875 million shares in the IPO (United States Securities and Exchange Commission). Subsequent to the IPO, stockholders completed the following registered offerings of Class A common stock: • in October 2011, 23. 0 million shares at $24. 75 per share; • in March 2012, 19. 6 million shares at $33. 50 per share; • in August 2012, 10. million shares at $38. 42 per share; and in November 2012, 11. 7 million shares at $35. 20 per share.
The company has its operations in 55 countries and has 6200 retail outlets and 8200 other store formats. Moreover, it offers products through domestic and international franchising activities, e-commerce, company-owned domestic retail stores, third-party contract manufacturing, and corporate manufacturing. It also provides products and services through drugstore. com, GNC. com and LuckyVitamin. com. It not only engages in retail operations but also manufacturing operations (GNC Holdings Inc, 2013).
Additionally, it provides a choice to its customers to make a selection of products and services that meet their requirements. The company emphasizes the quality of products and services as it has a significant effect on the health and life of customers. Providing high quality products and services to customers, aids in increasing customer satisfaction by building trust and loyalty among them (GNC, 2013). GNC is the largest company in the world, which focuses on providing high quality products and services by setting standards for the industry, by adopting and implementing new and advanced technology.
In addition to this, company has made huge investments in research and development so as to adopt advanced technologies that facilitate in achieving a sustainable competitive advantage. It is the company that offers help to customers through Live Well. It is diversified in different areas and different channels are used for distribution. GNC manufactures different dietary supplement products under private label using advanced technology through state of the art facilities. The assessment of the quality of products is done by taking into consideration the regulations of FDA.
Different tests have been carried out to test the quality of products from different aspects, such as raw material testing, product traceability, potency testing, microbiology testing and product freshness, and package integrity. It will facilitate in providing quality products to customers in order to meet their expectations and demands in an effective and efficient manner. The manufacturing unit of the company, named Nutra, has a capacity to produce 13 billion units of caplets, capsules and soft gels annually (GNC Live Well, 2007).
The label of GNC products include comprehensive information about different aspects providing the detailed relevant information to consumers like ingredients and allergens used, directions to use, etc. even when it is not required. This information helps customers to make decisions related to purchase of products, etc (GNC Live Well, 2007). Besides this, products are packed in a tamper evident package and safety sealed package that provides additional protection to products. Quality check done at this stage supervises and thus, ensures that quality products are offered to customers.
The dedicated and committed sales workforce of the company effectively handled the queries of customers (GNC Live Well, 2007). The queries of customers are also handled electronically by sales people via different modes, such as toll free hotline number, and customer care centers. GNC website, GNC. com, which re-launched in 2009, has become an increasingly significant part of GNC business. Some of the products offered on the website may not be available at retail locations, enabling the company to broaden the assortment of products available to their customers.
The ability to purchase GNC products through the internet also offers a convenient method for repeat customers to evaluate and purchase new and existing products. This additional sales channel has enabled GNC to market and sell products in regions where we have limited or no retail operations. Internet purchases are fulfilled and shipped directly from distribution centers to consumers using a third-party courier service. To date, most of the sales generated through the website are incremental to the revenues from retail locations (United States Securities and Exchange Commission).
In August 2011, GNC acquired S&G Properties, LLC d/b/a LuckyVitamin. com and What’s the Big Deal? , Inc. d/b/a Gary’s “World of Wellness” (collectively referred to as “LuckyVitamin. com”), an online retailer of health and wellness products. The addition of the LuckyVitamin. com platform expands GNC reach and growth opportunities in the ecommerce channel while broadening customer demographics and product offerings online. Economic Analysis There was an increase in the growth of retail drug industry of the US after the recovery from global financial crisis. There was a growth of 2% in the sales of retail drug industry of the US.
This is because; the retail segment has been growing at a steady pace for the last few years due to the positioning of healthcare products and services in the market (Redman, 2011). The positioning of drug stores in the market is well organized due to the presence of low average ticket, convenient locations, inflation, and flow of pharmacy traffic. There was an increase in the wholesale prices of drug products in the year 2008. Government also provided benefits to customers related to drugs, which increased prices of healthcare products and services at an unusual rate.
With the increase in the number of aging population, and awareness about health consciousness among people, there is an increase in the number of opportunities available in the markets, which facilitate the growth of the industry (Redman, 2011). There is also an increase in the number of customers in the drug retail industry due to offering of drug insurance, which has increased the revenue and contributed to the GDP of the country. Retail business in the US provided employment to 28. 1 million people in the year 2009, generating an income of $ 770 billion and contributing 8. 7% to the total national labor income.
The contribution made by the industry towards the GDP of the country is $ 1. 2 trillion, which is 8. 5% of the GDP (PWC, 2011). Increase in the wholesale prices of drugs during global financial crises has increased the expenditure to $ 10 billion, which increased to $300 billion in the year 2009. It has also increased the inflation rate in the country. In addition to this, it also has a negative impact on the Consumer Price Index, which fell to 1. 3% in the year 2009 (Wilson, 2009).
It is estimated that the retail drug industry would reach US$ 1420 billion in the year 2017 and there would be a compounded annual growth rate of 3. % in the next 5 years (Reuters, 2012). The US retail industry is at the maturation stage in comparison to other countries’ retail industry, and it has evolved a new structure for the industry. There is also a growth in the drug retail industry that helps in the growth and development of the economy as a whole. This is because; it results in the increase in the employment in the country, affecting the standard of living of people in a positive manner (PWC, 2011). The retail drug market has indicated high sensitivity towards disposable income, loss of job, etc.
