GNC Plans To Sell Off 1,000 Stores As Focus Shifts To Franchisees

GNC is putting more of its branded stores in the hands of franchise operators as it aims to snap out of a financial funk. The nutrition and supplements retailer has revealed that it plans to sell off:

  • 84 of its stores to one of its existing franchisees, Sun Holdings, for $17 million;

  • As many as 200 corporate-owned stores to franchisees in 2016; and

  • More than 1,000 of its 9,000 corporate-owned stores in total over the next three to four years.

{loadposition GIAA}With GNC experiencing fiscal difficulties stemming from a decline in sales of its Vitapak product line, pressure to slash prices on expiring products and overall challenges in the vitamin and supplement sectors, the company is scrambling for answers as to how to bring its stores to profitability.

The move to cast off additional stores under the franchise model is striking, as Q1 same-store sales at franchises actually dipped 5.6%, more than double the 2.6% sales declines at company-owned locations and its online store.

Nevertheless, the shift to a franchise operation brings money in for the short term from the individual stores, and is designed in the long run to maximize the retailer’s capital efficiency, according to a statement made by GNC CEO Michael Archbold in February.

GNC, Ace Hardware In Largely Unexplored Territory

With the franchising business model dominated by fast food restaurants, convenience stores and fitness centers, GNC and Ace Hardware are two of the rare breed of specialty retailers operating a significant portion of their business through franchises.

At first glance, the decision to sell sites to franchisees offers numerous benefits. For example, these stores require less corporate investment to open when they are operated by individual franchisees. In the long term, the attached fees and royalties paid to the franchisor can be substantial.

The downside for GNC is that many of its domestic franchisees did not participate in all corporate promotions, including the retailer’s expanded assortment initiative, according to the Q1 earnings report.

The lack of coordination and consistency with the GNC brand could definitely have had an impact on how these stores performed from a sales standpoint. Future sales could well erode GNC’s power as a national brand even further. If GNC does in fact go through with selling 1,000 stores off, the retailer might want to introduce more stringent terms related to the usage of expanded assortments and deployment of promotions.

Whether this idea works in GNC’s favor or not, the merchant is making a bold statement by doubling down on a business model that doesn’t provide much precedent within traditional retail. The success of GNC as a franchise operation will help set the tone for other retailers interested in moving to such a business model going ahead.

Asian Fashion E-Tailer Zalora Sells Thailand and Vietnam Operations

Southeast Asia’s largest online fashion platform, Zalora, is selling its Thailand and Vietnam operations. Thailand’s Central Group, looking to expand its e-Commerce business, is buying the Thai business, while an unidentified company will purchase the Vietnam segment.1 Zalora

“This move will allow us to capture opportunities and strengthen our position in our markets, as we gear towards accelerating our growth,” said Michele Ferrario, CEO of Zalora Group in a statement.

Zalora, backed by Rocket Internet, is making these sales in order to streamline its services in light of slowing output and the high cost of customer acquisition in Southeast Asia.

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Centralized Data Streamlines Collaboration For Happy Family

Though it’s owned by a multinational conglomerate, Happy Family Brands still maintains the attitude — and the staffing levels — of a scrappy, agile start-up. That means collaboration and communication are always at a premium, particularly when it comes to managing complex multi-stage tasks like introducing a new product.

To raise the stakes even higher, because its products are organic baby foods, numerous regulatory, food science and quality assurance (QA) requirements must be met along the way from original ideation to delivery to the retailer’s shelf.

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Chico’s Budget Cuts Spotlight Changing Roles For Retail Marketing

1chicosChico’s FAS expects to reduce its 2016 marketing expenses by $11 million and generate annualized savings of approximately $14 million with changes in the structure of its brands’ marketing departments, according to a recent quarterly report. The reduction in spending comes as the retailer’s President of Digital Commerce and Chief Marketing Officer (CMO), Miki Berardelli, has left the company to Chair the NRF CMO Council.

In conjunction with the budget slashes, the retailer will realign its marketing and digital commerce functions in an attempt to place decision makers directly in control of the retailer’s three brands: Chico’s, White House Black Market and Soma. Berardelli’s marketing and digital commerce responsibilities will be passed to the individual presidents of each brand.

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European On-Demand Grocery Platform Expands to U.S.

Online grocery shoppingFinland-based Digital Foodie, an on-demand grocery platform encompassing the user experience as well as digital commerce, order management and fulfillment, has received a strategic investment from Enterworks that will fuel its expansion into the U.S. The combined company is focused on all aspects of the grocery supply chain, including serving CPG and manufacturing companies with a food-focused Product Information Management (PIM) solution.

The Digital Foodie solution, which has been deployed in more than 1,100 stores in Europe, will allow U.S. grocery retailers to more easily move into e-Commerce while still maintaining their brand and loyalty relationships with shoppers.

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Mother’s Day Retail: Candy, Flowers And Much More

Mother’s Day is a day for celebrating everything that makes mom great. Americans will spend billions this year on jewelry, cards, candy and flowers, but if they listened to their mothers, most would be spending nothing more than their time. Yes, mom’s love transcends retail excess.1-mothers-day

In spite of mom’s request, and fortunately for retailers, Mother’s Day continues to grow and is now America’s third-largest retail holiday. According to the National Retail Federation’s annual survey, conducted by Prosper Insights and Analytics, U.S. consumers are expected to spend an average of $172.22, down slightly from last year’s record-high $172.63, with a total of $21.4 billion projected to be spent this year.

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Barneys Brings iBeacons And ‘Endless Aisles’ To New York Flagship

Barneys New York is enhancing the in-store experience at its flagship Manhattan location with iBeacon technology and an updated personalization platform.

The luxury retailer has enlisted the RichRelevance Relevance Cloud platform to:

Target, Walmart And Whole Foods Honored For Energy Efficiency Efforts

Retailers including Target, Walmart, Giant Tiger Stores and Whole Foods Market were presented with the Advanced Roof Top Unit (RTU) Awards during the PRSM2016 National Conference in Long Beach, Calif.

The Department of Energy (DOE) recognized six award winners, including Arby’s Restaurant Group and electricity supplier Southern California Edison, for innovative and efficient RTU management approaches that led to “significant energy savings in commercial buildings.”

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