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GNC takes the day off to reset pricing

Written by Tom Ryan

Source: GNC (Facebook)

GNC, the retailer of vitamins and supplements, closed about 4,500 of its U.S doors on Wednesday to make its shift to a simplified pricing structure under the new slogan, "One New GNC." The stores reopened Thursday. In October, the retailer admitted that inconsistency in pricing between its website and stores as well as discrepancies over what it charged loyalty members versus casual buyers was confusing customers. ”Our multi-tier pricing program often included the following cascade of prices: list, Gold Card member, non-member, promotional, and different prices at company-owned stores versus online,” interim CEO Robert Moran said in October on the company’s third-quarter conference call. “Obviously, this is overly complicated and doesn't drive the desired consumer behaviors. More importantly, our pricing communications strategy led consumers to believe we were not competitively priced even in instances where we were.” The chain also launched a free myGNC Rewards program to complement its paid Gold Card loyalty program. Mr. Moran said the paid loyalty program limited GNC’s customer data collection because some consumers refused to join. Under the changes, retail prices decreased on about half of its items, remained the same on about a quarter, and increased for another quarter. Some short-term fallouts were expected. For instance, online same-store sales fell 30 percent in the third quarter as online and offline prices were synchronized. Said Mr. Moran in a statement announcing the one-day closing, “We're confident it will have a positive impact on the business, but it will take time for the changes to take hold and translate to improved financial results." The one-day closings reminded Brian Sozzi of Street.com of Starbucks' three-hour closing in 2008 to retrain employees on customer service after Howard Schultz returned as CEO. Chipotle also closed its doors last year for a day to reinforce safety procedures following its E. coli outbreak. Krystina Gustafson of CNBC, on the other hand, was reminded of the struggles J.C. Penney and Jos. A. Banks faced trying to wean customer off promotions.

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