GNC wants to expand franchise network

General Nutrition Companies, Inc., the biggest specialty retailer of vitamins and nutritional supplements in the United States, wants to broaden its Canadian presence by adding 400 franchised outlets over the next five years.

The National Post
November 19, 2001

GNC wants to expand franchise network
Hollie Shaw

General Nutrition Companies, Inc., the biggest specialty retailer of vitamins and nutritional supplements in the United States, wants to broaden its Canadian presence by adding 400 franchised outlets over the next five years.

Health-conscious Canadians have a strong appetite for GNC products, says Gilles Houde, president and chief operating officer of GNC Canada. More than 50% of Canadians take a vitamin or mineral supplement, and ageing baby boomers are expected to stoke that trend.

"People are resisting the ageing process, but more importantly, they want to play a role in keeping their health, and that's where we come into play," Mr. Houde said.

GNC, a 70-year-old subsidiary of worldwide nutrition company Royal Numico N.V., based in the Netherlands, operates 127 corporate stores across the country with annual revenues of $60-million. Sales have grown "in the strong double digits" since the company came to Canada in 1996, Mr. Houde said.

The retailer's sales margins have been fattened because of its concentration on selling house-branded merchandise. About 80% of GNC's vitamins are manufactured by the company, as are half of its sport nutrition products.

Executives believe the company will grow more quickly through franchising than through public or private financing.

"People tend to migrate to our sector of activity" because of a growing interest in health and wellness, Mr. Houde noted. Related businesses exploded in North America during the second half of the 1990s, fuelling rapid growth for GNC and health food supermarkets such as Whole Foods.

In turn, giant retailers such as Shoppers Drug Mart, Costco and Loblaw took notice, and began to bulk up their own nutrition sections, selling value-priced supplements. GNC is expanding into an increasingly competitive market.

Mr. Houde said his company has the advantage of a knowledgeable staff and a computer database with detailed information about the retailer's products.

"If you go to Costco, you're shopping in front of a bunch of bottles without having access to information about what is inside of them," he said.

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