Wal-Mart eyeing healthy sales with nutritional 'store' concept

Drug Store News, Oct 20, 1997

BRADENTON, Fla. -- If imitation is the highest form of flattery, it's praise General Nutrition Companies would probably rather do without. Especially since it's Wal-Mart extending the compliment.

The world's largest retailer has its eyes on the rapidly growing nutritional products marketplace, and has developed a store-within-a-store concept strikingly similar in design to the format that has proven so successful for GNC. Wal-Mart calls its concept OneSource after a proprietary multivitamin it launched last year. The seven OneSource stores now open in various markets are roughly 1,000 square feet and stock a broad assortment of vitamins, herbs, sports nutrition products, books, health foods and beverages. Although slightly smaller than a typical 1,600-square-foot GNC store, extensive point-of-purchase educational signage, faux hardwood floors and two low rise gondolas in the center of the floor give OneSource a definite GNC feel. The new unit in Brandenton, Fla., is even staffed by a former GNC manager.

The biggest difference for most customers is expected to be price. GNC stores are not known for offering low prices, with the exception of a once-a-month promotion called Super Tuesday. On the first Tuesday of each month, the 2.7 million GNC customers who have purchased a special card are entitled to a 20 percent discount. The company also routinely offers a 50 percent-off promotion on a second store brand product when the first is purchased at the regular price.

Wal-Mart will employ an everyday low price strategy, which was evident at the grand opening. A 90-count bottle of OneSource vitamins was offered for $5.00. That's slightly less expensive on a per-tablet basis than the 130-count package of Centrum for $8.47, but not as cheap as the $4.76 price for a 130-count Sentury-Vite brand.

New concept, new brand

Wal-Mart is also using the OneSource name on a line of sports nutrition products including amino acids, protein powders, weight gainers and fat burners. The 4-foot section was merchandised adjacent to a selection of industry leading Weider brand products in a compare-and-save strategy. However, the savings may not be enough to persuade brand-conscious users to switch. Weider's Mega Mass 2000 was offered for $27.84, compared to One- Source's Mega Gain 2000 at $25.97.

Customers will decide the eventual fate of OneSource, and Wal-Mart pulled out all the stops to generate awareness of the concept at the recent grand opening of an approximately 200,000-square-foot Bradenton, Fla., supercenter. OneSource displays; were placed at strategic locations, there were OneSource brochures and free samples.

Immediately inside the front door on the food side of the store, dozens of bottles of One Source vitamins were loaded on a Jet-ski with blue helium-filled OneSource balloons attached to it. At the rear of the store, a red wagon loaded with OneSource multivitamins and a cardboard display were positioned next to a life-size Ronald McDonald parked on a bench in front of the fast-food restaurant. Near the pharmacy, where Wal-Mart continues to stock a 12-foot nutritional products set within the HBC department, an endcap was full of OneSource product.

For shoppers who managed to visit the store and miss such prime real estate displays, there was a large OneSource banner hung on the wall near the section's entrance.

The extensive cross merchandising evident at the Bradenton supercenter contrasts with a more low-key approach at an existing discount store 30 miles to the north in Brandon, Fla. At this less than two-year-old store, Wal-Mart made room for a OneSource unit by closing a packaging and mailing supplies center immediately inside the front door. Signage and cross-merchandising at this smaller store was relatively nonexistent compared to the new supercenter.

The first OneSource store opened in the suburban Fort Worth, Texas, town of Bedford. A month later, another unit was opened in St. Louis. A second unit recently opened in St. Louis and there are also One- Source stores at a new supercenter in Fayettville, Ark., Greeley, Colo. and the two Florida units. Whether more units are opened will depend on the success of the first seven, according to a Wal-Mart spokesman. However, it's no secret the high-margin nutritional products category is a business Wal-Mart likes. Chief executive office David Glass saw fit to mention the profitability of OneSource vitamins at the chain's June shareholders meeting. Wal-Mart has long carried a broad assortment of branded and private label vitamins. Manufacturers also credit the retailer as being among the swiftest to put in new items, a key advantage since media publicity of a new product's health benefits can quickly send sales skyrocketing. That was the case with herbal products, which are still a relatively new phenomenon in mass retail outlets. Roughly a year ago, Wal-Mart expanded its herbal assortment by committing an entire endcap to herbal products with signage that helped explain why certain products are taken.