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GNC Pumping Up its Cosmetics

NEW YORK -- Long known for its array of vitamins and diet supplements, General Nutrition Center stores are now flexing their muscles in skin and hair care.<BR><BR>GNC -- the nation's largest health and nutrition chain -- has watched competitors such...

NEW YORK — Long known for its array of vitamins and diet supplements, General Nutrition Center stores are now flexing their muscles in skin and hair care.

GNC — the nation’s largest health and nutrition chain — has watched competitors such as The Body Shop, Estee Lauder’s Origins, Beauty Without Cruelty and Blackmores build a substantial beauty following by emphasizing a natural positioning. Mass market retailers such as Pittsburgh-based Thrift Drug and Kmart Corp., Troy, Mich., also have been adding natural lines to their beauty selection.

GNC, which has 1,540 company and franchised units in the U.S., hopes to get more of the customers attracted by vitamins or other health-related merchandise to come into the beauty departments.

Despite the popular image of a well-toned male frequenting GNC, the company said 65 percent of its clientele is female, making the chain well- positioned to expand its beauty business.

“We feel there is a correlation between feeling good and looking good,” explained Michael Stoughton, sales manager for cosmetics, health maintenance care and apparel for GNC. “We’ve put an emphasis on building our beauty line.”

Beauty, according to Stoughton, accounts for about 3 percent of store sales. GNC hopes to almost double that with its private label line of beauty items sold under the Natural Solutions logo. GNC units average annual sales of $400,000.

An ongoing repackaging program of Natural Solutions, a line with 35-plus stockkeeping units, began last September. The new design features a more clinical, health-oriented look.

Natural Solutions had been packaged in an array of colors with no coherent theme. Now, Stoughton said, there is a uniform look.

The line consists of hair care, eye care, nail care, teenage skin care and massage items. The assortment is also being fine-tuned to reflect market needs. Among the new items are a hair care system containing a shampoo, a conditioner and a supplement selling for $17.99 and glycerin soaps at $1.99.

Stoughton singled out the Natural Solutions Teen Skin kit as a new sku that is “doing really well.”

GNC contracts out the production of its Natural Solutions line, which uses all natural ingredients that are not tested on animals. The firm also intersperses several nationally known brands in its beauty mix, including Blackmores skin care, Mill Creek and Rachel Perry.

Jeff Tolrud, a franchisee in Tampa, Fla., estimated that 90 percent of his cosmetics mix is GNC private label. He said new signs and fixtures offered by GNC have helped raise awareness of Natural Solutions.

“We’re seeing more people pick up a nail care or massage oil while they are here for their vitamins,” said Tolrud, whose store competes with a Wal-Mart and a Sally’s Beauty Supply for beauty sales.

Stoughton hopes to see the percentage of GNC’s own label increase in the assortment. The private label items can yield almost twice the gross margins of national brands.

The company has made it known in financial reports that it hopes to continue to shift sales to higher-margin vitamins, sports nutrition supplements and beauty items and away from less profitable food products.

Stoughton also hasn’t ruled out the addition of a color cosmetics line. “Right now we’re concentrating on hair, skin and body care,” he said.

Surprisingly, while specialty stores such as Goodebodies and drugstores like Thrift Drug are building bath care volume, Stoughton said GNC’s growth is still primarily in skin and hair care.

Although the size of GNC stores varies dramatically, most units stock at least 12 feet of beauty items stacked five to seven shelves high.

To highlight the new packaging the chain has created green wooden fixtures similar to those used in specialty chains such as The Body Shop. The beauty items are in the front of the store.

“We’re trying to create a boutique image,” Stoughton said.

He added that the fixturing continues to evolve as GNC opens new prototypes. Its latest look is on display at a new store in Schaumburg, Ill.

Stoughton said GNC is also planning to start promoting its beauty items in its advertising, which has traditionally focused on nutritional supplements.

Niche products continue to outperform traditional color cosmetics.

Several mass market chains, including Walgreen Co., Caldor and F&M, are converting unused sales space by using clip strips of a line of unusual items marketed by Cosmetically Sealed Industries, Mt. Vernon, N.Y.

The clip strips — long panels with hooks on them to hold merchandise — can be affixed to the edges of shelves. Stores have long used the devices in other departments, but Cosmetically Sealed is the first line to make use of them in beauty.

Cosmetically Sealed features Sealed With a Kiss, a roll-on lip fixative designed to make lipstick smear-proof; My Nails Are Sealed, a calcium-based nail strengthener, and My Nik is Sealed, a product that stops bleeding caused by razor cuts. While there are similar products aimed at the men’s shaving market, retailers said this one is the first targeted to women.