Complete Nutrition is Making a Pivot to Its Retail Strategy
On 3/5/19, I started getting email and social media messages from nutritional supplement industry colleagues that Complete Nutrition was holding a meeting about large strategic changes. If you are not aware of Complete Nutrition, they are a 80+ location specialty retailer that is based in Omaha, NE. The nutritional supplement retailer started about 15 years ago and quickly grew in the space before having several hiccups in the current competitive landscape. The location count is a mix of corporate-owned and franchise models (mostly the latter).
Last year, there was a sale of assets and also a CEO change that brought industry veteran Vito Sanzone to the retailer. That is enough of change for any company to handle in a short period of time but this meeting added even more fuel to the fire.
So, what are the facts that came from that strategy meeting? Instead of leaning on industry rumors, I went straight to the source…
“The facts are:
Effective April 1, 2019, Complete Nutrition will focus all efforts in building its successful completenutrition.com direct to consumer revenue, continue to expand presence on other strategic digital sites, expand its product portfolio, and distribute Complete Nutrition products to key retailers across the USA, including present Complete Nutrition franchisees
The corporate HQ staff in Omaha, NE, has been reduced and a corporate presence will open in Toronto, ON in Q2 housing key executive, marketing and digital talent.
Existing franchisees will transition to a simplified retailer agreement over the next several weeks.
A potential buyer has emerged for the 21 existing Complete Nutrition owned and operated stores. An announcement will be made when that transaction is complete.”
Lots to unpack in that statement!
Complete Nutrition’s Shift to Direct to Consumer
Most retailers are focusing on digital sales but Complete Nutrition is going to the extreme by shifting out of all corporate-owned physical stores. They are shifting those corporate-owned stores into franchises. This isn’t totally novel as GNC is also shifting many of its corporate-owned locations into franchises.
The goal here is to create a more agile organization. Complete Nutrition doesn’t believe its core competency, in the current environment, is operating physical stores. They believe these stores would be better ran by franchise operators.
Complete Nutrition’s Private Label Focus
This probably sounds like a broken record for my readers but retailers MUST focus on private label creation. This is one of the retail pillars to creating an exclusive experience. Complete Nutrition has always been strong on private label creation but its recently been elevated in its composition and execution, since the change in CEO last year.
They are also hoping to get those private labels outside of the “bricks and clicks” of Complete Nutrition. This is very similar to the aggressively expanded “partner distribution” of private labels by competitors GNC and The Vitamin Shoppe.
Complete Nutrition’s HQ Will Move
This one is probably the easiest to explain. Complete Nutrition’s shift to being a digital commerce company creates a huge need for technology talent. Toronto is a hot bed of technology talent and Omaha is not. This is simply a logical business move.
Franchises Will Shift to a Simplified Model
I would suspect this is mostly because Complete Nutrition is streamlining its value exchange with the current franchise stores. These shifts in strategy are very different than what these franchisees signed up for and this simplified model will give them more autonomy to operate independently.
My Final Thoughts
It seems everyday now, I am evaluating large strategic changes to the ecosystem of the functional consumer packaged goods industry. I know many stakeholders around me are left scratching their heads because the “chess board” they knew…is no longer available. For me, changing “chess boards” is where you find out the true winners and losers in business. A challenge is always an opportunity with the right perspective.
Complete Nutrition…like many other retailers/brands that found themselves stuck in the middle, are seeing their world disappear. Many have tried to make incremental changes to extend the runway and survive just a bit longer, in hopes that something become clear. Yet, others have decided that radical changes will be the only option to flip the script.
