General Nutrition Center Case Study

General Nutrition Center, headquartered in Pittsburgh, Pennsylvania, was established in the year 1935, offering health and wellness products and services to customers. There are different brands under which it sells its products, such as Total Lean, Pro Performance, Mega Men, Ultra Men, and other third party brands. Different products of the company include herbal supplement products, minerals, vitamins, diet products, sports nutrition products and other wellness products, offered under three segments; manufacturing/ wholesale, retail, and franchise.
On April 6, 2011, GNC completed an initial public offering (the "IPO") pursuant to which 25.875 million shares of Class A common stock were sold at a price of $16.00 per share. Holdings issued
There was a growth of 2% in the sales of retail drug industry of the US. This is because; the retail segment has been growing at a steady pace for the last few years due to the positioning of healthcare products and services in the market (Redman, 2011). The positioning of drug stores in the market is well organized due to the presence of low average ticket, convenient locations, inflation, and flow of pharmacy traffic.
There was an increase in the wholesale prices of drug products in the year 2008. Government also provided benefits to customers related to drugs, which increased prices of healthcare products and services at an unusual rate. With the increase in the number of aging population, and awareness about health consciousness among people, there is an increase in the number of opportunities available in the markets, which facilitate the growth of the industry (Redman, 2011). There is also an increase in the number of customers in the drug retail industry due to offering of drug insurance, which has increased the revenue and contributed to the GDP of the
The contribution made by the industry towards the GDP of the country is $ 1.2 trillion, which is 8.5% of the GDP (PWC, 2011). Increase in the wholesale prices of drugs during global financial crises has increased the expenditure to $ 10 billion, which increased to $ 300 billion in the year 2009. It has also increased the inflation rate in the country. In addition to this, it also has a negative impact on the Consumer Price Index, which fell to 1.3% in the year 2009 (Wilson, 2009). It is estimated that the retail drug industry would reach US$ 1420 billion in the year 2017 and there would be a compounded annual growth rate of 3.6% in the next 5 years (Reuters, 2012).
The US retail industry is at the maturation stage in comparison to other countries’ retail industry, and it has evolved a new structure for the industry. There is also a growth in the drug retail industry that helps in the growth and development of the economy as a whole. This is because; it results in the increase in the employment in the country, affecting the standard of living of people in a positive manner (PWC, 2011). The retail drug market has indicated high sensitivity towards disposable income, loss of job,