GNC 2011 Annual Report Download - page 11

Table of Contents
five year option. At December 31, 2010, Rite Aid had opened 848 of an additional 1,125 stores that Rite Aid committed to open by December 31, 2014.
Marketing
We market our proprietary brands of nutritional products through an integrated marketing program that includes internet, print, and radio media,
storefront graphics, direct mailings to members of our Gold Card loyalty program, and point of purchase promotional materials.
Manufacturing and Distribution
With our sophisticated manufacturing and distribution facilities supporting our retail stores, we are a vertically integrated producer and supplier of high-
quality nutritional supplements. By controlling the production and distribution of our proprietary products, we can control product quality, monitor delivery
times and maintain appropriate inventory levels. In addition, our broad, retail footprint provides a captive network for the introduction for new proprietary
products. In 2010, we entered into an agreement with PetSmart in connection with the development, manufacture and distribution of nutritional supplements
for pets. Our partnership with PetSmart will enable us to leverage our existing manufacturing and distribution capabilities and extend the GNC brand into the
pet care market.
Products
We offer a wide range of high-quality nutritional supplements sold under our GNC proprietary brand names, including Mega Men®, Ultra Mega®,
GNC WELLbeING®, Pro Performance®, Pro Performance® AMP, Longevity Factors and Preventive Nutrition®, and under nationally recognized third-
party brand names. We report our sales in four major nutritional supplement categories: VMHS; sports nutrition; diet; and other wellness. In addition, our
retail sales offer an extensive mix of brands, including over 1,800 SKUs across multiple categories and products. This variety is designed to provide our
customers with a vast selection of products to fit their specific needs and to generate a high number of transactions with purchases from multiple product
categories. Sales of our proprietary brands at our company-owned stores represented approximately 55%, 56%, and 51% of our net retail product revenues for
the years ended 2010, 2009 and 2008, respectively. We have arrangements with our vendors to provide third-party products on an as needed basis. We are not
dependent on any one vendor for a material amount of our third-party products.
Consumers may purchase a GNC Gold Card in any U.S. GNC store or at GNC.com for $15.00. A Gold Card allows a consumer to save 20% on all
store and online purchases on the day the card is purchased and during the first seven days of every month for a year. Gold Card members also receive
personalized mailings and e-mails with product news, nutritional information, and exclusive offers.
Products are delivered to our retail stores through our distribution centers located in Leetsdale, Pennsylvania; Anderson, South Carolina; and Phoenix,
Arizona. Our distribution centers support our company-owned stores as well as franchise stores and Rite Aid locations. Our distribution fleet delivers our
finished goods and third-party products through our distribution centers to our company-owned and domestic franchise stores on a weekly or biweekly basis
depending on the sales volume of the store. Each of our distribution centers has a quality control department that monitors products received from our vendors
to ensure they meet our quality standards.
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