WAL-MART UNIT SUPPLEMENTS ITS NUTRITION CENTER TEST

BENTONVILLE, Ark. -- Wal-Mart here has increased to seven the number of its test store-within-a-store nutrition centers with the debut of a supercenter in Fayetteville, Ark.Whether the chain can use its tremendously successful pricing strategy to build a mass audience for the likes of shark cartilage and ginkgo biloba is an issue being closely followed by industry observers and competitors like Pittsburgh-based

BENTONVILLE, Ark. -- Wal-Mart here has increased to seven the number of its test store-within-a-store nutrition centers with the debut of a supercenter in Fayetteville, Ark.

Whether the chain can use its tremendously successful pricing strategy to build a mass audience for the likes of shark cartilage and ginkgo biloba is an issue being closely followed by industry observers and competitors like Pittsburgh-based General Nutrition Centers, the category's leading retailer.

"The idea is that with the aging of America, obviously there is a greater need for vitamins and minerals," said Nick White, executive vice president of Wal-Mart supercenters, at the Fayetteville opening earlier this month.

"We see it as an opportunity to provide the customer with something they are looking for at a price consistent with what they'd expect at Wal-Mart."

Called OneSource, the 850- to 1,100-square-foot departments first went into a Wal-Mart supercenter in Bedford, Texas, in May. Other units containing the concept are in St. Louis; Bradenton, Fla.; Brandon, Fla.; Greeley, Colo.; and Town and Country, Mo.

The general merchandise coordinator at a Sack N' Save Food Store in Bedford told SN she was unaware of OneSource. "Our [vitamin and supplement] sales are normal. It hasn't fallen off any."

In Fayetteville, the OneSource department is situated at the front of the store, near the health and beauty care section and pharmacy.

In addition to vitamins and supplements, OneSource features sports-nutrition items like protein powders, some fat-free foods like chips and granola bars, herbal teas, health and exercise books and magazines, some sportswear and sporting aids like knee supports.

Each department is staffed by a trained employee who fields shoppers' questions.

According to Wal-Mart, OneSource offers 1,100 different vitamins and supplements and 600 products not available in the typical Wal-Mart store, all at prices 20% to 30% lower than those found at "traditional providers of such products."

Vitamin and supplement manufacturers supplying OneSource include Rexall-Sundown, Boca Raton, Fla.; Twinlab, Ronkonkoma, N.Y.; and Weider Health & Fitness, Salt Lake City, according to Stu Todd, a Rexall-Sundown vice president who works exclusively on the Wal-Mart account.

These manufacturers and Perrigo, Allegan, Mich., produce a "comprehensive" private-label line for Wal-Mart called Spring Valley, Todd said. Perrigo also makes a OneSource multivitamin for the retailer that is sold in all of its stores.

Results of the OneSource test, and Wal-Mart's plans for the departments, are unclear.

"I guess you could still call it a test, but we like what we see," said White.

"From our perspective, the products we supplied are turning at a reasonable rate given the amount of time the stores have been open," said Mark Hyland, vice president of sales at Weider. "There's always room for improvement, but overall they're doing very well."

He added that Wal-Mart will gauge OneSource's performance over the next three to six months, at which point it will decide whether to embark on a wider rollout. "Their future plans are on hold."

Though optimistic about its prospects, an HBC consultant knowledgeable about the test did not paint a rosy picture of results thus far.

"It's off to a slower start than they would have liked or expected," he said. "They're trying to learn the business as they go. There isn't a whole lot of data out there to tell a company like Wal-Mart what the mix should be."

According to his firm's research, households with less than $50,000 in income show "very little" interest in natural supplements.

"Is their market ready for a full-size nutrition center? I don't know. Wal-Mart doesn't know."

The consultant predicted that Wal-Mart would support OneSource with targeted mailings, coupons, bonus packing, educational programs and "intense" cross-merchandising with other products in the store -- exercise equipment, for example, or blenders.

"It's going to be that marketing push that gives them such an advantage over everyone else."

For its part, GNC, at least outwardly, is unperturbed.

"We believe [OneSource] is good. For all the promotion a mass-market retailer puts behind these products, it lifts the profile of the products themselves," said Greg Miller, a GNC spokesman. "We'd be more concerned if the segment wasn't growing at a rapid rate."