E-commerce sophistication helps drive Vitamin Shoppe's sales growth

06-Aug-2013 - Last updated on 07-Aug-2013 at 14:15 GMT

Vitamin Shoppe has reported solid sales growth despite posting slower than average comparable store sales figures growth, company officials told analysts when discussing the company’s second quarter 2013 earnings results recently. Bright spots in the earnings report were strong e-commerce sales growth and a fast integration of the Super Supplements chain based in the Pacific Northwest that Vitamin Shoppe acquired in late 2012.

“During the quarter, we reported total sales growth of 14.1% with comparable sales growth of 2.3%. Retail revenue increased 13.9% to $251 million, with the 31 Super Supplements stores contributing about $18 million,” said Tony Truesdale, Vitamin Shoppe CEO.

Truesdale cited e-commerce as one area of improvement and growth.

“E-commerce continues to drive significant growth, increasing at a double-digit pace. Online sales were up 18.5% in the quarter, with Super Supplements contributing 5.5 percentage points to this growth,” he said.

“Our omni-channel customers are our best customers. Marketing activities, including social media, not only drove traffic to our stores but also drove traffic to our websites. And with our stepped-up activity during the quarter, we saw a significant increase in unique customers to our website,” he said.

Different platforms, different habits

Truesdale said the company is learning more about shoppers online buying habits and how their preferences are different depending on what device they are using.

“Mobile has continued to grow as customers take advantage of the ease of access provided by their smartphones and tablets, and we are seeing an increasing percentage of sales and traffic coming from mobile. Clearly, this trend is representative of our consumers' shopping behaviors in this growing digitally enabled environment. And to better control our customer experience, we recently brought our mobile website in-house,” he said.

“We're seeing a dramatic change in traffic and in conversion in that particular business by just starting to figure out the differences between what a customer that is on a phone wants and what a customer on a tablet wants and how do you do that differently,” Truesdale said.

Shrinking the box

Vitamin Shoppe continues on its growth trajectory, Truesdale said. The company opened 10 new stores in the second qyarter for a total of 23 so far in fiscal 2013. The company remains committed to opening 50 stores this year, he said.

With the 31 Super Supplements stores and the two stores opened in Canada under the Vitapath banner, the total store count now stands at 630.

One change that the company has been implementing on an ongoing basis is a switch to a smaller store footprint—3,000 square feet or less as opposed to a chain-wide average of 3,700. Packing the same number of skus into the smaller box saves on rent and capital costs, Truesdale said. New stores are opening on the smaller footprint, and as old stores are replaced they will match the smaller footprint, too.

“What we've done is we've created a better prototype that allows us to merchandise the same 8,000 SKUs in 3,000 square feet and 2,500 square feet, which allows us to take the rent number down, the capital down. So theoretically, you're going equal to or better returns long term by doing that if you're can drive the sales volume through that smaller box,” he said.