Bulked Up and Ready to Grow

Vitamin Shoppe expects the woes of painkillers like Vioxx to boost the supplement chain?s expansionWith 235 stores across the country and some $400 million in revenue, Vitamin Shoppe is just embarking on a period of rapid growth. CEO Tom Tolworthy expects 2005 to be a ?milestone year? as the North Bergen retailer of nutritional supplements adds more than 65 new stores.
?The timing is exactly right,? says Tolworthy. ?People are concerned with the problems relating to drugs such as Vioxx and Celebrex, and are looking for alternative medicines.? Vitamin Shoppe markets more than 400 brands of vitamins, specialty supplements, sports nutrition products and herbs.
In New Jersey, Vitamin Shoppe plans to invest up to $45 million over the next 18 to 24 months to boost its presence from 15 stores to more than two dozen. The company opened a store in Ledgewood last November and plans to open another in Bridgewater in July. Others locations in the pipeline include Brick, Cherry Hill, Deptford, Vineland and Phillipsburg. ?Our plan is to have New Jersey 100% covered,? says Tolworthy. The firm owns and operates all its own stores, each of which carries some 9,000 items.
Founded in 1977 with a store in New York City, Vitamin Shoppe had 120 stores in 14 states when investment bank Bear, Stearns acquired it for $300 million in 2002. Bear, Stearns plans to take the company public with an initial public offering some time during the next 12 to 18 months.
Vitamin Shoppe ranks third in stores behind General Nutrition Cos. (GNC) of Pittsburgh, which has some 5,000 North American stores?including 125 in New Jersey?and NBTY of Bohemia, New York, which owns the Vitamin World chain. NBTY last week agreed to pay $115 million to acquire the Solgar supplements division of Wyeth Consumer Healthcare.
While GNC and Vitamin World have their stores in shopping malls, Vitamin Shoppe prefers freestanding buildings or corner locations in strip malls. ?We want high visibility and good signage in very high-trafficked areas,? says Tolworthy. ?What our customers like is easy access [that lets them] drive up, park their cars and spend some time in our stores without getting caught up in the whole shopping experience of a mall.?
The Vitamin Shoppe strategy dovetails with the growing tendency of developers to put freestanding buildings in shopping center parking lots. This ?works well for the landlord who finds rentable space in the parking lot and for new retailers who want to be as close as possible to the edge of the road,? says attorney Ted Zangari, who chairs government relations for the New Jersey chapter of the International Council of Shopping Centers.
Tolworthy plans to make increasing use of that strategy as he pursues long-term plans to expand Vitamin Shoppe to up to 1,000 stores.
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