Issue Vol8 Iss2
Food for thought
An effective and convenient weight loss platform, Nutrisystem provides everything customers need to accomplish and sustain their weight management goals, delivered right to their doors
A preeminent direct-to-consumer nutrition and weight management brand, Nutrisystem has helped millions of people lose weight safely and effectively for almost 50 years. The company’s portfolio of entrées, snacks, and shakes is complemented by various live counselling options, including trained weight loss coaches, registered dietitians and certified diabetes educators that are available seven days a week.
Anyone starting a weight loss journey is looking to make some improvements to their life, and indeed, Nutrisystem itself has also been through some dynamic changes since it was last featured in Supply Chain World. In December 2018, Tivity Health announced that it would acquire the Nutrisystem brand, and just a few months after that deal was completed, it saw another evolution when, in December 2020, Kainos Capital took over the brand.
As David Burton, Chief Operating Officer, explained, Nutrisystem saw this as an opportunity to become a standalone business again and is very excited that Kainos Capital is the private equity firm that ultimately decided to go ahead with the purchase. “Kainos Capital is focused exclusively on the food and consumer industry, and its vision is to develop a world class direct-to-consumer e-commerce health and wellness platform. We are focused on expanding our digital capabilities and also on our product innovation to reach more consumers and help them on their health and wellness journey.
“We are just in the beginning stages of the partnership, but we are very excited that we are now part of a firm that really understands the food industry, and the health and wellness space. We are looking at an opportunity to leverage the shift in the industry to e-commerce and direct-to-consumer, and how we can build a platform that helps us reach more consumers in the industry.”
The customers that David refers to come to Nutrisystem to benefit from its balanced and clinically proven approach to weight loss. It offers portion-controlled foods specifically designed to meet consumer needs that are conveniently delivered directly to customers’ homes. Nutrisystem also provides a free digital app, NuMi, that helps customers track performance and achieve their goals. “We have a great solution that helps individuals lose weight, help them get healthier, stay active and improve their health outcomes,” added David.
Clearly a resilient business, Nutrisystem hasn’t been distracted by the changes it has been through and has maintained a high level of activity and of growth in 2020. “We have gone through changes of ownership, but our mission and vision remain the same and that is to help individuals to live happier, healthier, lives,” agreed David. “Over the past year, especially with the pandemic and the challenges of Covid-19, health and wellness is top of mind for consumers. As the largest direct-to-consumer health and wellness company in the country, we have seen tremendous double-digit customer growth over the past year, and they are staying with us longer. That gives us strong momentum as we head into 2021.”
David identified one of the big contributors to Nutrisystem’s success has been an alteration in how it is reaching its consumers. “Historically, Nutrisystem has been heavily focused on TV advertising but we are seeing a shift in the industry where digital marketing and advertising are playing a more significant role,” he explained. “We have been investing heavily in digital platforms, and we have focused on a digital transformation of our business, really looking at how we can better target and reach our consumers. This has also included improving our consumer database platform (CDP) and our messaging through digital channels, and this has been a big contributor to driving our growth.”
The second big focus for Nutrisystem has been on adapting its product range, and as David highlighted, this began two years ago, when the business launched a program focused on personalization. “We know that one size does not fit all when it comes to weight management and weight loss products, so we are creating a program that is more personalized to each consumer, based on their lifestyle, their food preferences and their body type.
“By introducing that, we have been able to have a more effective program that helps our customers on their weight loss journey. Each year, as part of our product pipeline, we introduce more elements and features around that personalization, which are delivered through our food development program and also through our NuMi App.”
The App that David referred to gives customers the ability to track their own program, weight loss and activity, and it also provides content around lifestyle changes and how they can adapt the Nutrisystem way of dieting into their own lifestyle. “All of those digital options have resulted in an increased level of engagement from the customer, and ultimately, this means that they are getting better results and achieving their health outcomes. They lose more weight, are learning how to keep it off, and they are seeing more success.”
While it is clear that Nutrisystem has thrived in 2020, what makes that success even more impressive is the fact that it was achieved at the same time as the company, and the world, had to cope with the challenges of the coronavirus pandemic. David admitted that there was no single part of the organization that went unaffected by Covid-19 and gave some details about how the business has coped with the dramatic changes that the virus has wrought.
“First of all, I am very proud of the resiliency of our business through this pandemic, as we had to adapt quickly and the reactions have been excellent,” he stated. “We shifted our messaging from a marketing standpoint, we introduced working from home and through all that we have still seen great growth.
“Specifically, from a supply chain standpoint, there have been challenges across every link, including food manufacturing, fulfilment and transportation. Thanks to the relationships and partnerships that we have established, and the amazing reactions from everyone, while there were disruptions, we have been able to pivot, reallocate and redirect resources where necessary, such as shipping volume from to one geographical area to another. This meant that when one part of the supply chain was under pressure then there were other parts that were able to alleviate it. It really was a balancing act of having open communication across all of our partnerships and working through those challenges every day.”
Having referred to the essential role that its close supplier relationships played in dealing with the new demands on the supply chain, David elaborated further on what Nutrisystem looks for in a partnership. “Having a shared value in keeping the customer at center is really important. We need to have the same vision around meeting consumer needs when it comes to health and wellness. We always ask, ‘how can we collectively work together to try and solve some of the health challenges that we have in our country?’ Every part of the Supply Chain plays a role in serving the customer on a daily basis.
“Another key aspect is common goals and making sure that from each side of the partnership there is an understanding of what we are trying to accomplish and make sure our goals line up with each other. This means that we have a lot of openness and transparency with our suppliers when it comes to developing new products or operating plans, and I think as long as we are all working towards that common shared goal and those shared values then it’s mutually beneficial for us.”
David also explained the symbiotic relationship between Nutrisystem, its customers and its partners, as it is more than simply ordering and delivering a product. “Weight loss is a very emotional journey, and it is a tremendous decision for people to embark on a weight loss program,” he said. “We want to make sure that we are helping to get them on board as quickly as possible, so it is very important that we are able to process orders, and deliver them to the consumer as fast as we can. Our delivery capabilities in a direct-to-consumer model are extremely important, and our partner FedEx is tremendous in this area. One of our key goals is to continue to improve that delivery experience with the consumer, and we can’t do that without partnerships such as those we have with FedEx and also with our 3PL, Geodis.”
Having highlighted the importance of prompt and reliable deliveries, David then stressed that this is only one part of its interactions with customers, and a key priority for Nutrisystem is to continuously improve its customer experience from end to end. “We are introducing innovation in the supply chain, and one part of this is the implementation of a new demand supply planning system from John Galt Solutions, and the focus there is to give us better visibility and collaboration across the supply chain around our demand supply planning. That in itself is going to improve the customer experience, because it helps us make sure we have the right product, in the right location, in the right quantities.
“We will also continue to look at automation within the warehouse, as our business grows and with some of the current labor challenges of the market, we need to look at how we can improve our efficiency in the warehousing and fulfilment of our orders. We are in the beginning phase of exploring different levels of automation to help us in that process.
“Lastly, we are examining how we can better utilize the data that we are collecting on our customers to achieve their tailored offering, and how that impacts not only their experience through our app and website but also ultimately in the products that we develop and deliver for them. We want to mine that data and really understand the consumer at a deeper level so that we can deliver on that personalized experience.”
The direct-to-consumer system adopted by Nutrisystem has been very successful but that doesn’t mean it is the only way that customers can purchase its products – they are also stocked by a range of retailers and David describes its omni-channel approach as one that has been evolving and developing over the past three to four years. “We wanted provide an infrastructure that enabled us to support consumers wherever they are on their journey and wherever they are shopping,” he said. “So, we have built core capabilities to support all of our online retailers, including amazon.com, walmart.com, target.com and kroger.com, and we wanted to make sure that as the industry and consumers shift how and where they are purchasing and consuming products, we are supporting retailers in how they serve their customers. We were the first dropship vendor that partnered with Walmart to deliver frozen food, and I think that was a great accomplishment. We were able to help Walmart and their consumers in providing that capability and the infrastructure to fulfil and deliver product on their behalf.”
Nutrisystem’s superlative delivery model also came into its own during the pandemic when it was able to come to the aid of people who were struggling to keep themselves nourished. “With our partnership with Tivity Health we were able to support those people that were finding access to food a challenge, especially seniors, and we continue to do that post divesture,” said David. “We are supporting health plans and local agencies that are focused on delivering and providing food for those in need. While our primary business is focused on weight loss and weight management, we are able to provide nutritious meals for those individuals that are food insecure.”
This caring approach to the community is part of a wider social responsibility remit, and David was able to reveal a newly launched product that is part of Nutrisystem’s green agenda. “We have introduced an eco-friendly cooler as part of our initiative to improve sustainability, which uses environmentally-friendly packaging materials,” he said. The new coolers are biodegradable up to 92 percent over a four-year period, and are made with thermally robust materials, and can be reused or repurposed. The coolers are part of Nutrisystem’s commitment to reducing the environmental impact of its products and the company is excited about their launch. “It is something new for us and it is an investment that we made because we felt that it was the right thing for the environment,” David added.
As we start the New Year, Nutrisystem continues to concentrate on improving its performance, using the lessons it has learned through 2020 to make sure that is it operating effectively across all levels of the organization. “From a food standpoint, we continue to enhance and build our frozen and cold chain capabilities, and I think one of the key learnings we discovered was that we needed to have more redundancy across our supply chain,” said David. “At the beginning of the pandemic we had a bit of redundancy which definitely shielded and protected us from any major disruptions, but through the past nine months we realized there is an opportunity to increase that redundancy and to take even more pressure off and have more contingency plans in place. So, as we head into 2021 that has been a focus – looking at the areas of the supply chain where we need more redundancy and contingency, and actively putting those in place.”
These activities are being undertaken alongside work on a new premium line of frozen products, the introduction of new programs and a continuing focus on personalization, as well as other ways to improve that all important customer experience. “We are looking to launch those over the next six months, and they all have an impact on the supply chain and our fulfilment. So, we are also examining how we are designed across our network to make sure we are able to deliver that. As we integrate with Kainos Capital and really focus on driving better experience, we will continue to build and focus on all these areas and more!” David concluded.
Services: Commercial provider of weight loss products and services