Nutrisystem Joins Forces With Walmart in Retail Push

In-Store Sales Are Part of New CEO's Turnaround Strategy

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Diet program Nutrisystem, which has long relied on home delivery, is taking a major step to grow its retail presence with a new Walmart partnership.

The weight-management marketer on Monday will announce plans to sell "5-day Nutrisystem Jumpstart" weight loss kits at nearly 2,000 Walmart stores. Priced at $44.98, the kits include 15 entrees, plus desserts and a meal planner and program guide. Specially designed kits for people battling diabetes will also be available in the pharmacy section in select Walmarts.

The move marks a significant change in direction for the 41-year-old company that was built on a home-delivery system in which consumers order 28-days-worth of portion-controlled entrees.

As revenues have fallen in recent years, Nutrisystem has begun experimenting with retail options. For instance, in 2009 the company inked a deal to sell prepaid program cards at Costco for its traditional 28-day home-delivery program.

The marketer in May of 2012 launched "Nutrisystem Everyday" at Kroger stores, which included bars, smoothies and bakery and breakfast items, according to a recent report by market researcher Packaged Facts. But that program has been phased out as Nutrisystem shifts its retail strategy to focus on multimeal plans rather than individual entrees.

"Under our new leadership, we have shifted our focus to weight-loss kits rather than competing in the overcrowded and heavily discounted maintenance space in the grocery aisles," a spokeswoman said in an email.

The new strategy is being pushed by President-CEO Dawn Zier, who joined the company late last year after a 20-year career at Reader's Digest Association, most recently as president of the company's international business.

In an interview with CNBC earlier this year, Ms. Zier hinted that the turnaround effort might even include expanding the brand into non-food items. "We typically offer only food and there is so much more that we can be doing," she said.

The company appears to have little choice but to seek a radical revamp. Since 2008, sales have sunk by 42%; sales fell to $397 million in 2012 from $401 million in 2011, Packaged Facts reported. Competitor Weight Watchers has fared better. But free, do-it yourself online apps have given all fee-for-service weight-management marketers fits.

Nutrisystem's Walmart program was first tested at a small number of stores. Packaging includes an image of long-time spokeswoman Marie Osmond. Meals include items such as a cinnamon bun bar, red beans and rice, and rotini and meatballs. "We're seeing a lot of repeat business, which is important because people coming back week after week tells us that the program is working for them," Ms. Zier said in a statement.

A spokeswoman said advertising plans are not finalized, but that she expects it will be "heavily promoted." The company's marketing is helmed by Keira Krausz, who joined Nutrisystem as exec VP-chief marketing officer in February after a stint at QSP a youth fundraising company.

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