Thursday May 15th, 2014 - 11:49AM
For Full HSN Coverage, see the May 12 issue of HomeWorld Business.
ST. PETERSBURG, FL— “Please don’t call us Home Shopping Network,” HSN executives said when HOMEWORLD BUSINESS® visited the retailer’s campus recently. HSN, HomeWorld’s 2014 Retail Champion, has undergone a transformation in the seven years since the appointment of current CEO Mindy Grossman, not the least of which has been the rebranding to “HSN” with the tagline, “It’s fun here,” suggesting that the company has more to offer than products.
A lot has changed since Grossman took the helm. The company has developed more entertainment-focused merchandising, a more curated product assortment and a cohesive multi-channel presence designed to engage its customers wherever, whenever and however they shop. “Our goal is to cultivate content that resonates with our primary customer, offering a great product with a great story,” said Sandy Conrad, svp/electronics and home solutions.
After Grossman’s first order of business— refreshing the campus with white walls to begin her HSN tenure with “a blank slate,” she examined everything in the business from product assortment to cross-channel strategies and personnel responsibilities. “Mindy Grossman is the most inspirational leader. She shares her vision in a way that builds consensus and points everyone in the same direction,” said Cindy Zontek, buyer/home solutions, a sentiment shared by many at the company.
Grossman tore down silos, such as treating TV and digital platforms separately, instead providing a cohesive customer experience across electronic merchandising lines. As a result, while TV is still the company’s bread and butter, digital platforms have grown significantly during the past several years. Currently, digital sales make up 40% of HSN’s revenue, with mobile, at 14% this year, the fastest-growing sales vehicle. “HSN considers itself to be a media network, creating content and an experience with an HSN identity across platforms,” Conrad said. “The goal is to provide a seamless experience.”
It all starts with TV. Television programming is HSN’s real-time vehicle for entertaining, informing and connecting with its customers. Media events and product demonstrations are first rolled out live on TV and are then reformatted to provide similarly focused information online. “While non-TV sales are growing, without TV, we couldn’t be successful. TV is in our DNA,” Conrad said.
HSN television programming is live, unscripted and casual. Viewers can call in to chat with the host and guest— a celebrity, chef or designer, for example. The hosts and guests demonstrate a product’s features and benefits to its audience in real time. “We have the ability to tell the story about unique, new, innovation. We refine messaging and help the vendor partner to tell the story in a way the customer gets it,” Conrad said.
“New” is key to successful programming for HSN. Because of its demonstration capabilities, new to market and exclusive products are often its most lucrative launches. “When we get something first, we can demonstrate it in a way no one else can. We educate the market,” Zontek said.
Not only does TV provide an optimal demonstration platform, programming is fluid, so producers can gauge performance and make changes “on the fly” to keep customers engaged and sales flowing throughout a segment. While HSN hosts and guests don't use scripts, they do have prompts that signal talking points, available quantity or product changes. In any given segment, there are approximately 20 related items prepped for sale, and six to seven items can be replaced during airtime to keep a segment fresh. “On HSN, every minute counts,” Adam Marland, senior buyer/kitchen, said. “Per Mindy, agile is the new smart.”
A recent hour-long Today’s Special segment featuring Ming Tsai’s Aero Knife, for example, also touted cutting boards and cookware (see in-depth coverage of the Ming Tsai launch on page 18).
The Today’s Special (TS) airs each day as a 24-hour event that promotes new or a specially configured product bundle, often at value pricing and available only for that day. The TS is staple programming that customers know to expect. HSN has also enhanced its TV programming with more of an entertainment focus. The retailer has developed programming events around national movie releases, for example, such as a three-day sales event around the hit Julia Roberts movie, “Eat, Pray, Love.” During the event, HSN promoted products that depicted Italy, India and Bali, the three locations Roberts’ character visited in the movie. “We’ve polished the approach to TV shopping as entertainment,” Conrad said.
HSN’s most successful programming effort to date, said Marland, was HSN Cooks, where the retailer launched four new chef brands— Curtis Stone, Ming Tsai, Lorena Garcia and Donatella Arpaia— with a full-day event this past March that featured live in-studio audiences. During the groundbreaking 24-hour programming, the four chefs promoted 65 kitchenware products, selling 165,000 units.
While the new chef brands were brought in to offset the loss of three previously core culinary brands, the change allowed HSN to reduce redundancies in its kitchenware category and create a more balanced assortment, something the company has been doing across all of its categories. “This allowed us to look at how our brands and products fit. Now, when I look at these new brands, everything is distinct,” said Chris Nicola, svp/home.
The new chef partners have diverse culinary expertise, an alignment that has allowed HSN to create kitchenware statements for each chef without overlap. “We are most proud of eliminating duplication across product lines,” said Allyson Holt, vp/culinary. “With the new chef lineup, the culinary assortment has developed a distinct point of view, based on how the chefs cook and what the customers expect them to cook.”
The rollout of Stone, Tsai, Garcia and Arpaia was a programming win for HSN, and it also put a spotlight on perhaps one of the more important transformations Grossman has effected during her tenure— curating HSN’s brand and product assortment. Upon her arrival at the retailer, the new CEO did a “top to bottom assessment” of HSN products and vendors. “What stayed and went was based on customer experience,” Conrad said. “Her decisions signaled that the customer comes first. It’s not about chasing the dollar.”
Grossman’s vision required making changes to HSN’s assortment, particularly in the home categories, concentrating on products and brands where the retailer could have more impact and create more value. “If you don’t curate, you end up selling the same things to people under different brands,” Marland said. “That’s not a recipe for success.”
HSN’s home product assortment now showcases a balance of national and private label brands; the culinary group, for example, has added more national brands in recent years for a 50/50 mix. In addition to exclusive brands such as its new chefs and veteran HSN chef Wolfgang Puck in kitchenware, HSN also spotlights national brands such as Cuisinart, Calphalon, Nordic Ware and Joseph Joseph. In the tabletop category, as well, HSN juxtaposes private label brands, such as its new line from designer Colin Cowie with national brands such as Corelle from Joy Mangano and 10 Strawberry Street.
In other home categories, such as floor care and home environment, HSN’s brand mix has also become more heavily populated with national brands, especially online. In floor care, HSN showcases a selection of Hoover, Dyson and Bissell floor care solutions, and in the home environment category, such brands as DeLonghi and Honeywell make up some of the retailer’s range. (For more detail on HSN brand assortment, see category coverage throughout the issue.)
Incorporating more national brands has allowed the company to expand its product breadth on its digital platforms, while still keeping its assortment curated. HSN can showcase a unique new vacuum on a TV segment, for example, with additional versions online. “We are broadening our assortment with key partners. You want iRobot? You should be able to get several models,” Conrad said.
To fit with its unique merchandising capabilities, HSN looks for brand partners and products that showcase innovation and quality, and help create engaging programming. Price, value and how a product fits in with the overall assortment matters; however, there also has to be a point of view and points of differentiation for hosts who are demonstrating the products, Marland said. “We look for partners who are willing to go through creative sessions to bring a product to life,” Conrad added.
Bringing a product to life is only the first hurdle, though. Once a product is sold, the second hurdle is meeting the customer’s expectations when her purchase arrives at the door. “We sell a product twice; once to get it across the threshold and then again so it stays in the house,” Conrad said.
As such, all products that appear on HSN are subjected to a rigorous quality assurance process. A non-stick frypan, for example, undergoes the egg test to ensure the non-stick surface lasts as long as claims say it does. (For more on the HSN QA process, see story starting on page 18). “We need to exceed customer expectations,” Holt added. “That’s work that is never finished.”
The fine-tuning may never be finished, but the changes that have taken place under Grossman’s direction have been critical in HSN’s evolution from a television shopping network to an omnichannel media entity that touts an entertaining shopping experience.
“It’s a clear vision and a culture of people devoted to that vision,” Nicola said. “We’re making it cool to shop HSN.”
For More HSN Retail Champion coverage, see the May 12 issue of HomeWorld Business.