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THIS ISN’T YOUR MOM’S HSN.
HSN, owned by IAC Retailing, hasn’t been the same since Mindy Grossman joined as chief executive officer in 2006.
This story first appeared in the May 30, 2008 issue of WWD. Subscribe Today.
Under Grossman, HSN has taken an upscale path, especially in beauty, where Sephora has joined the lineup as well as a recently announced deal with Estée Lauder’s BeautyBank. Also, a new deal was recently inked between HSN and Coty to market and sell select Coty prestige brands.
Much of this activity is thanks to Grossman’s vision for the channel. “We offer a unique opportunity to build brands and businesses and to leverage technology that can create a new dynamic for the beauty industry. And I think we’re in fact the new retail frontier,” Grossman said during her presentation at WWD’s Beauty CEO Summit.
She thinks the potential is enormous since HSN has a platform as both a marketing and commerce vehicle. “There is a confluence of consumer trends and technological developments that are occurring today which are creating this significant opportunity for our business,” she elaborated. “First we’re living in a here-and-now-minded world. Customers are demanding what they want, when they want and how they want it. So forcing them to a specific time or locations is no longer the optimum experience.”
When she accepted the position, colleagues asked if she was going to go high-end, low-end or luxury. “And the reality is that in a business that’s in 90 million homes, niche is probably not the way to go. So the key is to be aspirationally accessible and be able to provide her with options for her lifestyle and it could mean a flat-screen TV one day, a mascara the next, a $29 pair of shoes and a $600 handbag,” she said.
Grossman told the audience that customers want an experience that they can engage with and that resonates emotionally and often that is celebrity-driven. However, she said, customers have a new definition of celebrity. Celebrities of today aren’t just the stars, she said, but the hairstylists, fashion stylists, makeup artists, workout gurus and even psychics. Grossman said there is an abundance of choices today and that shoppers rely on HSN to edit for them. “Being a trusted authority or a place where trusted authorities are available is a significant competitive advantage. And technology is influencing everything we do, particularly for our business,” she added. Videos on the Internet are particularly effective in selling products. “The content and commerce model of HSN is a multichannel network of integrated experiences. We broadcast live 24 hours a day, 365 days a year to 90 million homes, making us the fourth largest cable network with almost $2 billion in sales. HSN.com is one of the…10 top-trafficked e-commerce sites in the U.S. and it is now also one of the most video-pervasive,” she said. HSN is a leader in emerging interactive platforms, such as interactive TV, video on demand and community-generated commerce, she added.
“We reach a customer that’s over 80 percent female, has an above-average income, is informed and engaged with television and the Web and, most important, she really loves to shop. Our core customer is between 30 and 54. But what we’re seeing more and more, it’s not about age, it’s about a connection,” she said.
With that in mind, the opportunity for HSN was to create a more modern, more editorial, more aspirational choice that competed with retail formats as well as lifestyle television and media. “We immediately began the process of evolving every aspect of our on-air presentation — graphics, communication, marketing, audio sets, hosts and more to reflect this new direction, but all the while keeping the consumer at the center of everything we did.”
HSN had to reinvent itself. An important decision was made to edit over $125 million worth of brands and products that the company felt did not live up to standards of relevance or quality. “To replace that volume, we identified existing brands and products that had both growth potential and had to have a unique proposition for HSN,” she said. A great emphasis was placed on beauty because it is a category that can be demonstrated and is innovative with great content opportunities. One of the most exciting partnerships was with Sephora, she said. “The relationship was and still is a significant focus for us and we launched with a live remote from their landmark Fifth Avenue store in December…where virtually every product sold out in just a little bit more than an hour,” she said.
HSN now carries 27 brands as part of its Presented by Sephora programming, including Clarins, Two Faced, Ole Henriksen, Cosmedicine, Oscar Blandi, Dior and others. “I felt very strongly as we develop these new branded partnerships, communicating the history, the legacy and the story behind those brands as critical to bringing them to life. Our production team travels all over the world to film and create content to tell the real story behind the brand. And a great example of this is Coris.
Bob Debaker of Coris said the HSN experience has taught it to be a more benefit-driven, problem-solution-oriented brand. “We’ve learned how to weave our brand story throughout our conversation, creating a more intimate relationship between consumers and our brand proposition,” he said. HSN has also collaborated with makeup artist Philippe Chansel for Ready To Wear, an HSN exclusive.
“Our team also looks around the globe to bring new discoveries to our customers that they can’t find anywhere else in the U.S.,” she said. She also noted the success with Carol’s Daughter that had a total sellout before the last show was aired. “Our set and our communication brought the birth of Carol’s Daughter in Lisa Price’s kitchen to life,” she said. “So the ability of the interactive medium to showcase innovation and demonstrate the features and benefits of technology and communicate, it is like no other.” For example, hair removal is not easily demonstrated at retail, yet HSN had success with NoNo at a $250 price point — attributed to the power of live demonstrations. The BeautyBank venture will be launched in July.
She said HSN isn’t only about new, but also about building brands such as Wei East, a line of herbs HSN launched in 2002, as well as Adrienne Arpel and Ken Pavés. “Ken Pavés is the star and Jessica Simpson is the muse. It’s funny, our customers love Ken so much that when Jessica sometimes calls in, our call volume goes down because they’re annoyed that we’re interrupting him.”
In total, HSN has added 40 new beauty brands, cut back time on promotional products and raised the core productivity of existing brands. There have been changes to the live shows to make them more entertaining and lifestyle-driven. An example is the Beauty Report, which airs every Thursday and highlights beauty discoveries. Last year, HSN relaunched its Web site and has seen HSN.com top-line growth more than double. Before the relaunch, Grossman called the site a “disconnect” from the online image. “Today we have a differentiated experience. One of our core advantages is that our store on both TV and dot-com changes every single day and we’re not limited by floor space or shelf size. And now, with the video content of HSN.com, we’re no longer constrained by time. We know that the multichannel customer is our most valuable in terms of loyalty and spend, so we’re crafting new and innovative ways to cultivate, creating a 365-day selling experience for brands,” Grossman explained. On that, beauty is brought to life by tips, how-to’s, blogs, video demos and other avenues. “Our online business has over 250,000 unique visitors, who visit HSN.com every day, with a lot of them visiting beauty.”
The ultimate proof of ongoing customer relationship is evidenced by Auto Ship, a continuity program, which now represents 10 percent of total beauty sales and is growing at a rate of 50 percent a year. Other initiatives include efforts on YouTube, Facebook and MySpace as well as blogs. Recently there was a program where customers could vote through a sampling program which new fragrance they should launch next. Over 20,000 women voted and the first new fragrance was launched in April with a built-in audience.
There’s also been an upgrading in fashion with Scoop and a venture with “Sex and the City” to get trends launched in the film.
“So, by leveraging the power of this content, community and commerce platform, and embracing innovation and reinvention, as well as engendering loyalty and trust, we’ll continue to be able to create a new dynamic for brands, for consumers and for HSN,” Grossman concluded.