Q&A With Mindy Grossman, CEO HSN

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\"RRI recently toured the headquarters, broadcast studios and operating heart of HSN Inc. (Home Shopping Network) in St. Petersburg, Florida. There’s HSN across all platforms – television, online, mobile, interactive TV, gaming, all of that. Then there are 8 e-commerce and catalog brands: Frontgate, Ballard Designs, The Territory Ahead, Garnet Hill, Travelsmith, Improvements, Smith + Noble, and Grandinroad.

I was truly awestruck with what one might call their “store,” a gargantuan building that actually houses all of the mini-theatres where the television, online, and catalogue sets get changed hundreds of times a day. If more traditional brick and mortar stores viewed their businesses as “theatre” they too would be creating exciting new “sets” on a continuous basis.

The high point of the visit was the hour I spent with CEO Mindy Grossman, who shared some of her views on the five years she’s been at HSN’s helm, and what’s ahead for this unique retailer. Here are excerpts of what she had to say:

\"RR_MindyHow the mission of HSN has evolved along with the changing retail landscape:

Our original mission – of delivering the joy and excitement of new discoveries every day has not changed. We had this big audacious goal when I came in which was to be a disruptive force on the retail and consumer landscape. Now our intention is to lead and pioneer the future of boundaryless retail – a term we’ve trademarked, by the way, so no one else can use it. It’s about a world devoid of artificial barriers where collaboration and community all come together to create a unique and seamless experience for consumers. If you’re not moving today, and not incredibly connected and inquisitive, you will be left behind in the dust. Because the pace and speed of what’s happening…things that didn’t exist 6 months ago like Pinterest. You have to be so connected. If you think you’re going to do everything yourself on an island, then you’re not being realistic. I’m a huge huge believer in strategic collaboration and win-win and not having everything invented here. You have to have great partners. You can’t let “how do I make the deal” take over the equation.

On Brand Collaborations:

We’re now Conde Nast’s largest marketing partner. What started as “they want to sell subscriptions, and I want editorial validation” has evolved to a more immersive relationship. Probably the best example is we now have the license to all Bon Appetit branded products, from cookware to small electrics to cutlery, everything. We launched the brand in January – they were simultaneously relaunching their publication, so we worked completely collaboratively – so there was a big trust factor there. We worked with editors, test kitchen people, content people – Ryan Scott, their top chef, will go on air. We’ve created countless videos, recipes – the basis of our entire culinary experience. We’re marketing, they’re marketing, and together we\’re working to build another extension of a brand.

Our mission is to partner and be not just a commerce or transactional partner but a strategic marketing partner for brands to tell their stories, to translate the voice of their product. And I think that’s why we’ve been able to attract brands and businesses. I say to everyone all the time when your biggest competitor is 2 and a half times your size, you are not going to win by telling someone that you can sell more of these in 10 minutes. But if you say to someone I will bring the DNA of your brand to life, I will tell your story, I will be your partner in the long term and make it relevant and modern and fun and informational, treat it with respect, and create a bond with you and your consumer base, that’s a little bit more compelling. That’s an experience.

\"\"On Pop-up and other Physical Stores:

People say to me, “why don’t you open up a pop-up store?” I’m not going to do that because our mantra is we want to lead, be first. But, if it’s to be the virtual iteration of a pop-up store, then I’m there. So what did we do? At NRF, we launched with Intel the first 13×8-ft interactive touch wall, and we’re going to put those in environments where consumers are going to be open to experience, entertainment and interactivity. Imagine it at South by Southwest or at an airport, or the Aspen Food Festival. People can order off it. That’s the direction we’re going in. It all has to be interactive. The first one we did was on culinary, and you make a pizza with Wolfgang Puck, and you have to win points, and it’s less about how much I’m going to sell off the wall than it is about being where they are and creating awareness.

On Upping The Entertainment Ante – Literally:

About two years ago, Bill Brand, who runs our marketing programming business and I decided we really needed to rev up the entertainment factor, and be a part of popular culture. We needed to evolve the entertainment to the next level. We went to California and met with heads of movie studios, tv studios and music companies to educate them on HSN, who we are, who our customer is. I said to them: You want to engage women. You want to get women into your theatres, to watch your shows. We have those women, and they’re very passionate and very engaged in what we’re doing. I met with Sony, and knew they were coming out with the film Eat Pray Love. I’d read the book, and told them we would create a 72-hour extravaganza around Eat Pray Love –24 hours on Italy, 24 hours on India, and 24 hours on Bali.

And we did it. We got Naeem Khan, Nicky Butler, Padma Lakshmi and lots of amazing people. We created product. We used the story of the journey as the storytelling vehicle – Sony gave us trailers, the behind-the-scenes clips, even the makeup artist who did the elephant, and we created an entire magalog, landing site, and programming. Nicki Fink of Deadline Hollywood credited us for driving women to the theaters on opening weekend. It was 72 straight hours around the inspiration. Once we did that, the floodgates opened. Since then we had a Disney Dreamworks thing with The Help, and Paramount with Footloose. Our most significant integration to-date is coming in June with Universal around Snow White and The Huntsman with Charlize Theron.

I also wanted us to be a launch vehicle on music. Our first one was the launch of Rod Stewart’s Fly Me To The Moon about a year ago. It’s a live performance, like a concert, with a small audience of about 100 – in Rod’s case it was like a supper club. We sold 30,000 CDs in an hour. We then launched Randy Travis’s new CD, and had Mary J. Blige. With Lionel Richie, which we’re broadcasting live tonight, we’re doing a different spin on it. We want to take advantage of every screen and the social world. We have a series of bloggers. We’ll be on from 7 to 8 on Facebook in a behind the scenes look. After the show, from 9-10 there will be a post-show event on Facebook. From the time we announced we were going to do this we’ve had an additional 75,000 members on Facebook so they could see the post-show. All these initiatives serve to deepen the immersive experience of the brand.

\"\"About Cannibalization of Television by Internet, Tablet and other Mobile:

I am channel agnostic. The screen doesn’t matter. You can’t buy from a TV. The TV is a mechanism for us to produce and distribute the live experience. Then we take that and leverage it across the other screens. I want engagement on one of those screens, or ideally on multiple screens. Like I don’t believe that physical stores will go away, I don’t believe that television will go away. There is that woman who loves that live television experience, she likes hearing the conversation, she’s engaged, she’s entertained, she’s informed. She likes to make that appointment to view. There’s another consumer who would never do that, who wants to watch it on her own terms. She loves the idea that we have a dress shop, where she can take a style quiz, a size quiz, etc. We love both these customers. The most important thing is that wherever she goes, it’s a consistent experience with the brand. We try to make it as customized and personalized as possible. We’re trying to make it as engaging and immersive as we can, an experience. We realize that the key to our future is to maximize the experience. I don’t think it’s enough to be ubiquitous. You have to be everywhere, but it has to be customized. What is it about the way she’s interacting, and how can we make it as easy, simple, seamless for her as possible. We think about her every single minute. We’re starting to create exclusive content for digital. If you go to our site and the Bon Appetit, you’ll find lots of videos with recipes and videos on how to make the dish. We’re creating synergistic content that enhances the experience. If I just bought the pressure cooker from BA, then I can go online and find the demo, then find a bunch of recipes I can make with the pressure cooker.

About Gaming:

Video gaming is very powerful today. Our customer is into the thrill of achievement and acquisition. She watches HSN, she’s on Facebook, she’s playing casual and social games. The biggest demographic playing social and casual games is the female ages 35-50. She’s playing Words with Friends, Bejeweled, Solitaire. We wanted to create a gaming portal called HSN Arcade. We went to Seattle and San Francisco, and met with the gaming people. The live show is streaming, and you can play one of 26 casual games at the same time you’re watching. We launched the gaming arcade June 1, and had over 35 million game plays by the end of the year. Now we’ve had 40 million. Our customer can come and win badges for things, and watch the live show while she’s doing it, so she can win things, see new items she wants to win, etc.

\"\"On Flash Sale Sites:

We’re different from all those sites like Gilt Groupe. We have new product every single minute, every single hour. We have urgency all the time. But we’re not about a discount. We are about exciting great product, and our customer expects that they’re getting something valuable and for a great price/value, but not a discount. How do we do that and remain competitive? 75% of the products we sell are exclusive to us. Either the brand is, or we have something first before anyone else does, like in electronics. Today it’s no different from what you’re hearing from Macy’s and everyone else.

On the HSN Customer:

People have this misguided stereotype of our target consumer, like she sits around watching TV all day. Our woman works. She wants to do what she wants to do. We were in the process of turning around the business. Second, we understand consumer behavior, and we have a flexible business model. So even though she wasn’t buying selfish purchases like jewelry, she was still buying things for her family. On the Cornerstone side, though, we were very hard hit – most of those brands are luxury home goods – So when we started coming out of the recession, that business went on fire, because of what’s happened to the luxury customer. So they are back to growth mode, but they were very hard hit. So whereas most retailers are trying to get back to 2007 numbers, we’re back in growth mode.



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