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HSN executives seek digital solution to TV, shopping challenges

In the wake of the departure of CEO Mindy Grossman, St. Petersburg-based HSN is seeking to build on digital initiatives that began under her watch. 
[Courtesy of HSN Inc.]
Published Jun. 16, 2017

ST. PETERSBURG — Before there was Amazon and phone apps that promise one-hour delivery, there was the Home Shopping Network.

Similar to its competitor QVC, the company now known as HSN was an innovator in reaching new audiences during live broadcasts on its cable television channel and even online. Over most of the last 11 years, the company flourished under the leadership of Mindy Grossman, a veteran retail executive who polished the St. Petersburg-based company's image and added to its line of high profile partnerships with celebrities and fashion brands.

But times change. HSN is not immune to the challenges nearly all retailers face these days. They too are struggling to compete with nimble, digital competitors like Amazon and others that continue to surge ahead in sales and innovation. Even Grossman, who announced just last month that she had accepted the job of CEO and president of Weight Watchers International, couldn't stem the bleeding of the retailer's tumbling profits over the last year.

"The economy overall is moving toward digital. It's vicious in a lot of ways. If you can't keep up with the likes of Amazon, you're going to be destroyed," said Budd Margolis, a TV shopping consultant based in London. "I worry that TV shopping is at the beginning of the end. Companies are not being aggressive enough."

HSN executives see the writing on the wall. In the wake of Grossman's high profile departure, the company's remaining executive team continue to build on the digital initiatives that began under her watch.

Many of those strategies are focused on reaching new audiences beyond the loyal base of female TV consumers ages 40 and up who have sustained the company up until now. HSN is working with companies like Facebook to sell merchandise to younger audiences live online but in shorter segments. They're experimenting with new ecommerce tools, expanding their reach on mobile devices and streaming their shows and segments on more digital channels than ever before. Meanwhile the company's board of directors is considering candidates who could be Grossman's successor, including Grossman's first-ever hire, HSN's current president, Bill Brand.

"We are embracing and investing in what we think our customers want and what they like, which isn't necessarily asking them to come to HSN to buy something," Brand said in an interview with the Tampa Bay Times. "It creates a deeper bond with our brand, and brand loyalty is important. We know that it's really experiences that drive loyalty."

Previous Coverage: HSN and QVC struggle to find their place in a world with less TV

HSN's digital strategies are targeting audiences that may have never shopped or watched the show before. In a world where shoppers can buy just about anything in a few seconds online, the need to stand out has become vastly more important for companies.

Facebook engineers visited HSN's offices in Florida this month to lead a boot camp in how to sell and market merchandise using Facebook Live, said Jennifer Cotter, executive vice president of television, content and programming at HSN. She said HSN has been working with Facebook in a beta testing business program for some time.

"We used to be just a live studio for TV, but now we're reaching audiences across so many channels. We have partnerships with Univision, Disney, a second channel called HSN 2, we're growing on mobile," Cotter said. Mobile transactions now account for 25 percent of all of HSN's sales, she said. "And our content is different on every platform. We're learning to make an impact in shorter segments for social channels from Facebook to Instagram."

HSN's shows are live streamed on YouTube.com and on apps for Roku, some smart TVs and Apple TV. But live streaming is hardly the focus to reach new audiences anymore, Cotter said.

"We've been using Facebook Live to give our viewers a behind the scenes look at some of our upcoming segments, like when we filmed in Nashville with country music stars, Sheryl Crow, Kimberly Schlapman and Hillary Scott," Cotter said. "We're trying to strike that balance of polished videos we're known for and that raw material that makes more sense for mobile and social."

Cotter called this strategy the "Netflix of shopping."

"Its where customers can browse through 20-second clips and decide if they want more information about a product," she explained. "If not, they just keep swiping. Kind of like (the dating app) Tinder."

Previous Coverage: Retailers continue to struggle with no saving grace in sight

While the internet has made shopping easier and perhaps more enticing for consumers, it's also made them more selfish, Brand said. It's easy to be distracted by the many options available online. Brand described a scene where a shopper could be lounging on the couch at home, with the television on in the background, but mindlessly scrolling on a phone or tablet too.

It's tough to cut through all that clutter to get their attention, he said.

"What that means is we have to be selfless as a company in trying to reach them," he explained. "We've got to give her reasons to come here in addition to shopping. It's not just pushing buy, buy, buy."

So HSN is creating more content on its various platforms to help keep shoppers engaged. The company is publishing "how to" blogs and videos to help shoppers put together fashionable looks and teach them how to wear or use a specific item sold on HSN.

"I think a lot of our shoppers will see a pair of shoes or a really hip casual look and think, 'I would love this but I don't know how to wear it,'" said Brandi Mercado, fashion director at HSN. "So we show them how."

Brand says audience engagement is up by 50 percent on HSN.com thanks to this new push in video and written style blogs.

"The future of retail is content driven," said Ryan Ross, HSN's executive vice president of marketing and commerce. "Storytelling is something we already know how to do. Now it's about bringing the story to life on digital."

HSN.com also has an arcade page where shoppers can play online games for free for as long as they want. It's become one of the top five destination pages on the HSN website over the last five years, Brand said.

"Women ages 30-plus are the No. 1 gamers. Who knew?" Brand said. "Customers who play games spend three times the amount of time on our site. I can't tell you how much they spend but I can say they are our most valuable customers."

HSN still relies heavily on its partners, brand names and celebrities that help build their brand's credibility, executives said.

"When you have someone like Wolfgang Puck teaching you how to cook something on our channel, it only builds on our authenticity," Cotter said.

This fall, HSN will also launch a new program with partners like Food and Wine Magazine, where consumers can buy items sold through HSN directly from Food and Wine's website. The "Boundaryless Retail" program will be an interactive tool that allows customers to make purchases without leaving the article they're reading or being redirected to HSN.com. Food and Wine will in turn sell its own line of cookware on HSN as part of the distributed commerce partnership.

Brand said this platform has been in the works for years. Analysts say that lag time is problematic. Those that take too long to adapt won't be able to survive anymore. That's what has crippled the retail industry,

"When we look at these companies we need to ask ourselves, 'Is it possible for someone else to come in tomorrow and do the same thing better?'" said Margolis, the London consultant. "You can't tie your kite to one or two or six partnerships and hope to get by. You have to constantly be moving and innovating. You can't expect Facebook to be in the position it is today in five years from now. Companies like HSN always have to be trying new things in order to stay alive."

Brand is aware of the issues HSN faces going forward. Television viewership in the U.S. is seeing declines in the double digits, and market value at HSN have tumbled to $1.9 billion, which is half of what it was at its peak price. HSN shares too used to sell for more than $77 a pop in early 2015, but more recently hover around $35 a share or lower. HSN is cutting back its live broadcasts, at least for two weeks in August, to see if previously recorded material will sell just as well as live broadcasts during the non-peak hours from 2 a.m. to 7 a.m. It's been a tough year for consumer confidence because of the election, Brexit, terrorism and other outside factors. But reaching new audiences on the various platforms they use is still key, he said.

"This is a challenging time for everyone. The winners are going to be those that have customer loyalty. The stability of our business right now is our loyal customers. They have not wavered," Brand said. "While there are a lot of distractions out in the world that take attention away, experiences and loyalty give customers a reason to come back. That's the secret to our success."

Contact Justine Griffin at jgriffin@tampabay.com or (727) 893-8467. Follow @SunBizGriffin.

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