Q&A With Mindy Grossman

Mindy Grossman is a walking advertisement for HSN.

On a recent rainy, blustery day in Manhattan, the trendy CEO arrives at the Frank Gehry-designed IAC building and almost immediately begins dishing about her outfit, which includes Sam Edelman platforms, a Joan Boyce necklace and several other items purchased from the shopping network.

“I always say I’m a perfect example of how people interface with our product,” Grossman said in an exclusive interview with Footwear News. “I can wear a $79 necklace, a $500 ring, a $250 pair of shoes and a Balenciaga dress. That’s how people look at things today, especially because of this economy. It’s not about status, it’s about ‘Hey, this is something I desire, so let me see how I can access it on my own terms.’”

After moving to HSN in 2006, Grossman knew she had to shake things up. Competition in the broadcast world was fierce, and more viewers were tuning away to new lifestyle channels. Her aggressive revamp of the company — which in August 2008 spun off from parent company IAC to become a separately traded public firm — has touched every aspect of the 32-year-old HSN, from branding and product assortment to programming and customer service. In addition, she overhauled the Website, a move that has significantly expanded online sales and HSN’s reach.

“We embarked on this pretty aggressive journey to go from thinking of ourselves as the TV shopping channel to thinking of ourselves as a network of transactional innovation,” said the executive, who came to HSN from Nike, where she was global VP of apparel. Grossman also held several executive positions at Ralph Lauren before joining Nike in 2000.

The new strategy is paying off, and Grossman said the economy isn’t holding her back. HSN, which reaches 93 million households, reported a sales decline of only 1 percent for the third quarter, with Internet sales up 7 percent, representing 30 percent of total sales.

In addition to beefing up its online presence, HSN last year debuted an iPhone app, as well as applications with Comcast and Verizon Fios that allow customers to make purchases through their remote controls. The company also rolled out a high-definition channel in 13 million homes.

“The model of getting the consumer to come to you is old, and the new model is how can you get to the consumer on their terms, in ways they want to engage in,” Grossman said. “How people are choosing to interface with content is very different. You’ve got to marry different platforms.”

Giving the HSN audience access to more fashion-forward product and exclusives also has been a priority for Grossman during her nearly four-year tenure at the firm. Recent high-profile partnerships include the American Glamour line with Badgley Mischka; Curations with Stefani Greenfield, a lifestyle line by the Scoop founder; and new fragrances from Sean Jean.

In the footwear arena — HSN’s fastest-growing category — brands from all corners of the market, from Vince Camuto to Sam Edelman to Born, have been performing well, Grossman said. The firm also has steadily been adding apparel, accessory and footwear exclusives, including American Glamour and jewelry by Iman.

HSN’s partners cheered Grossman’s innovative rebranding.

“There is a very sophisticated merchandising and buying team within the HSN organization, and Mindy truly understands partnership and brand building” said designer and HSN vendor Sam Edelman. “People believe in Mindy Grossman.”

Several new initiatives are on the agenda for 2010, though Grossman remained mum on specific details. “[Overall], we will continue to launch new concepts, new brands and new business … as we find our growth potential in alternative distribution channels. If 2010 is going to be the year of anything for us, it will be the year of innovation.”

FN: What were your impressions of HSN before joining the company?
MG: When I [first] looked at the channel, it didn’t feel very lifestyle or real — even though it was live — and there wasn’t a synergy between the experience on TV and the experience online. I knew we had to not just think of our competition as retail but as lifestyle television, whether it be the Food Network, Style, HDTV, DIY, or any emerging lifestyle channel. The more I looked [at the business], the more excited I got. Today, HSN is more relevant than at any other time in its history. Content is power in today’s world, and if you can own that content, create it and make interaction more of an experience than a transaction, you create a different kind of loyalty.

FN: Cultivating more loyalty among HSN consumers has been a priority. How have you done that?
MG: When I joined the company, I would say our customer experience was sub-par. We used to outsource about 30 percent of our calls off-shore. We changed that around and said the No. 1 focus is the customer experience. We brought 100 percent of our sales and service back to the U.S. and elevated our pay scales in those areas. We elevated our quality standards and changed how a package was received by the customer. We re-trained not only our sales and service people but even our hosts on air to be very authentic on how they articulate the product.

FN: How has that paid off?
MG: It’s one of the things we’re most proud of. Prior to 2008, we didn’t even show up on the American Express/National Retail Federation survey of best companies for customer service, and in 2008, we appeared at No. 16. In 2009, we were in the top 10. Our customer is not shy, whether she’s posting reviews on a product or going on the community boards [to vent] or calling customer service. We get great feedback, whether it’s good or bad, and it’s very helpful. We have a mechanism we use where if a product triggers on three different measures — returns, customer-service complaints and reviews — we immediately pull the item off the Website and stop selling it. And no one can override that, not even me.

FN: Were you worried about changing too much too soon?
MG: Our mantra is to be surprising, yet familiar. We never wanted a customer who has been with us for 20 years to feel that [we weren’t] a place for them anymore, but we wanted them to feel it was reenergized and we wanted to attract a new customer. So we’ve made [changes] in a series.

FN: Did the economic crisis force you to alter your plans?
MG: Regardless of headwinds coming at us, our strategy wasn’t changing. Granted, we had to be very cognizant of expense and inventory management and be very disciplined in terms of where we made strategic investments. But the strategy itself of bringing the right brands, personalities and products never changed. We run a very transparent, communicative company, and we have a unique business model that allows us to maneuver our business in real time.

FN: How does HSN.com compare with the on-air business?
MG: The way we think about it is HSN.com is our 365-day-a-year storefront with curated assortments and is a very experience-driven, content-rich environment. The relaunch of the Website in 2007 was a huge investment, and it went from being a very flat experience to a very content-rich experience. HSN TV is the marketing vehicle for our products, but also serves as the content creator, which can be dispersed on HSN.com, your iPhone or YouTube. What we want is to create a multichannel experience because we know that our best customer — even if she chooses to make her purchase by calling — is on HSN.com at least 18 times a month to see the home page and the new program guide. And we know our efforts are working because our unique users were up 30 percent during the month of November. And we had the biggest Thanksgiving weekend in the history of the company. On Black Friday alone, Internet sales were up 50 percent.

FN: Who is your core consumer today?
MG: That is always an interesting balancing act because it’s important to bring in new customers as we expand our knowledge and educate people on what HSN is, but we want to keep the loyal customer. At some point, though, you have to decide what you’re going to be and what you’re not and who you’re marketing to. So we have a universe of 25 [years and older], but the core is 30 to 50. We know if we market there, we’re going to serve the broadest audience.

FN: How do men factor into the HSN customer base?
MG: We have certain categories that penetrate higher, from a male-to-female ratio. The kitchen and cooking category is almost split male to female, and we have a very sophisticated high-end coin collection business among men. Her side of the equation is obviously heavier in jewelry, beauty and apparel.

FN: How big of an opportunity is footwear?
MG: Footwear and accessories is the fastest-growing category. We were very underpenetrated, so our opportunity within the entire fashion arena, as well as the [shoe] category itself, is huge. For instance, with Carlos Falchi, we see footwear as a category that can be not just a complement [to the bags] but a very distinct business. I think of us as an incredible shoe trunk show in 93 million homes, where you can get the product immediately. You have the designer passionately speaking about their product in detail, and because of what we do in our breadth, we carry a much more extensive range of sizes than most stores do, both in sizes and widths. So we offer more than can fit in a traditional store.

FN: Returns are a big issue with online footwear shopping. How does that impact you?
MG: Customers are already buying a huge amount of footwear online today. Of course there is a higher return rate than buying, for instance, a camcorder, but once a customer is familiar with a brand, you start to see over time that the return rates stabilize.

FN: What areas of the footwear market have the most potential?
MG: The different segments each present an opportunity. We want to be able to service different parts of a woman’s life in different ways. And we also want to tap into things that are unique. For instance, we have a jewelry designer, Joan Boyce, who makes very high-end jewelry and also does fashion jewelry for us. She did a line of boots that were adorable and incorporated her jewelry. It’s important for us to have creative concepts that don’t exist anywhere else in the world. I love putting things together [in a way] one wouldn’t think of. Or taking an interesting personality and looking at it differently. In that respect, our team is almost more of a product development partner than a retailer.

FN: How do you balance showing new and established designers?
MG: For our customer, it’s not about status. Many times we can be as successful with the smaller or unknown brands as we can with the known entity. It really starts with great product no matter who it is. What creates success on HSN is great product, a great story and a great storyteller. We absolutely invest in bringing the DNA of a brand to life, and the reason that is so important to me has to do with the world I grew up in — whether it be the DNA of Nike around athletes or the DNA of Ralph Lauren around heritage. When we partner with someone, it’s a very integrated experience at our whole company, so anyone who touches the brand understands the DNA. We invest heavily to be able to do that properly.

FN: Another way you’ve connected with consumers is through charitable partnerships. Why is that so important?
MG: We feel it’s very important to have a strategy around community giving that aligns with our customers’ values. For us, giving back to things that are important to women and their families is what we have focused on. Andrew Lessman, for instance, who has a big vitamin and supplement business with us, donates a bottle of prenatal vitamins for everything he sells. [In 2009], we had a significant partnership with Susan G. Komen for the Cure. We have a close and passionate partnership with St. Jude Children’s Research Hospital. Through our relationship as a sponsor of Lucky Shops, seven contemporary designers, including Rebecca Taylor and Abbe Held of Kooba, designed exclusive collections for HSN this year, and we did a four-hour event on air where all the designers came on to sell and a portion of the proceeds went to Dress for Success.

FN: How have you redefined the culture at HSN?
MG: I have never gotten in front of the company — ever — and said, “I want to be bigger than anybody else and sell more.” No one has ever heard that from me. I’ve said I want this company to have the best customer experience we can and be about total quality of people, culture, process and product. In addition to that, we have the responsibility to all our shareholders to run a successful and profitable company. Every couple of months I do lunches with employees that have been with us for five, 10, 15 and 20-plus years, and I have everyone go around the room and tell their experience and why they stay with HSN. And when I leave the room, there is nothing in the world that can bother me.

FN: What is your outlook for the new year?
MG: In terms of the economy, we’re not going backward anymore. There is a better tone. Those who came out strong from the past year, who have positioned themselves properly and have stayed connected to their consumers will see that slow resurgence of consumer spending.


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