Home Shopping Network Enjoys a Mobile-Shopping Rebirth in the Digital Era; More than half of all new customers come to HSN through their mobile phones

July 4, 2013, 7:05 p.m. ET

HSN Enjoys a Mobile-Shopping Rebirth in the Digital Era

SHELLY BANJO

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ST. PETERSBURG, Fla.—When Mindy Grossman took over as CEO of HSN Inc. five years ago, she was up against naysayers who said the Home Shopping NetworkHSNI +1.80% would die in the digital age. True, Home Shopping Network had a reputation of C-list celebrities selling rhinestone jewelry and miracle skin creams to couch potatoes. But digital hasn’t been the death of HSN, by any means. Ms. Grossman, 55 years old, has begun to prove that she understands the audience HSN needs to attract and how they use mobile devices. HSN still has a long way to go to catch up to rival QVC, but after posting a multibillion-dollar loss in 2008, HSN Inc., which also includes home and lifestyle brand Cornerstone, started posting increasing profit, which last year topped $130 million. The stock price, less than $11 in 2008, is above $54 today, giving the company a market value of $2.9 billion.Catering to HSN’s average customer—a woman age 25 to 54 with an average yearly income of $69,000—she repositioned the retailer as a place where busy women like her could shop on their mobile phones and tablets, on their way to work or during their kids’ soccer practice.

She pushed to spread shopping content from static shows on televisions, to interactive offerings available on lots of small screens.

More than half of all new customers come to HSN through their mobile phones, she says.

Mounted above Ms. Grossman’s mammoth glass desk here are six TV screens broadcasting her world: QVC and HSN’s shows, the website’s home page, and a live-stream of sales data. She says she tunes into Rachael Ray’s syndicated show for “what women are talking about,” and monitors cable news.

The fast-talking New Yorker, known for wearing high heels rather than sneakers during her six years at Nike Inc. NKE +0.38% has instituted a range of changes, starting with HSN’s 66-acre campus here in Florida, where she had the buildings pressure-washed and painted a gleaming white.

She recruited new hosts and designers, including celebrity chef Emeril Lagasse and model India Hicks, assembled a leadership team in which women make up nearly half the executive bench and board of directors, and spent hundreds of millions of dollars on new infrastructure, technology and websites.

Now, shoppers can cook dinner while watching Chef Emeril on HSN’s TV channel and simultaneously chat online with an HSN host on the same set. Customers might use their iPads to play games on HSN’s new arcade, where more than 115 million games have been played since June 2012. (They vie for HSN merchandise prizes.)

The company’s $3.3 billion in sales still trail those of rival QVC Inc., which posted $8.5 billion in sales in 2012. But HSN Inc. sales have risen by 22% since it was spun off in 2008 from Barry Diller‘s IAC/InterActiveCorp IACI -0.87% .

The redesigned HSN website accounted for half of HSN Inc.’s revenue last year. Purchases on mobile devices, a subset of Web sales accounted for 10% of total sales.

HSN’s mobile customers tend to be younger: 48 years old, compared with 52 years old for the company’s Web shoppers and 58 years old for customers who place phone orders. And wealthier: About 30% of mobile shoppers make more than $100,000 a year, compared with 27% of Web shoppers and 23% of phone customers.

Analysts say HSN faces steep competition from other retailers in sales via phones and tablets, including Wal-Mart Stores Inc., WMT +0.07% Target Corp. TGT -0.26%and rival QVC, controlled by Liberty Media Corp. LMCA -0.15% (which also owns 37% of HSN).

“HSN had underinvested over the years and Mindy is playing catch up,” said Ben Mogil, an analyst at Stifel Nicolaus. “The challenge now is executing her plan and attracting more customers in a challenging market.”

QVC plans to “comfortably exceed $1 billion in mobile revenue in 2013, compared to almost nothing three years ago,” President Mike George said in an interview.

HSN doesn’t forecast its mobile revenue but plans to plow $70 million into capital investments this year, such as new infrastructure, data services and improvements to its Web and mobile applications.

“If you go up on a mountain and scream about change, you better make sure you’re ready for people to come,” says Ms. Grossman, during an interview in her office.

HSN curates its merchandise so customers don’t have to click through hundreds of Web pages.

“We’re not trying to be Amazon, all things to all people,” Ms. Grossman says. “We have a highly specialized customer and want to give her the best experience somewhere she can trust.”

The changes are attracting people like Michelle Mayo, 43, a real-esate agent in Waterford, Conn., who recently bought two Liz Lange dresses at HSN. She says she keeps her TV tuned to shopping channels but also shops on her laptop and iPad.

“I’m a shopaholic,” Ms. Mayo says. “I like to browse throughout the day and night.”

Mindy Grossman says she gets that.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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