http://www.businessweek.com/magazine/content/10_22/b4180060442368.htm

Features

HSN's Fashionista


It's 30 minutes to airtime, and Serena Williams—muscled, styled, economical in her movements—sits on a leather couch admiring her navy blue quilted flats. "These are incredibly comfortable shoes," she says. This is not the casual remark of a celebrity killing time in the green room. This is Serena Williams-as-saleswoman, practicing her pitch. Over the next 24 hours, Williams will be live on HSN (HSNI)—the television shopping service formerly known as the Home Shopping Network—for a total of eight hours, hawking pieces from her clothing and jewelry collection to women across America—some 15,000 bracelets, 4,000 flats, 1,900 pairs of jeans, plus sweaters, dresses, T-shirts, and handbags. Every minute she is on air will be measured in dollars, every hour will be scripted, product by product, to build momentum. When it's over, Williams is expected to have sold all of it. On HSN, celebrities have to produce.

The fact that Williams is here at all, linking her reputation to an outlet once known for pushing Suzanne Somers' ThighMaster, shows how far HSN Chief Executive Officer Mindy Grossman has taken the company. When Grossman was recruited for the job in 2006 by Barry Diller, chief executive of HSN's then-corporate parent IAC/InterActiveCorp, she told Diller that she would accept only if he gave her the freedom to turn the place upside down. She had an impressive background, which included nine years at Polo Ralph Lauren (RL), where she launched the Chaps and Polo Jeans lines, and six years at Nike (NKE), where she built up the women's apparel business. She wanted to transform HSN by making it more modern and tasteful: Maybe it would never be hip, it certainly wouldn't try to be edgy, but it could at least be relevant. "I got excited about what it could be, not what it was," she says during an interview at the Pierre Hotel in Manhattan. "There was not a lot of pride in the culture, and that was shocking to me, especially given where I had come from."

HSN and its ubiquitous low-fi cable channel had become a symbol of American consumption gone terribly wrong. The clothes were uninspired; the beauty products didn't live up to their claims; the gadgets arrived broken. It was a second-rate version of its main competitor, QVC. "I knew we had to move quickly," says Grossman, "on the things we needed to stop doing."

Within her first year at the company, she dumped about a dozen brands she had never heard of. Gone were the pants with elastic waists and anything that viewers could easily find elsewhere. Then she set out to create a studio environment that wouldn't scare off the designers she hoped to feature. For that she turned to Andrew Sheldon, a British television executive. He streamlined the sets, cleaned up the green rooms, hired full-time makeup artists and hair stylists, and modulated the hosts' presentations. "Before, there was a lot of finger pointing. They spoke too quickly and too loudly," he says. "Selling doesn't mean you have to shout 'Buy it! Buy it!' "

HSN is still only a fraction the size of QVC, which had $7.4 billion in 2009 revenue. (John Malone's Liberty Media Interactive (LINTA), which owns QVC, also owns one-third of HSN; under the terms of a standstill agreement that expires in August, it will have the right to buy more, or all, of the company.) But HSN is now a credible competitor, and just as important, it has achieved a measure of cultural status. "I've never tried to motivate my staff by saying we're going to be bigger than someone else," Grossman says. "I'm more a Mac than a PC."

Even during the depths of the recession, when many retailers' sales fell dramatically, HSN's grew, rising 3 percent in both 2008 and 2009. In the first three months of 2010, sales increased 9 percent, to $519 million, compared with 2009, and HSN shipped nearly 10 million items to customers. HSN's corporate parent, HSNi, which includes the shopping network and Web site as well as a separate catalog division, is a $2.8 billion business. Its stock has more than doubled in value since it was spun off from Diller's IAC (IACI) in August 2008, just before the retail economy collapsed.

Grossman, 52, is sleek and stylish, and she likes to pile on the necklaces and bracelets when she dresses. If women ask her for advice about accessories, she always says: "more." She calls HSN customers, herself included, "professional shoppers." More than 80 percent of them are women, and most are over 35 and comfortably middle class. Beyond that, what they seem to have in common is a desire to be soothed by the promise that what they buy will make them feel better: It's the psychology of acquisition at its most simple. HSN broadcasts live, 24 hours a day, 364 days a year (it goes dark on Christmas) to 93 million homes. Some 5 million people make at least one purchase every year; the best customers make six or seven more.

In order to attract more power shoppers, Grossman set out to persuade a whole new type of designer to create collections for HSN. Among those who have happily, if nervously, appeared on the network as a result of Grossman's coaxing are Naeem Khan, who designed the silver sequined gown Michelle Obama wore to the President's first state dinner, and Badgley Mischka, who dressed Helen Mirren in gray silk and organza for this year's Academy Awards. Grossman promised to protect them and their brands from ridicule and to present their clothes in sophisticated settings as she exposed them to an audience far greater than they could otherwise reach. She also charmed them. "It was the force of Mindy's personality and the changing economics that persuaded designers to work with HSN," says Christopher Marangi, a media analyst at Gamco Investors. "Her impact can't be underestimated."

Ever since Isaac Mizrahi signed on with Target (TGT) in 2003, all manner of luxury designers have collaborated with chains that cater to the masses. None of these partnerships compel the designers to engage so directly in the fundamental give and take of commerce as HSN does. "If they don't want to go on air, then they don't want to work with us—they're not passionate," Grossman says. "The whole idea is to bring more than just a product. It's to bring a voice. Their personality has to show through. I keep telling people that it's a trunk show in 93 million homes."

To court the fashion set, Grossman and Lynne Ronon, her head of merchandising, had to do some selling of their own. "I knew they would be concerned about their image," says Ronon, who was previously an executive at Burberry (BURBY) and Saks (SKS). At the beginning, meetings with potential designers were like job interviews for the HSN executives. Now, one recession and several well-publicized sold-out shows later, the power has shifted. "We say no more than we say yes," Ronon says.

Grossman asked Khan, whose sequined gowns can sell for $10,000, to create an exclusive collection for HSN in 2009. Khan then asked for the blessings of the heads of Saks and Bergdorf Goodman. "Luxury was in the doldrums," Khan says. "We were all asking: 'How do we keep our business going?' They need me as much as I need them. So they said, 'Fabulous. Just get a different name for the line.' "

For many of the designers Grossman has recruited, the stress is more acute and the concerns about image more pressing. They go on air anyway, having realized that in order to survive they must accommodate the marketplace. "Designers have to become more business-savvy, and that means tailoring assortments to specific retailers. They have to come to terms with that," says Kelly Tackett, a consultant at Kantar Retail.

When he launched Timeless by Naeem Khan on HSN in October 2009, Khan was apprehensive. "I'm not used to that kind of volume. I might [typically] cut 100 dresses, while they're buying 800, 1,000, 2,000 dresses. How am I going to sell all that?" In the first 10 minutes, 7 of the 10 styles of dresses, tops, and pants (priced $59.90 to $499.90) sold out. In his second appearance in March, Khan sold all 531 pieces of a silver sequin dress (price: $179.90) in 12 minutes. "The way I sell my clothes is the way I am with my wife and children," he says. "I race cars, cook, raise a family. Women love to hear that. You have a lot of pretentious designers out there. People buy your clothes because they like you."

When Grossman talks about her ambitions for HSN, she doesn't talk about a mere shopping channel. The experience, she insists, "could be empowering for the customer. She wouldn't just buy something; she would be inspired and engaged."

The source of that inspiration must be the style icons who appear on-screen. Grossman wants celebrities who are comfortable with the hustle of "sellavision," as some of them call it. She thought Williams would be a natural fit: "I knew Serena would love this and would be successful," says Grossman. "When she and Venus were kids, they used to pretend they were hosts on HSN. Even though she's a globetrotting athlete, her passion is fashion. One time I was talking her through all the fabric technology we had at Nike, and she said, 'Mindy, I really just care that it looks great.'"

Williams' selling coach at HSN's St. Petersburg (Fla.) studio is a lively executive named Christie Miranne-Seipelt who is priming her for her debut, a two-hour sale that begins at midnight. "Start with the bracelet. The up-sell is the matching necklace and earring set," says Miranne-Seipelt. She and her mother, Joy Mangano, a home shopping sensation in her own right, serve as the liaisons between Williams and HSN. Their goal is to match the tennis pro's more youthful, body-baring sensibilities with those of HSN's older, body-conscious shoppers.

A word about the bracelet: It's a woven metal and crystal cuff engraved with "Serena Williams First Anniversary 2010" (Williams launched her Signature Statement collection for HSN last April). It has been designated a "Today's Special," which means it will be mentioned or shown hundreds of times before Williams' visit is over. It's $29.95. "So, we're going to sell the bracelet with the necklace and earrings," says Williams.

"I want you to focus on the bracelet," says Miranne-Seipelt.

"You focus on the bracelet," Mangano says. "Connie [the HSN host] will weave in comments about the necklace and earrings. But the focus for you is the bracelet."

Williams tries out her pitch: "Wear it this way [with the clasp in front] and it's kind of rock and roll."

"You can talk to the fact that you're giving them a luxury look at such an affordable price," Miranne-Seipelt says. "Once these are gone, you're never making them again."

During each of Williams' five shows, Miranne-Seipelt watches the sales figures and gives instructions that the producer passes on to Williams and the host: "Go through the colors for the chiffon scarf. It's the last thing. The price is unbelievable [$19.95]. It feels like silk. The shrug feels like cashmere—lightweight cashmere. One thousand people have bought the jeans. Get those tonight. The dress is flattering on everyone. It's available in black, gray, cream. It was $99. Now it's $49.95. It's classic, it never goes out of style. Pick up the flats...."

The next day, after a two-hour sellathon that ends at noon, Williams lies curled up on the couch in the green room. She pulls a blanket over herself and mumbles, "Can someone get me something to eat?" She goes on: "These visits are getting harder and harder. At the beginning they were very easy. Now it's just not as easy." What's changed? "I don't know. It's like when you're first on tour, you're really eager to play the top players, you want to be the best, you're eager, eager. That's how I felt. Now I've played her, beaten her, let me relax."

During her 24-hour visit, HSN sold $3.25 million worth of products; Williams accounted for about one-third of it. The 1,900 pairs of jeans are gone. So are the maxi dresses. About half the shoes remain, though, and even Serena Williams couldn't sell all 15,000 bracelets. Thanks to her relationship with Grossman, she'll be back to sell another day.

Susan-berfield-photo-200x200
Berfield is a writer for Bloomberg Businessweek in New York. Follow her on Twitter @susanberfield.

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