April 2, 2004, 12:00 AM

TV? Internet? Both

(Page 2 of 3)

But while the customers themselves may be the same or similar in their backgrounds, Nealon sees key differences in what those customers are buying. And she wants to build upon that difference in developing a broader merchandising strategy. For example, Nealon believes that HSN’s Internet sales will consist of more “classic products” than what are being sold on TV. While there will be some identical offerings between the two channels, the Internet mix will include more basics.

“On TV, we have to show products that can be made to look and sound exciting and that are visually interesting,” she says. “If a product is too much of a commodity, it won’t look very interesting on TV and it will be hard for us to generate excitement about it and ultimately we won’t build sales.”

Still, a lot of basic commodities are products that consumers want to buy-and that HSN wants to sell. Nealon believes the place to sell such merchandise is on the Internet. Within all of HSN’s popular categories-jewelry, fitness equipment, beauty and health care, electronics and apparel-there are products that sell better on the Internet, she notes.

For example, within the jewelry category, plain gold necklaces and earrings are popular with consumers, but they don’t show well on TV. The Internet is a good medium in which to sell these simpler designs, leaving the flashier jewelry for TV, Nealon says.

Similarly, HSN sells basic jeans and sweaters on the Internet, while keeping the TV channel free for more trendy fashions. Some basic vitamin products and beauty creams also sell better on the Internet than on TV, Nealon says. “There are a lot of classic products that consumers want and need, but the products themselves don’t generate the excitement required to be included in our television rotation,” she says.

The TV flash

In addition to classic products, HSN views merchandise that is ancillary or complementary to the products sold on TV as doing well on the Internet. Nealon uses the example of a quilt. Consumers who purchase a quilt shown on TV are encouraged to check out the Internet later to purchase matching pillows, curtains and sheets.

Using the Internet to broaden its product scope, however, is consistent with HSN’s commitment to serve a broad-based clientele. “HSN appeals to a broad spectrum of consumers,” says ERA’s Tulipane. “It offers a wide variety of price options that is not limited to a particular income segment.”

HSN is also looking at how it can utilize the Internet better to move merchandise. For example, the merchant has had a lot of success with its online apparel fitting sessions, based on My Virtual Model Inc. technology. Nealon says HSN has had 300,000 customers use this service since its introduction, creating 2 million different fitting sessions.

HSN is also a big user of e-mails to communicate to its loyal customers. It sends 180,000 daily e-mails informing customers about upcoming sales and special offers available through both TV and the Internet. In addition, HSN sends out about 1.5 million monthly newsletters to customers containing promotional information.

A novel approach

But with Internet sales, Nealon and her team may need more novel approaches than what has been used with TV. “HSN uses romance to promote its products,” says Jupiter’s Evans. “But the Internet is less emotional and it’s hard to appeal to romance. Also, it’s harder to show the product features than with TV.”

But Nealon has some ideas on how to harness the Internet better. One way is to develop features that allow customers to call up multiple products on the screen at the same time for comparison-shopping. This would hold a big advantage over TV shopping, Nealon admits. “TV retailing is linear-you can only view one product at a time,” she says. “I’d love to give our customers the ability to call up several items at a time and be able to really look at them up close for comparison purposes.”

If Nealon appears focused primarily on the merchandising side of the retail business, that’s because that’s where she has spent most of her career. “She is very merchandise-driven and has a strong background in negotiating with suppliers,” says Jupiter’s Evans. “She also has a strong sense of fashion that will be helpful in developing product line.”

In her early years, Nealon moved up the sales and management ranks of department store giants Macy’s and Bloomingdale’s. “At Macy’s, I learned about the importance of value in selecting merchandise; at Bloomingdale’s, we emphasized fashion,” Nealon says.

Learning the fundamentals of retailing prepared her for future corporate assignments. From the department stores she went on to run Afterthoughts, a chain of fashion accessories marketed primarily to teenage girls. That chain was then sold to Claire’s, which has 2,500 stores nationally. Nealon remained president and chief operating officer of Claire’s. That assignment also advanced her understanding of merchandising.

“When you are selling to teenagers, you learn that you need to change your merchandise constantly,” she says. “Styles get old real fast. That’s something I’ve always kept with me.”

Also while at Claire’s, Nealon got her first exposure to the Internet as that chain launched a web-based operation. However, Nealon concedes that in the early days of online shopping, her target market wasn’t quite ready. “The Internet had just begun and 14-year-old girls were not big Internet shoppers yet, so our offering was pretty basic,” she says.

From Claire’s, Nealon moved on to Kenneth Cole Co., manufacturer and retailer of high-end apparel, where she was executive consultant for the firm’s consumer direct division.

It was at Kenneth Cole that Nealon got her first significant exposure to the Internet and how it fit with the firm’s catalog and direct retail operations. Today, Kenneth Cole makes its entire catalog available on its web pages as well as sends web users to Kenneth Cole direct stores as well as to department stores that carry its merchandise.

E-aggressive

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