San Diego – Phil
Molyneux,
U.S. president
and COO, told TWICE Friday that his company has started notifying retail partners
that it is readjusting its sales organization structure to leverage greater
control over the shop-front selling environment to improve cash flow and
product turns.
As part of the
effort, the company is eliminating a number of in-house sales positions —
though not as many as rumors on the street have suggested — and is adding new
ones aimed at improving in-store sales training, product merchandising, and implementing
programs and promotions to better engage consumers in stores.
“If you look at
the overall plan that we have, we will significantly increase headcount and
resources that we deploy to the shop front, and we will take a firm reduction
in the number of people we have focused on the buying office,” Molyneux said.
The U.S. president
said Sony expects this change in focus from a relationship driven “push-oriented
operation” to an in-the-field store-front level “pull model” will help improve the
company’s revenue and profit results.
The shift in focus
actually started several months earlier, but recent advancements happen to follow
the announcement of a corporate recovery strategy — called One Sony — that
was outlined last month by new Sony CEO Kazuo Hirai. That announcement continued
the company’s commitment to returning TV operations to profitability by 2013, which
will involve a reduction in resources, including the elimination of 10,000 jobs
and the reduction of TV SKU count by 40 percent.
In the U.S.,
Sony’s TV assortment has been reduced to 17 models, from 30 last year, Molyneux
said. At the same time, the company will increase its focus on three core
revenue generators: digital imaging, gaming and mobile electronics.
Meanwhile, the earlier
changes to Sony’s U.S. sales operations have also resulted in role changes for
some executives, although Molyneux was not able to say which ones or how many
at this time. But newly added positions will mostly include personnel hired by
Sony to conduct shop front sales training and point-of-purchase merchandising
and detailing.
Molyneux explained
that for the past 18 months, Sony has been executing a comprehensive
go-to-market plan that includes “how we engage and improve our capabilities at
the shop front.”
“Traditionally we
have been a relationship-only focused organization working with the buying
office, but with very little presence at the shop front. But the world has
moved on, technology has moved on, and we now have to focus more on our efforts
at the shop front together with our third-party partners and focus more toward
the consumer, and really focus on the value of the product and messaging the
value of the product.”
Molyneux said that
while some jobs will be eliminated, it “is not a cost-cutting exercise, this is
about building competency and capability that we don’t have, but we need to
improve our future outlook.”
He added that it
will also not affect Sony’s relationships with its retail partners, which he
said remain “very important to us.”
The changes on the
sell-in side mostly involve using the new product sales manager/specialists to
“carry a whole basket of products from Sony to the associated [retail] buying
office. That allows us to shift resources or shift investment to the shop
front.”
Molyneux said the
new multifaceted effort at the shop front includes:
-
sales training to
ensure third-party retail sales people are knowledgeable and eloquent in
explaining Sony’s increasingly sophisticated new technologies, products and
their benefits to the consumer;
-
making sure retail
displays are up and running with the right apps showing and demo loops running
to help consumers experience the product properly;
-
gathering market
feedback for Sony’s headquarters operations to help understand the dynamics of
what is happening in the market much faster and respond much quicker; and
-
rallying resources
around the products to better engage consumers.
Sony’s field sales
team will be visiting “thousands” of shop fronts in the United States.
“There have been a
lot of analytics done over the last six months to show where and how we should
focus,” Molyneux said. “This won’t be fewer shop fronts than we’ve had in the
past and it won’t involve defocusing any of the partnerships we have with any
of the retailers. It is about adding additional, capable, qualified resources
to several thousand stores across the U.S.”
In addition to
using Sony-employed sales teams to beef up the shop-front effort, Molyneux said
the company will also utilize some third-party employees to complement the
effort.
“There is a big
investment that is going into our own sales shop-front people,” he added.
Molyneux explained
the new pull model will benefit both Sony and its retail partners in cash flow
and inventory turns.
“We’ll get a
greater conversion rate with the consumers at the shop front and the supply
chain will be better controlled so that their cash flow will better improve and
the turn of the product will speed up,” Molyneux said.
Molyneux said
recent changes involving the establishment of a unilateral pricing policy on
select high-end goods and discussions on the new store-front focus have
generated mostly positive feedback from retailers.
As for changes in
Sony Store operations, Molyneux said the company continues to advance it
remodeling program across the country and has closed some underperforming
locations.
Starting this
fall, the company will also start a trial of a new boutique style store that
will run 2,500 to 3,000 square feet instead of the 5,000 square feet used in
Sony Stores today.
“With a smaller
footprint you can put more focus on a premium product line rather than trying
to cover to wide a product line,” he said.
