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.