Are brilliant people focusing their creative energy on the internet, or is the internet inspiring brilliance in ordinary people? Based on the exponential growth of web-related ideas, the answer seems to be a bit of both.
For investor relations practitioners, one of the newest cyber-advancements taking shape over the last six months is the internet store tour. The internet store tour is just what the name suggests: companies conduct a tour of their businesses, with the audience following along over the internet. Both PaineWebber and Merrill Lynch have conducted the events, though each takes a slightly different approach.
Touring with Merrill
The internet store tours that Merrill Lynch conducts for its institutional clients focus on the physical stores of a retail company. The idea sprang from Merrill Lynch retail analyst Mark Friedman’s original desktop conference series, which has company management giving virtual presentations. The same slides that might be seen at an investor conference can simply be viewed on computer, followed by an online Q&A session.
‘The stores really tell the story,’ explains Lonnie Fogel, director, investor relations and corporate communications, at Abercrombie & Fitch, the first company to participate in a virtual store tour with Merrill. ‘The idea is to replicate the store environment as closely as possible. We shot a series of digital stills, then audio recorded a walk through the store which was done by our VP of stores, David Leino. David walked the analyst [Mark Friedman] through the store. Over the internet, each audience member could hear them speaking and see a series of visual stills highlighting what David was talking about.’
In addition to the visual images and the audio, Fogel says Abercrombie & Fitch’s in-store music, a key component of the company’s store environment, was added in as a separate track to increase the experience.
‘The audience seemed to really enjoy it. You have to realize that the investment community is so time constrained, that if there’s a way for them to get a store experience without having to drive to a shopping mall and spend half a day, it’s very attractive. It also vastly expands our reach,’ he explains.
Fogel admits that the tours would be better served by full motion video, but he says current technology doesn’t allow for enough bandwidth for extremely high quality images. As for the digital images, he advises companies to present large images for better resolution until greater bandwidth is more widely available.
Despite the current limits of technology, Fogel remains undeterred. ‘I think it’s a medium with great potential, and I expect to attempt this in the future, hopefully with greater bandwidth.’
E-commerce tour
PaineWebber’s internet store tours are similar to those of Merrill Lynch in that they’re tailored for retailing companies. However, the PaineWebber tours are to show off e-commerce rather than bricks-and-mortar stores.
‘What we’re trying to do is find out how traditional retailers are equipped to deal with the virtual world,’ explains PaineWebber hard-line retail analyst Aram Rubinson. ‘We carve out about 15 minutes, during which the head of an internet business gives a strategic overview of how important the internet is to them, what they’re doing in terms of operations to take it seriously, how they’re fitting in content and commerce or other sides of the equation, and what they’re doing to stay ahead of the curve. Then we take another 15 or 20 minutes to walk through the site and show some salient and unique features worth noting. This is followed by about ten minutes of Q&A.’
Rubinson notes that some companies have tried ‘canned’ presentations, in which they stage the tour outside of their web site, and the audience watches as the company moves the tour along, rather than leading it in real-time. ‘I prefer working on the live site because it gives viewers a sense of speed, and keeps the event interactive,’ Rubinson says.
According to Richard Jaffe, PaineWebber’s soft-line retail analyst, who, along with Rubinson, put the internet store tour series together, both companies and investors get something out of the presentations. ‘It’s easy for companies to do,’ he says. ‘They get a chance to pitch their internet site, they get a good audience of 70-100 people, and our clients, the investors, like it very much. They don’t even have to leave their desks for a quality experience; they just listen on their speaker phone while watching their computer screens.’
Although the initial virtual store tour series was staged by the retail group at Merrill Lynch, Jaffe and Rubinson are reaching out to other analysts, trying to include any company with interesting online strategies. In addition to Home Depot, Staples, Office Depot, Nordstrom, Zale, and other retailers, Preview Travel, an internet company, was recently highlighted.
Staging the shows
‘I always find that most investors are analytical people, but a lot of people are visual people,’ says Eileen Dunn, vice president of investor relations at Office Depot. ‘Doing a virtual tour gives them a good idea of where you are and where you are trying to be.’
Office Depot, which was the first company to stage a tour in the PaineWebber series, followed a standard format that has remained consistent for other companies. ‘Aaron Rubinson did a 15 minute introduction, and then the head of our internet business provided a business overview. We talked about our process, about how we approached putting the business online, and then we went through our business model and site, followed by a Q& A session,’ Dunn explains.
In the case of Preview Travel, which held its internet store tour in February with PaineWebber, chairman Jim Hornthal ran the tour, using essentially the same format as Office Depot. However, having on hand an executive who is familiar with the marketing as well as the functionality of an e-commerce site is a must, according to Darcy McKinnon, manager of investor relations at Preview Travel: ‘The chairman walked everyone through the site and talked about quality of services and the types of services we offer, and then our chief marketing officer, Barrie Seidenberg, talked about specific services we offer and our promotional and advertising deals.’
To McKinnon, having the chief marketing person speak to investors is crucial, especially for a company like Preview Travel, which runs a purely e-commerce business. ‘Barrie Seidenberg is not only in charge of marketing – she also heads product development. She’s intimately familiar with the features of our site in a much more hands on way so she was able to offer specific examples of how things work,’ she says.
The do’s and don’ts
Veterans of both the PaineWebber and Merrill Lynch store tours have one common piece of advice: make sure your systems can handle the traffic. ‘We’ve had an experience where things didn’t work, because there were too many hits at once,’ says PaineWebber’s Jaffe.
Jaffe notes that it is important to prepare the audience in advance. Some investors may need to gain access or clearance from their internal internet controllers. ‘In one early case, a few people couldn’t actually get online and participate because they hadn’t cleared it with their internet controller.’
Office Depot’s Dunn adds that companies should not treat the tours as they would a typical conference call. ‘You can’t just talk about issues. It’s a visual process, and you have to be very succinct in the things that you’re saying.’
Unfortunately, no matter how much planning a company undertakes, some problems are out of their hands. Zale Corporation’s senior director of investor relations, Cynthia Gordon, explains that if the end user is inexperienced or using faulty equipment, there’s little that can be done. ‘There were some technical issues when we did our tour in March. The majority of participants were fine, but there are always a few end users who have problems on their side.’
Because Preview Travel’s business is based around the internet, it was already conducting similar investor presentations on its own. ‘A lot of what we do in our investor presentations is talk about the features of the web site and the uniqueness of our product offerings, so the tour was an extension of what we do on our own,’ says McKinnon.
But in addition to having the most experience with virtual store tours, Preview Travel may also have had the strangest experience. ‘Everything in our virtual tour went well, but there was a weird turn of events,’ explains McKinnon. ‘We actually had been downgraded by PaineWebber about ten minutes before we were scheduled to do the call, which was obviously a surprise to us.’
Caught off guard, the company conducted the tour without discussing the downgrade. McKinnon’s advice to those considering a virtual store tour: ‘I would say, make sure you have a good relationship with the investment bank or analyst.’
