Penney to Offer Home Shopping by Cable TV
Imagine your cousin is getting married next week and you saw the perfect dress at the store. But you don’t have the time to get it, between the job and taking care of the kids. There’s no need to panic. You may someday be able to come home, kick off your shoes, pull out your credit card, turn on the TV and order that dress.
On Wednesday, J. C. Penney, the nation’s third-largest retailer, introduced an “interactive home television shopping system” called Telaction. As proposed, you would punch an 800 telephone number and your personal identification number into the phone and shop.
By pushing buttons on your telephone, you can browse through various selections offered by participating merchants, make your choices and hang up.
Your dress would be shipped to you as well as, say, tickets to that play you wanted to see or groceries you ordered for tomorrow’s dinner.
Penney’s scenario will be offered to more than 125,000 households in the Chicago area by the end of this summer, and if Telaction is successful, the company plans to expand to 20 cities by late 1989 and to 60 major markets in the next five years.
Telaction was one of several home shopping announcements Wednesday.
Home Shopping Network, the industry leader, said it has ended negotiations over the proposed acquisition of the direct marketer COMB, a Minnesota-based partner in a rival video shopping service. Officials for both companies said they couldn’t agree on a price.
Joint Endeavor
Minneapolis-based retailer Dayton Hudson announced that it will begin testing a one-hour shopping program next month in a joint endeavor with a subsidiary and with USTV of Los Angeles, a production, distribution and syndication company.
What differentiates Penney’s Telaction from other home shopping networks already available on cable is that what you see on television will be customer controlled, according to company officials. Consumers with an existing cable television hookup and a push-button phone would be able to gain access to the system and browse menus of merchandise at will, choosing what they wish to look at and when.
There would be no hookup charge for the consumer, Penney said. Telaction would be installed by the cable company in a way that would allow customized programming to be carried to neighborhood cable lines.
Shopping by cable has existed since 1981, but in the past few years the market has exploded. In 1985, total sales were an estimated $91 million. In 1986, they totaled an estimated $450 million. For 1987, the Home Shopping Investor Newsletter projects that sales will be $2.25 billion.
According to officials at the newsletter, a publication of Paul Kagan Associates, it was in 1985 that home shopping by cable started to take off in selected markets, and in 1986 it started to take off nationally.
“It looks like 1987 will be the pivotal year,” said a representative of Carmel-based Kagan, “the year we’ll see who will end up being the major players. The companies might be consolidating. The pie’s big, but it only divides up so much.”
J. C. Penney has budgeted about $40 million for the technology and market introduction costs of Telaction, its bid for a piece of the pie.
Fee Based on Usage
Companies participating in the introduction--including American Express, Spiegel Inc. and Ticketron--are being charged a fee, based on their product and consumer interest, officials said.
On the cable side, Stuart C. MacIntire, president of Telaction, said that “we expect to reach agreements that will include a contribution of promotional dollars (by Telaction) and a fee based upon usage.”
Ralph B. Henderson, executive vice president of J. C. Penney, did not appear worried about his company’s financial commitment to this new technology.
“We’re concerned--but not very,” he said. “Ours is the ultimate catalogue.”
