Macy to Launch Cable TV Home Shopping Venture
In the first major effort by a retailer to enter the fast-growing television home shopping business, R. H. Macy & Co. announced plans Tuesday to create its own 24-hour cable shopping channel.
The retailer--operator of the Macy’s and Bullock’s department store chains--will launch the service by the fall of 1994. Los Angeles is expected to be among the first cities to receive the channel. Within the first year, Macy’s expects to offer the programming nationwide to up to 20 million households.
Analysts were split on whether this move would give a new vitality to the struggling retail industry. Macy’s has been functioning under bankruptcy court protection since January, 1992. In this latest effort to boost sales, Macy’s has forged a partnership with Don Hewitt, producer of CBS’ “60 Minutes” program, former CBS executive Tom Leahy and Chuck Dolan, head of the Long Island-based Cablevision Systems Corp.
The home shopping cable channels--such as the Home Shopping Network and QVC Network--are considered a major growth industry as media firms, telephone companies and cable operators step up competition for new markets. It is considered a major opportunity for so-called interactive businesses in which consumers use their televisions and home computers to perform a wide array of transactions.
Shopping via cable--once considered the lowest form of retailing--has gained respect since Hollywood power Barry Diller invested $25 million in QVC last year. By investing in QVC, the former chairman of Fox Inc. became a partner of John C. Malone, head of the Liberty Media and Tele-Communications Inc. and one of the prime movers in the emerging media-telecommunications industry.
Macy’s executives said their channel--to be called TV Macy’s--will offer the full range of merchandise available in their department stores. Currently, the shopping channels are known for selling knickknacks and sports memorabilia, along with clothing and jewelry.
“The last thing we want to do is sell baubles, bangles and beads,” Hewitt said.
New York-based analyst Alan Millstein criticized Macy’s move. He said the troubled retailer should concentrate on store sales.
“The company has enough problems without creating new headaches,” Millstein said. “This is comparable to a person with heart trouble deciding to enter a marathon. The money they’ll be putting into this could be better spent.”
Millstein said Home Shopping Network and QVC have had some success because they sell goods at discount prices. Macy’s, he noted, plans to offer goods over the channel at prices comparable to those in its stores. The typical home shopper is less likely to pay “store prices,” he said.
On the other hand, some analysts said Macy’s is taking the lead in a retail sector that is likely to expand dramatically this decade.
“I think it’s smart,” said Ira Kalish, a retail economist at the Los Angeles offices of Management Horizons, a division of Price Waterhouse. “The retailer that gets a head start in this sector is more likely to be a sales leader in television.”
“The creation of TV Macy’s marks the birth of a new category in television retailing and will make Macy’s the retailer of choice 24 hours a day,” Macy’s Chairman Myron E. Ullman said Tuesday. “We expect TV Macy’s to bring new customers to our stores, while making the Macy’s shopping experience available to the millions of people who do not live within driving distance of our stores.”
The retailer has 110 Macy’s and Bullock’s stores in 15 states--including 42 in California.
Macy had indicated early last month that it was exploring the possibility of such a cable operation. The firm decided to proceed with the venture after securing major partners, said Laura Melillo, a Macy’s spokeswoman.
“Macy’s will provide the merchandise and marketing expertise, Hewitt will provide the programming expertise, Leahy will provide the television management skills and Dolan will provide the cable systems operations and technological know-how,” Melillo said. “Most of our stores are on the East and West Coast and this will give us an opportunity to sell to people in the middle of the country.”
Macy’s will not be the first retailer to use cable television to sell goods, but will be the first to own a cable-casting operation and the first to produce programming on a 24-hour basis. J. C. Penney contracted with an independent firm to produce a home shopping program in the late 1980s but it was not a 24-hour, nationwide program. Penney’s abandoned the cable project in 1991 because it failed to generate profits.
Also, Saks Fifth Avenue last month took its first plunge into electronic retailing by airing an hourlong segment on QVC. Bloomingdale’s and Nordstrom recently agreed to display their products on a June 11 segment of NBC Direct, the network’s fledgling home shopping division.
In addition, Nordstrom announced last month that it is seeking partners for an interactive home shopping network that would give consumers the opportunity to control what kinds of goods are presented on their screens.
