Channeling In Holiday Buyers : TV Shopping Networks Try to Lure Customers With Seasonal Products, Shows on Gift Ideas
Ruth Glass is a self-described “shop-till-you-drop” consumer who usually buys lots of products from Home Shopping Network throughout the year--until the holiday season, when she depends on conventional retailers. But Glass, who hasn’t dropped, shopped via Home Shopping Network this December, purchasing “Trilliant cut cubic zirconia” earrings designed by actress Suzanne Somers late last week as a Christmas gift for a friend. “I had to get that jewelry as a present,” said Glass, a Los Angeles-based free-lance writer. “Suzanne Somers’ jewelry and the Native American paintings and jewelry that Bob Eubanks offers are my favorites on Home Shopping Network. The work is beautiful, and the prices are excellent.”
TV shopping operators such as Home Shopping Network and rival channel QVC are not as dependent on late-season sales as traditional retailers, who get as much as 40% to 50% of their annual sales during the holiday shopping season. However, many department stores, specialty retailers and catalogue operators are monitoring the holiday season sales performance of TV shopping channel operators as they try to decide whether to engage in televised merchandising.
“We’ll be tracking sales and conducting lots of studies because we want to make an informed decision,” said Ann Barkelew, spokeswoman for Dayton Hudson Corp., the Minneapolis-based operator of the Target and Mervyn’s chains.
There are some disadvantages to selling through the tube. The return rate is a bigger problem than at traditional stores because consumers order clothing that doesn’t fit. Also, the profit margins are thinner because products are sometimes marked down to meet the discount expectations of viewers. And retailers must pay fees to showcase their merchandise on shopping channels or bear the cost of establishing their own channel.
With combined annual sales of only about $2 billion in 1992, QVC and Home Shopping Network are not a major force in the holiday season sales, but they are a growing factor.
In fact, the TV shopping market is growing at a faster rate than the $35-billion-a-year catalogue industry.
In a recent nationwide survey of about 1,000 people conducted by the giant accounting firm of Deloitte & Touche, 3.7% indicated that they planned to purchase holiday gifts through home shopping channels, which would be a sharp rise in usage.
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“When you consider that only 2% of consumers have engaged in television shopping, 3.7% is a significant increase,” said Harvey Braun, chairman of retail services at Deloitte & Touche. “As consumers show more interest in TV shopping, retailers become more interested. This should be the start of a series of strong Christmas seasons for TV shopping operators.”
Home Shopping Network, based in Clearwater, Fla., has tried to stimulate the Christmas buying spirit with shows that offer holiday products such as decorations, Vanna White holiday sweaters and celebrity-backed gift baskets, said spokeswoman Louise Cleary. The company does not release figures on its holiday season sales, but some industry analysts estimate that those sales account for more than a quarter of the firm’s annual sales.
QVC, based in West Chester, Pa., and headed by Barry Diller, has produced shows on specific gift ideas--including a show on products for parents--and programs on holiday entertaining at home. QVC’s fourth-quarter sales accounted for more than a third of its annual revenue last year.
Both companies are trying to expand their presence. QVC is currently engaged in a bidding war for Paramount Communications, an entertainment giant that could bolster QVC’s resources. And Home Shopping Network on Tuesday signed a letter of intent with Tele-Communications Inc., a major cable company, to form a joint venture that will market cable television retailing abroad.
The two home shopping giants are looking to expand quickly partly to extend their advantage over retailers who may become future competitors, said Stephen Sibert, vice president of research at the International Mass Retail Assn., a Washington trade group.
“Starting a home shopping channel is risky because no one really knows the sales potential in this medium,” Sibert said. “But a lot of companies want to take a chance.”
J.C. Penney was among the first to roll the dice, but its television retailing venture failed in 1989. However, a recent Deloitte & Touche poll showed that more than a quarter of 1,009 retailers surveyed plan to offer products on TV over the next three years.
Some retailers have already announced their plans to start their own venture:
* R.H. Macy has a joint venture project with “60 Minutes” producer Don Hewitt to launch such a channel.
* Time-Warner Inc. and retailer Spiegel Inc. will create an interactive Catalog Channel on a test-market basis next year, offering merchandise from the Spiegel catalogue.
* And Nordstrom also has plans to develop an interactive channel that would allow viewers to select product categories.
In addition, CUC International, which sells membership-based consumer services such as discount dining clubs, hopes to launch an interactive television retailing service soon.
To be sure, interactive television could reshape the retailing world. The anticipated information superhighway with 500 channels could create more venues for shoppers to view specific product categories, request product demonstrations and make purchases by clicking a remote-control switch.
However, industry analysts say many retailers are very cautious about this brave new retailing world because some surveys show that many consumers are not interested in TV shopping.
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For example, the Gallup Organization recently surveyed people nationwide about electronic shopping on behalf of the International Mass Retail Assn. Of those who have not used home shopping services, 17% said products “can’t be easily returned,” 14% said they don’t like to wait for products to be shipped and 12% said that products offered on television are available in stores.
Ann Raymond, an actress in Pacific Palisades, is among those with such reservations.
“I’m a big skeptic,” she said. “I’m concerned that when the product comes--I won’t want it. And I’ll have to send it back.”
Most studies also show home shopping does not have a strong appeal among men. Consider David Melcon, a carpet salesman who lives in Los Angeles.
“I don’t have the patience to watch something being sold over TV,” Melcon said. “You can’t be sure of the value and you can’t make price comparisons. It would be an impulsive way of shopping for the holidays.”
Retailers must also consider the consumer trend toward shopping later in the holiday season. For example, Rita Argentieri of Philadelphia has purchased holiday season gifts from QVC in the past. However, Argentieri, was laid off from her job as a secretary about a year ago and, like many other consumers, is more value-conscious these days.
“At this stage, I’d worry about getting products on time if I ordered from television,” she said. “And, there are better bargains at the end of the shopping season.”
‘This should be the start of a series of strong Christmas seasons for TV shopping operators.’
Shopping on the TV
Television shopping is not a major force in retail but sales on the two major home shopping networks have been rising rapidly:
(sales in millions)
QVC: $1,097.7 (1992)
Home Shopping Network: $921.8 (1992)
Source: Company reports
