QVC CEO Mike George
We thought we were seeing things a few days ago when we checked ShopNBC’s Web site and saw that it was selling dozens of Gucci watches. What happened, did they fall off a truck? Why was Gucci, a premier luxury brand, being sold on a home shopping network?
Then back in October, we couldn’t believe it when a sharp-eyed poster on QVC’s jewelry forum said that upscale jewelry designer Stephen Dweck, whose chunky gemstone masterpieces are featured in Neiman Marcus, was on the No. 1 home shopping network’s schedule. THE Stephen Dweck?
We checked QVC’s program guide ourselves, and there it was: Dweck was doing a lower-priced jewelry line for QVC called Dweck’s Diamonds. His Neiman Marcus pieces didn’t even have diamonds. The high-end stuff is made with semi-precious stones.
Also in October, we were checking the press releases on HSN’s Web site when we saw the network had struck a deal with one of the most famous and elite fashion houses: Badgley Mischka, designers of bejeweled gowns for the red carpet and celebrities.
We’ve written bits and pieces of this during the past two months, but we thought we’d tie it all up in a tidy package for Thanksgiving: There has been a sea change in the home shopping world, prompted by the disastrous economy and the crash of the luxury market.
Yes, home shopping networks have seen their sales hurt by the economy, like everyone else. But they claim they are still managing to steal market share from brick-and-mortar retailers. In fact, QVC is making a full-frontal assault on them this Black Friday, with 28 hours of special products and programming stunts starting Thanksgiving night.
The consumer press will continue to mention “cubic zirconia” in every story it writes about QVC or HSN, oblivious to the fact that some of the most esteemed names in fashion, jewelry and cosmetics — brands you find in Saks, Bloomingdale’s and Neiman Marcus — are plying their wares on the aforementioned home shopping channels.
ShopNBC CEO Keith Stewart
Male journalists are blind to this. You still have the nerds at Gawker, a snide Web Site for the navel-gazing media, chiding HSN for selling “useless crap.”
If you have ever seen how male journalists dress or their fashion and style sensibilities, you will realize that you can’t expect them to know names like Badgley Mischka, Judith Ripka, Robert Lee Morris, our fellow Montclair, N.J., resident Bobbi Brown, Yves Saint Laurent, Smashbox, Lancome and Dweck. And these brands and artists don’t represent “useless crap.”
Luxury-good makers are hurting, and they need to make up their loss in sales. So they are turning to outlets like QVC, as CEO Mike George explained at a recent Liberty Media conference, as outlets to distribute new lower-priced lines to the masses. George cited fashion designer Vivienne Tam’s QVC alliance at the meeting held in Manhattan by his parent company, Liberty.
“This complete implosion of luxury retailing in America has caused all these folks to rethink their business model,” George said.
And that means partnering with QVC, HSN or ShopNBC.
As we said, it will take the consumer press years to figure out that home shopping channels are distribution powerhouses that have undergone a transformation, in part because of the infllux of talent like a Morris, who does couture jewelry for designers like Donna Karan and RLM Studio sterling silver jewelry for QVC.
The Big Three — QVC, HSN and ShopNBC — are aggressively trying to broaden their audience and potential customer base, those who don’t normally watch any of these three networks. That means the three are actually “programming” the channels, doing “shows” that have entertainment value, not just product shilling, so they will attract non-QVC or non-HSN watchers.
We remember once interviewing a QVC exec years ago and asking what the network’s ratings were. He said ratings were irrelevant: QVC was only concerned about how many products were sold in an hour.
HSN CEO Mindy Grossman
That’s a totally different tune from what we heard recently from QVC’s George, and from the strategies that HSN CEO Mindy Grossman and ShopNBC CEO Keith Stewart have initiated.
Like traditional TV networks, the home shopping players want viewers to “sample” a QVC or an HSN. These new audience members, hopefully, will then see products that they want to buy.
For example, singer Natalie Cole recently did a live concert on HSN to promote a new Holiday CD set she is selling on the channel. If you’re a fan, you might tune in to HSN to see her, and then actually decide to purchase her CD. Artists such
as Jose Feliciano have also performed live on QVC.
QVC alum Stewart on a recent third-quarter conference call pointed out that actress-entrepreneur Suzanne Somers, who came to ShopNBC from HSN, had succeeded in attracting new viewers to Minneapolis-based ShopNBC because she was “entertaining.” And these networks want new eyeballs.
And home shopping networks’ capacity to reach millions of consumers and do fulfillment of orders has not been lost on magazine publishers, celebrities or cable’s reality TV stars. With circulation falling, women’s magazines such as Lucky, Allure, Glamour and Self are partnering with HSN to sell subscriptions.
And stars have seen the light. In a recent interview in Oprah Winfey’s O magazine, Joan Rivers, who’s had a jewelry line on QVC for almost 20 years, told O she was on home shopping when “nobody except dead celebrities was doing merchandise on TV.”
Nowadays, it’s hard to find a celebrity or TV star who doesn’t have a home shopping line. Even Madonna was interviewed on HSN when she was selling her children’s book.
Here’s a partial list:
Paula Abdul, HSN, formerly “American Idol,” Fox
Rachel Zoe, QVC, “The Rachel Zoe Project,” Bravo
Isaac Mizrahi, QVC, “The Fashion Show,” Bravo
Padma Lakshmi, HSN, “Top Chef,” Bravo
Ramona Singer, HSN, “The Real Housewives of New York City,” Bravo
Susan Lucci, HSN, “All My Children,” ABC
Carson Kressley, QVC, “How to Look Good Naked,” Lifetime Television
Dr. Robert Rey, ShopNBC, “Dr. 90210,” E! Entertainment Television
Tori Spelling, HSN, “Tori & Dean: Home Sweet Hollywood,” Oxygen
Paula Deen, QVC, Food Network
Rachael Ray, QVC, “The Rachael Ray Show,” syndication
Ingrid Hoffmann, HSN, Food Network and Univision
Home shopping is a big business. ShopNBC is the also-ran in the group, but in the third quarter Stewart made some nice progress cutting its losses. Sales for the Big Three were all down, but down less than previous quarters.
And we are not talking chump change for these networks. The three home shopping channels generated $8.3 billion in net revenue in 2008. QVC domestic posted $4.9 billion, HSN netted $2.8 billion and ShopNBC had $568 million.
Even with revenue still slipping this year, for the first nine months QVC had revenue of $3.308 billion; HSN had net sales of $1.4 billion; and ShopNBC had $372.6 million in net sales.