Still Spending at Home1 Jun, 2009 By: Bridget McCrea Response
Despite the economic climate, consumers continue to turn to shopping networks — especially their online arms — to feed their buying jones.
The 45-year-old woman is sitting at her desk in the office, ready to tackle a busy day, when she checks her iPhone to see what ShopNBC is offering for its best promotion or "Our Top Value" of the day. Using an application that she downloaded for free from iTunes, she quickly maneuvers through the options, sets her sights on a pair of $70 Franco Sarto low-heel black pumps and presses a few buttons on her iPhone's touch screen to complete her purchase. Within just a few minutes, the happy shopper is back to work, knowing that she'll have a great new pair of shoes to wear out to dinner on Friday night.
Creating that level of convenience, and taking the home-shopping experience out to shoppers' mobile lives, is all part of the game plan for companies like Eden Prairie, Minn.-based ShopNBC, which in April launched a beta version mobile application for Apple's iPhone and iPod Touch units. With about 30 million devices now at its avail, the home shopping firm is currently offering its top value and "once-onlys" (items that appear only one time at the price offered — and in some cases the product is not showcased again) via the devices.
Keith Stewart, ShopNBC's president and CEO who was hired in August 2008 to help turn around the struggling shopping channel, says the app is part of the company's mobile strategy, which is part of a broader "ShopNBC Anywhere" initiative. By taking the shopping experience off of the traditional television channel — and putting it in the hands of the consumer who uses mobile devices on a 24/7 basis — the company is not only broadening its reach, but also giving shoppers a taste of what they can find on the traditional network and/or online.
"This initiative opens up 30 million handsets that couldn't otherwise be able to access ShopNBC," says Stewart, "while opening up our business to a broader, newer demographic — something that's been a puzzling challenge for most of the CEOs in this industry." Expect to see more mobile initiatives from ShopNBC in the near future, says Stewart, as well as the introduction of DirecTV interactive television. "We're looking forward to unveiling the rest of our mobile strategy on more platforms by the end of 2009."
Weathering the Storm
By paying attention to how people shop, creating more "brand" oriented experiences and offering price points that can be dropped on a dime when necessary, home shopping channels in North America have largely been able to buck the economic trend that's challenging so many retailers. At HSN in St. Petersburg, Fla., for example, Bill Brand, executive vice president of programming, marketing and business development, says the firm's hallmark beauty products have been flying off the shelves as if consumers were still enjoying the boom times of the early 2000s.
Lancôme Paris, with its $78 skin rejuvenation cream, $60 eye cream and $26 eye makeup remover, is selling particularly well. "This brand premiered in December, and we wound up selling nearly 15,000 units of Lancôme Ôscillation mascara (which sells on HSN.com for $34)," says Brand. "It was a complete sellout."
Sellouts like that resulted in six consecutive quarters of growth for HSN, which has "directly outpaced its competitors," according to Brand, who acknowledges that the overall business environment right now is challenging at best. In fourth-quarter 2008, HSN's sales were down 4 percent, but HSN.com's sales were up the same amount. "In this environment, that is pretty encouraging."
QVC is also holding its own, says Doug Rose, vice president of multi-channel programming for the West Chester, Pa.-based company, which is also seeing its online sales growing. "The Web is making up a pretty rapidly-growing share of our business," says Rose. "Not only has it increased steadily over the past decade, but it's been picking up lately."
Comparing QVC's performance to the rest of the retail marketplace, Rose says business has remained "relatively healthy" through the recession. Even so, he says the home-shopping giant isn't immune to the obvious lack of consumer confidence. "Our advantage lies in our ability to read and react quickly by adjusting our storefront — on a daily or hourly basis — to be more relevant to where our customer's head and heart is these days," says Rose, "whereas a traditional retailer would take months to respond to what they're seeing, and change out their stores across the country."
In tough times, for example, Rose says consumers tend to be most receptive to products that solve a true problem for them. They want items that provide a clear, functional benefit, and that make their lives easier. To answer those needs, QVC's wellness and sports category stands at the ready with products like Lucinda Bassett's Solution to Stress and Worry 5-Day CD Program for $66, a $20 Qigong for Everyone DVD and the $198 auto-delivery Nutrisystem weight loss program.
Rose says stressed-out consumers looking to improve mental and physical wellbeing are sweeping up such offerings. "People are dealing with a lot of bad news out there right now," he says, "and that's driving a lot of Americans back to taking care of themselves, their families, and their health and home."
At ShopTV Canada in Toronto, Mark Goodale, vice president and general manager, says sales slowed in fall 2008, but then picked up slightly in March and April. Like its U.S. counterparts, ShopTV Canada is also incorporating more brands into its mix, which includes well-known names like Hair Club for Men, Proactiv Solution and Murad products. The company has also started using non-direct response call centers, and in doing so has raised its closure rates to 80 percent. "That move — combined with our new IVR function — has worked out great this year," says Goodale.
And while one might not think the purchase of fine jewelry would be top of mind for consumers right now, Tim Engle, senior vice president of strategic initiatives for Jewelry Television in Knoxville, Tenn., says the multi-channel retailer is faring well, despite the economy. Having announced new options like Bill Me Later (through its alliance with payments platform provider Litle & Co.), the seller of fine jewelry and loose gemstones has taken numerous steps to weather the economic storm.
Engle sees the addition of the Bill Me Later platform as a significant step for Jewelry TV, particularly in today's economy. The function enables consumers to shop online without using a credit card and helps the home shopping retailer simplify the payment experience. The initiative went over well during the 2008 holiday season, according to Engle, with more consumers looking to "defer" payments over time, rather than shelling out cash on the spot for jewelry and gemstones.
Such initiatives are all in the name of creating an experience that consumers will want to repeat over and over again. They also go a long way in helping retailers like Jewelry TV effectively grapple with the challenging business environment. "We've restructured the company to become much more efficient," says Engle, who adds that the firm is operating at lower expense levels, across the board.
"We're focusing more on close-out business, so that as other retailers look to move product outside of their channels, we can step in and move more product faster," says Engle, noting that closeouts, bankruptcies and overstocks, for example, have all contributed to Jewelry TV's success. "We moved faster than most companies did to adjust to the recession, and to right-size our firm to support the new economy."