Home a hit at TV shop channels
Clint Engel -- Furniture Today, September 15, 2003
While reality television is commonplace on the major networks, another reality has hit the shopping channels — jewelry is no longer the undisputed shop-at-home king.
TV shopping networks have been tipping their merchandise mix over the last few years in favor of the home category, which has either become the dominant category in terms of sales — leapfrogging over jewelry — or is one of the leading or emerging businesses.
With a lucrative base of tens of millions of viewers, TV shopping retailers have found that their core customers love shopping for the home while at home. And though only a relatively small number of products make it to live television, many others deepen the assortment online, as the networks find the Web a complementary channel.
Clearly the shopping channels have evolved into broadline retailers, along the way developing their own merchandising sans many of the brick-and-mortar modalities. Following are capsule profiles of four well-known TV merchants:
Home eclipsed jewelry as QVC's largest-selling category several years ago. No wonder. The retailer's strategy is to double its business every five years — and growth of the home category has outpaced that, said Rodney Ghormley, merchandising director of home fashions.
"We have the ability to show the brand in a friendly arena, instead of in some packaging on a shelf," Ghormley told HTT. He added that the products that do best "have a story to tell, not just a price."
Housewares, for example, does well because it is so demonstrable, as are luxury products, because many of QVC's 95 million households aspire to that level of taste. Feather beds do exceptionally well, he said, because viewers can see the product and its attributes clearly displayed on the bed. Those are sensual qualities that don't always register through a package.
"We're half retailer, half entertainer," he explained.
Textiles has been in a "deep growth" curve for the past nine years, he added. Private label constitutes more than half of the product mix — a balance QVC likes. The retailer does well with its proprietary labels, and some national brands have a "confusing direction," he added.
QVC runs a host of programs on which home products can be sold, from a generic show called "Around the House," to a more targeted programming. The channel's "sweet spots" are college-educated suburban soccer moms, Ghormley said. But he added that the viewer base is too broad to boil down to a single demographic.
The retailer's Web site is also a growing contributor, and gives QVC an opportunity to drive add-on sales through deeper assortments. "As people become more comfortable with the Web, they watch the channel but then order off of the Web," he said.
QVC is also the lone TV merchant to operate a bricks-and-mortar store. The unit, located in Minneapolis's Mall of America, is considered largely a marketing tool by QVC, which has no plans to roll out the format. The store also serves as a venue for live shows.
Targeted as an emerging business at HSN, home textiles has shown "truly amazing" growth over the last three years, said George Firrincieli, director of merchandising. The category's sales skyrocketed 110 percent in 2002 and then another 40 percent in 2003.
"It's really been an incredible ride" — now at about 3 percent of sales, he told HTT. Home, which includes electronics, is the largest selling category, according to Firrincieli.
Three years ago, the channel's textiles assortment was limited to quilts and white goods, but HSN has evolved its offerings to include basic and fashion-oriented merchandise.
Basics include "technology" such as memory foam and specialty pillows, while the drivers on the fashion side include HSN's sheet sets and fashion bedding, especially jacquard woven comforter sets.
To fuel that fire, HSN will break into new categories this fall — bath towels and freestanding window treatments.
"As the bedding business evolved, the bath business made sense," Firrincieli said. HSN will launch two towel programs, one of Egyptian cotton and the other of combed cotton.
The freestanding window business will also launch two programs: a solid velvet and a cotton duck.
HSN's merchandise is segregated by lifestyle rather than price point: luxury and opulent, casual and comfortable, and simple and modern. The simple and modern group is still evolving, Firrincieli said, and is similar to Federated's Hotel collection or Williams-Sonoma's West Elm, aimed at an urban, younger consumer.
"We're maintaining our core customer" — which is a female over 50 years old, with a household income of $63,000 — "but [we're] also looking to attract new ones."
HSN's assortment is also strictly private label. The retailer used to offer national brands, including Fieldcrest a year and a half ago, but "we walked away from it … Few brands have the equity of Ralph Lauren or Waverly," which he contends HSN's proprietary offerings do. That doesn't mean that HSN won't reintroduce national brands in the future, he said.
Its Web site, introduced in 1999, has also grown significantly.
"Every time we offer something outside our regular assortment, our new customer rate increases dramatically," especially with high thread counts, for example, a 200-count sheet set that retailed for $79 a few months ago.
The customer is also open to higher price points, as long as value and quality are there, Firrincieli added. "As we've delved into the higher price point, the customer has moved along with us."
At ShopNBC, home has grown along with the network, which expanded its viewership from 15 million viewers five years ago to almost 60 million today.
As the retailer aggressively diversified its merchandise mix, home sales increased last year from seven percent to 12 percent, and home is currently the second most important category, after jewelry.
By 2007, the channel plans to see the home area grow to one-fifth of revenues, said Liz Haesler, executive vp, television and Internet sales.
ShopNBC also has several fall initiatives in place, such as driving its average price point down from $250 to $125 — for all areas of business. The retailer has found that with lower price points there are fewer returns, and margins are usually better, Haesler said. Its customers also spend money primarily on themselves, and the lower price points will encourage more gift buying.
The balance between branded and unbranded merchandise in the home textiles group is about even, and products are shown on several home shows a day, such as Home Living.
Launched in 1999, the Internet is a big mirror of the network, and now accounts for 17 percent of the retailer's total sales.
Shop At Home
Shop At Home added home goods to its mix only a year ago, making it a newcomer among its peers. Its home — which it categorizes as housewares and textiles only, excluding electronics, collectibles or cook items — launched last September, with textiles coming on board in January.
Already, home has grown to occupying seven percent of air time within a year, and the retailer hopes that it will hold 20 percent in the future, said Tom Merrihew, executive vp of sales and merchandising.
"This is a category critical to the growth of our company," he told HTT. "Textiles are a big piece of where we're going."
Shop At Home last year was purchased by E.W. Scripps, the parent company of cable channels HGTV, Food Network and DIY Network. The crossover opportunities to build the home area are significant, Merrihew added, and tie-ins are already being explored. Market research found that people watching HGTV are four times more likely to view a shopping channel than another cable channel. In addition to some promo spots, Shop At Home is also doing tests with DIY Network and the Food Network.
And although jewelry and electronics are its largest the channel's largest selling categories, the retailer sees the biggest growth coming from home, cook and health and beauty. Its core viewership consists of 30- to 55-year-old females who make between $45,000 and $75,000 annually.
"We cater to customers who are willing to spend more," Merrihew said, and the average price point in its business overall is $180 per unit.
"We're creating a story," he said, and customers will look for things that are not sold at the typical brick and mortar stores. "If we sell the same thing, we won't achieve the same sales results."
The textiles category consists mainly of area and accent rugs, but that will change shortly. Next month, the channel will launch a full down product line, including comforters, blankets, feather beds and others. In the October/November time frame, bedding will be added to the assortment, including sheet sets, mattress pads and pillows.
In the television shopping world, "we can change the store front every hour," he said. "Our format is much more flexible, and we're very bullish on the home and home textiles areas."
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