The new retail revolution

The new retail revolution

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Will the internet empty out the UK's crowded mall of TV shopping channels? asks Tara Conlan

Two events recently marked another chapter in the history of television shopping channels. The first was that Sit-up TV – which operated Bid TV and Price-drop TV and once used David Dickinson as the face of its brand – went into administration.

The second was that the wrecking balls moved in to demolish the old south-west London headquarters of QVC – an iconic, neo-classical building that once represented the dreams of the pioneers of home shopping.

The incidents tell stories about two different areas of the UK market, which is still big business.

Figures from research and consumer insight company Opinion Matters suggest the British market for products bought from TV shopping channels is worth around £1bn a year.

QVC, now based in a more high-tech building in Chiswick, is the UK’s market leader. It launched in Britain in 1993 and is now owned by Liberty Interactive; Liberty-owned sister companies include Virgin Media and All3Media.

According to QVC’s figures, in 2013 it handled 14.5 million calls and shipped 14.8 million products. Revenues rose from £404m to £418.6m, year on year.

QVC CEO Dermot Boyd reckons the UK “probably has more [shopping] channels than anywhere else”.

On Sky, there are 27. These range from niche ones such as Create and Craft, through to jewellery station Gems TV (which hit the headlines recently after a presenter made a rude gesture live on air) and Paversshoes.TV, apparently the world’s first 24-hour channel dedicated to shoes.

Others include Ideal World – singing the praises of “smart trousers with an elasticated waistband” when I tuned in – and The Boutique, which was extolling the virtues of a Victorian porcelain doll.

There are fewer channels on Freeview, largely because of the higher cost of scarcer spectrum.

But why does the UK have so many TV shopping channels, and are they in decline in the internet era?

Retailer Argos’s experience of launching a channel in 2011 and closing it less than two years later suggests it is not an easy market.

Says Retail Week Senior Reporter Gemma Goldfingle: “TV made sense for Argos. It seemed to fit well with the catalogue retail company. But it was ill-fated; it didn’t last very long.”

She explains that while companies might do well on the internet, this is not always an indicator that they will prosper as a TV channel. Where TV shopping differs from online browsing is that it usually gives a demonstration and often has fixed “special-offer” points in the schedule, such as a “finale” or “today’s special value”.

QVC is available to around 27 million homes – and is, arguably, the most upmarket. It sees itself more as a department store – providing entertainment and, often, exclusivity on certain brands.

Last year, it launched two more channels – jewellery and fashion-­focused QVC Style and “best of the rest” station QVC Extra.

QVC’s focus on beauty and jewellery has paid off, along with partnerships with celebrities such as Joan Collins and Donna Air (who recently launched beauty and jewellery ranges, respectively), guaranteeing star factor and coverage in the Daily Mail and women’s magazines.

But it also sells more diverse products. Prince Charles praised it a couple of years ago when it sold meat from a small lamb producer as part of a rural campaign backed by him.

He said: “There are huge opportunities, it seems to me, through something like QVC, to communicate to so many people all these wonderful little stories that are going on, so often in dark, unseen corners.”

According to QVC’s figures, in 2013 it handled 14.5 million calls and shipped 14.8 million products. Revenues rose from £404m to £418.6m, year on year.

“Amazon is a phenomenal competitor but our customers still use us because we provide a different experience”

The company has always been an early adopter of digital enhancements – from websites and content that is compatible across all mobile devices to a YouTube channel and apps.

More than half its business is now via the internet and around 50% of its web business is from mobile devices. This is more than QVC achieves in the US market.

Boyd reckons the outlook for shopping channels in the UK is pretty good at the moment. It certainly is for QVC’s net revenues, up 10% in the first quarter of the year, boosted by its new channels.

He says the company benefits from the expertise available across the QVC group, including at owner Liberty Interactive, particularly in areas such as website development and apps.

“Television channels can survive and drive sales, in combination with the web and mobile,” argues Boyd. He points out that QVC’s channels are now available for streaming to iPads.

One of the enduring draws for TV shopping audiences, particularly on QVC, says Boyd, is the relationships viewers have with the presenters.

As anyone who has seen candidates in The Apprentice doing the shopping-­channel buying and presenting challenge, marketing a product on live TV in an entertaining way is a real skill.

“We like to think of it as social entertainment and being able to buy things in one place,” says Boyd. “Amazon is a phenomenal competitor but our customers still use us because we provide a different experience.”

Ashley Faull, one of the founders of Sit-up TV, acknowledges that the online retailer was a factor in the company’s demise. 

“I’m very proud of what we did, we had 1,200 people working for us,” he says. 

After he and the original team sold Sit-up, it declined – largely, says Faull, because it ceased to innovate.

Moreover, he claims that around £100m in cash was taken out of it, “plus the web didn’t help the Sit-up model”.

He thinks it is now a tougher market as Freeview slots are more expensive and the biggest brands, QVC and Ideal World, have launched more channels: “The economics have changed – having a 10-channel block ahead of you [on the electronic programme guide], all promoting each other, makes it more difficult.”

Boyd emphasises that TV shopping is a “scale business” and that perhaps the market is moving towards a “fixed-price model”.

He says that fewer TV shopping channels are running the falling-price or auction models, typified by Sit-up’s channels, Price-drop and Bid TV; both specialised in starting products at high prices, then reducing them to encourage sales.

That might be where the impact of the internet is being felt, as viewers can “showroom”, as Goldfingle puts it. In other words, watch a TV shopping channel to find out about a product, but then go online to find it cheaper on websites such as Amazon.

The writing was on the wall, arguably, for Sit-up after regulator Ofcom launched an investigation last May.

This followed 27 complaints being upheld against Bid TV and Price-drop TV over the true value of products and the misleading of consumers.

TV shopping channels are often seen as the domain of older viewers. Intriguingly, while QVC’s audiences have predominantly been women over 35 – and Boyd says the company is “very comfortable with that demographic” – he adds that “new customers tend to be younger each year”, perhaps as a result of the company’s investment in technology.

Goldfingle says QVC is “continually solid” and the famous faces it attracts prove that TV shopping is “still a powerful medium”.

After watching hours of television shopping channels, you can’t fail to notice that one of the most-frequently repeated phrases is: “They are going to start selling out, they’ll be gone soon.”

The same could be said about those channels that do not adapt and use the benefits of the digital world.



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