Selling items through television instead of inside a mall was radical when West Chester-based QVC started doing it in 1986, but now television is declining. Online is now the place for sales, and QVC faces a crowded field.
When QVC host Mary DeAngelis’ new video posted, her fans let her know they were watching.
“Mary, I just love you,” one Facebook user commented on her video about making sangria.
“Mary, you just made my day!!" another typed. "Great recipes, And, I couldn’t stop laughing!!”
Before self-made Instagram and YouTube stars told people what to buy, QVC was the original influencer, with such charismatic hosts as DeAngelis beaming through the television set to sell women kitchenware and handbags by the hundreds.
DeAngelis’ One on Wine series shows how QVC is leveraging its signature business strategy — a personal connection with customers — to compete in a crowded online field.
West Chester-based QVC debuted its live broadcast in November 1986 when selling items through television instead of inside a mall was a radical move. But the television and shopping habits that once enriched this network are changing.
An army of e-commerce retailers swarmed the market, with Amazon and Walmart, Netflix and streaming services, and Instagram influencers and YouTube stars emerging as challengers. And, not everybody shares QVC management’s confidence that the company can adapt fast enough to keep up with changing consumer habits.
Investors are “concerned about their ability to survive in this media landscape,” said analyst Tom Forte of D.A. Davidson & Co. “It is more severe, the concern is more significant, than it has been in a long time.”
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Qurate Retail Group, QVC’s parent, brought in $14 billion in revenue last year and made acquisitions in recent years to expand the company’s reach. It acquired its main rival, St. Petersburg, Fla.-based Home Shopping Network, in 2017 for $2.1 billion and, two years earlier, bought online retailer Zulily for $2.4 billion to attract millennial moms.
The company aims to reach its core customer base, women between the ages of 35 and 64, wherever they are tuning in. QVC has expanded on Facebook and YouTube, while maintaining the set-based broadcast that made the company’s name.
“We just need to figure out how to bring the great stuff that we do at the core of our business to those platforms,” Alex Miller, Qurate’s senior vice president of digital commerce and marketing, told The Inquirer in April. “And in some areas, it means we need to potentially reinvent the way we bring some of the core kind of special sauce of our brand to those platforms.”
Still, investors remain skeptical about the home-shopping giant’s ability to set itself apart.
The company’s stock is trading at close to its 52-week low, especially after the company said in May that first-quarter revenues declined across its brands, including Zulily and the combined HSN and QVC U.S. networks.
QVC, which stands for “Quality, Value, and Convenience," served as daytime “background music for the home,” said Budd Margolis, a global television shopping expert based in London.
Constant programming meant a shopper could turn on QVC while doing other things around the house, Margolis said. This model propelled Qurate Retail Group into a home-shopping machine, now airing QVC U.S., QVC International, and HSN programming daily to 404 million homes worldwide.
On screen, QVC hosts talk to their audience, unscripted and live, explaining why they like certain cookware, shoes, or apparel, and pointing out details, such as an interesting pattern. HSN and QVC U.S. shows feature 633 to 783 products every week.
For the first time this year, eMarketer found that Americans will likely spend more time on their mobile phones than watching TV. And those TV watchers are evolving, too. Pew Research Center previously found about 6 in 10 young adults choose internet-based streaming services over cable as their primary method.
While someone might have tuned in to QVC to watch a celebrity chef cook and eventually buy a product, that same person can now watch the Food Network or stream a show on Netflix, said Oliver Wintermantel, an analyst at Evercore ISI.
After the recent earnings, Wintermantel said, “some of our customers are saying [Qurate’s] business model is obsolete.”
Margolis said he is disappointed by what he sees as the company’s lack of innovation.
“The format hasn’t changed in over 30 years,” Margolis said. “They’re still stuck in the studios. They should be out in the real world.”
The Kardashians, former Bachelor contestants, and YouTube personalities amass millions of followers and promote such products as clothes, beauty items, accessories, and food.
Though YouTuber Safiya Nygaard’s 7.8 million subscribers are a fraction of Qurate’s reach of more than 400 million homes worldwide, she’s hardly the only one. Kim Kardashian has 139 million Instagram followers.
QVC’s Miller said the company works with influencers to promote its products. About 84 percent of QVC’s new U.S. customers last year made their first purchase through QVC.com, which includes its mobile app.
Former QVC hosts, such as Lisa Robertson, can defect from the studio and remain successful influencers, showing the power of a personal brand.
Robertson, a host for 20 years, launched a lifestyle video blog and magazine where she broadcasts from her living room, while gardening, or traveling abroad.
She posted a video on her personal Facebook page last September while riding a boat across the Grand Canal in Venice, phone in hand documenting the journey.
“I just wanted you to see all of the traffic in the water, all the gondolas. Everyone is going to Saint Mark’s [Basilica],” she said before panning the phone camera. “Now we’re just going to go down the Grand Canal.”
Though Robertson, who is based in West Chester, can’t move as many products as she did at QVC, she enjoys the freedom of choosing what to promote and when to broadcast. She has about 326,000 followers on her Facebook page, 63,000 followers on Instagram, and 41,000 YouTube subscribers.
More than 20,000 people watched her Facebook Live stream from Venice.
Qurate executives insist that the company is well-positioned for the future.
Broadcasts are offered on its website, Facebook Live, its mobile app like Q Anytime, Roku, Apple TV, and Amazon Fire, allowing the company to follow the changing habits of consumers, regardless of cord-cutting. Shoppers remain loyal, with more than 85 percent of the shipped sales coming from repeat customers who spent an average of $1,500 a year.
“Despite this period of heightened volatility, the customer fundamentals of our business remain strong,” Qurate CEO Michael George told investors on the recent call.
Still, the company missed Wall Street earnings estimates three out of the last four quarters, earning less than analysts expected. Since the two shopping networks merged in 2017, the share price has dropped roughly in half.
Bank of America Merrill Lynch analysts are modeling negative QVC U.S. and HSN sales growth through 2020. Though they believe Qurate is right to focus on digital platforms, the recent note to investors said they "expect a multiyear learning curve.”
Forte thinks the company should go private while it makes these adjustments. He recently cut his price target for the company from $25 to $15.
“They’re in the penalty box, clearly, and let’s see how they can work their way out of it,” Forte said. "If history is a guide, it will happen. It just won’t happen overnight.”
Rob Robillard, Qurate’s vice president of integrated beauty, emphasized in April how traits driving QVC’s programs and products — such as storytelling and value — set them apart.
Mally Roncal shared how, when she was 17, her mother died of breast cancer.
When it was time for Roncal to speak inside the studio that night, an employee rushed over a tray with her beauty products before the camera turned to her. The host, standing next to Roncal, described the eye shadow palette, brow pencil, waterproof hazelnut eyeliner, and brush bundled for $29 “or two easy payments of $14 and change.” There were 3,000 units offered during the campaign.
They sold out in less than two minutes.