Sales might have slipped at QVC, but the home shopping retailer seems largely unconcerned. The reason stems from its unique positioning, which it cites as a distinction that will always set it apart from competitors, even if temporary shifts might keep its customers from placing an order in a particular week.
Observers of the sales dip in a recent quarter questioned whether QVC might be suffering in the face of competition from various fronts, including Amazon and niche online retailers that make virtually everything accessible at any time. In contrast, QVC still relies largely on its conventional television channel, and it sells a limited stock of items, hoping that viewers will be compelled to make impulse purchases of a piece of jewelry, clothing items, or housewares. But with this reliance on television, the increasing numbers of people who are cutting the cable cord represent a threat, because they no longer receive the channel in their regular lineup of shows. If they aren’t watching, they can’t be buying.
Within QVC though, the mood remains confident. In particular, executives note that the sales dip occurred during a period when the U.S. presidential election was dominating people’s viewing time, while at the same time many conventional retailers were offering deep discounts in the face of inventory excesses.
Moreover, it dismisses the question about viewership. Most of the people who are getting rid of cable services are younger than QVC’s target segment of women between the ages of 35 and 64 years. Those shoppers continue to pay for cable channels, including QVC, and all the company needs is some of those viewers to buy. Once a consumer makes an initial purchase with the company, she tends to stay loyal to it, purchasing an average of 24 items annually over a period of at least five years.
Furthermore, QVC is not just sitting still. It was one of the first retailers to respond to Amazon, by launching its online channel way back in 1996. It also has purchased several e-commerce brands to expand its reach, including Zulilly, as well as shares in its direct competitor HSN. Altogether QVC thus ranks as the tenth largest e-commerce retailer in the United States. But Amazon also launched its own webcast, where viewers can watch hosts introducing new beauty products, seemingly encroaching on QVC’s territory.
Finally, QVC executives highlight what makes this retailer different from all the other retailers: the stories that the channel tells, which help people realize they want something they never knew they needed. Thus it does not need to compete directly with Amazon, for example. Shoppers can visit Amazon to purchase particular items that they are seeking, but at the same time, they can watch QVC or browse its website to get new ideas about compelling products that they might decide they simply cannot live without any longer.
- Perform a SWOT analysis for QVC.
- Would you invest in QVC? Why or why not?
Source: Paul Ziobro, The Wall Street Journal, January 9, 2017