CEO'S Corner: QVC's Mike GeorgeIn 1986, QVC (LINTA) launched its first live broadcast out of its studio in West Chester, Pa., entering the world of television shopping then dominated by HSN (HSNI).

Since then, the network, which celebrates its silver anniversary next month, has morphed into a multichannel, international retailer with $7.8 billion in annual sales -- nearly triple that of HSN -- with a $2.8 billion online business.

QVC's hokey image -- fed by a product lineup that included items like Chop-O-Matic food choppers, cubic zirconia rings, porcelain cats and Christmas sweaters -- has also evolved. While the retailer still sells everything from kitchenware and computers to jewelry and beauty products, it's gotten notably edgier.

QVC has upped its fashion and style credibility in recent years by adding exclusive clothing lines from runway designers such as Isaac Mizrahi, luring tony department store brands like Lancôme cosmetics, and showcasing celebrity-backed wares such as a new jewelry collection from supermodel Heidi Klum.

Although some industry pundits wrote off the television shopping format as passé when online shopping started to take off, a funny thing happened on the way to the era of digital retailing: QVC ended up being among the biggest beneficiaries of the shift.

"QVC's business has held up better than general retail," said Christopher Marangi, an analyst with GAMCO Investors. "There are strong secular trends behind it: It's essentially an e-commerce business."

Mike George, CEO, spoke with DailyFinance about QVC's next growth phase, which he said will be strengthened by parent company Liberty Interactive's spin off last month of its non-core, retail assets.

He detailed the channel's wide-ranging expansion plans. These include wooing a West Coast audience with the recent launch of LA Live, its new Los Angeles-based studio; penetrating international markets so that overseas sales eventually surpass U.S. sales; and stoking e-commerce and mobile commerce -- the fastest growing parts of its business.

DailyFinance: How does QVC define itself these days?

Mike George:
It's something we wrestle with because all of the traditional labels don't work very well [anymore]. We think of ourselves internally as a global shopping community and a video commerce retailer.

If you think about the old stereotypical experience [of a home shopping network], it's a customer watching QVC on her TV. Today's consumer is interacting with us on multiple screens. She has her PC or tablet besides her, and probably her smart phone.

Twenty-five years ago, we pioneered the testimonial call, when the customer calls into the show to say, "I really like and used this product." Today, she might be sending a tweet to us about a product or guest, which will appear on a scroll live on screen during the broadcast. She might be using her PC and tablet to engage in a Facebook chat about the program, or asking us questions on Facebook or QVC.com, which we might answer live on the air. We're using all of the technology to engage that customer.

Traditional retailers have their product on the floor, which might not change over the course of a day, or even a season. What we do changes based on the multidimensional live feedback of our customers. The customer may be telling us on Facebook, 'I don't understand if this product does a, b or c.' If we find that a certain demonstrability of a product doesn't make sense, we'll change that. We have producers change the product mix based on the multidimensional, live feedback from customers. It's the world's greatest shopping democracy.

Who's shopping QVC these days?

I'm hesitant to put a label on her, because she's very diverse. Our customer is a 35- to 65-year-old woman with a somewhat above-average income, The sweet spot of the household income level for QVC goes from $50,000 to $250,000.

What's interesting about QVC is at any given hour, the demographic of who is watching dramatically changes. K-DASH [the fashion line from the Kardashian sisters] is going to appeal to a customer who is newer to QVC and might be younger and overwhelming female, while during a Dell computer hour, you'll see a balance of men and women.

What do you hope to accomplish with the launch of LA Live, QVC's first West Coast studio?

We program our day to accommodate the bulk of our audience, which is on the East Coast and Midwest. We don't get our fair share of West Coast customers. [So QVC decided] to have a studio out of L.A. to create great programming in prime-time hours on the West Coast. The formula is such that there is a little more time spent telling the stories behind the story, a little more of an entertainment focus to the program. On premiere night, for instance, Kristin Chenoweth promoted her new CD, but there was also an opportunity to have more of a talk show format.

How will the new corporate structure of QVC parent company Liberty Interactive help you invest in the business? Any chance an acquisition of HSN could come from it?

It's very good news for QVC and our shareholders. QVC will represent more than 80% of the revenue of the new Liberty Interactive. The reason that's important is that historically, as part of Liberty Media, many of the investors were media investors. The new [entity] is a retailer, so it really opens up opportunities for that investment community to invest in what we think is a pretty dynamic video/e-commerce entity.

So what do we do now that we have this currency in the form of Liberty Interactive stock? The first use of cash is to invest back in the business in the form of global expansion and technology. We'll continue to pay down our debt, and buy back our shares.

Acquisitions are third on the list of priorities, and they could take on [a few] different flavors, such as acquiring small, e-commerce retailers or purchasing other video commerce companies. We own 35% of HSN, which is included on that list, but we have also been clear to say that we don't view an acquisition of HSN as a high priority.

If they are interested in selling, and the value is right, then it's something we could consider and evaluate.

Is QVC bullish on the international business?

International is a big focus for us. Today we get one-third of revenues and profits from markets outside of the U.S. Italy launched October 2010. We're really thrilled with the response from Italian customers: They have a repeat purchasing rate that exceeds all of our markets. [QVC is also in Germany, Japan and the U.K.]

We're actively exploring a few markets. We have a dedicated team who is working in China. We think it would be an extraordinary market for QVC [due to] the growing middle class, the growth of the country. So we're hopeful we can find an effective partnership and way to enter China.

We're looking at other opportunities in Europe -- certainly France and Spain would be on our list. Other high-growth developing markets, like India and Brazil [are of interest.]

We'll be entering new markets over the course of the next few years. At some time, international will certainly be larger than the U.S. business.

What's the growth potential of e-commerce and mobile?

There have been these mega-trends that perfectly play into our concept. One is the explosion of video content.

The second mega-trend is the power of social networking through what used to be small and localized communities. Now technology makes these communities even more engaged and expansive. Now we can enhance communities' ability to engage through social networking forums, Facebook, etc.

E-commerce and mobile is 35% of QVC's total revenues, and growing at a 15% to 20% rate per year -- which is double the industry. Mobile [commerce] is about 3% of total sales, growing 10 times faster than e-commerce. About 60% of new QVC customers make their first order on an e-commerce platform, and many become avid viewers of the live program. These channels are not in competition. Each one reinforces the other.

What are the big merchandising opportunities?

We've made great strides in creating a world-class mix of brands. Another dimension is bringing in great personalities that have a big following, and leveraging their credibility and following, such as fashion lines from the Kardashians and [celebrity stylist] Rachel Zoe -- which is a great example of explosive sales of a product from both existing and new customers.

Another dimension of product would be leading designers, like Isaac Mizrahi. [You'll see] more of the top-tier celebrity brands as well as great designer brands.

What's your outlook for the holiday season?

To use an overused phrase, we are cautiously optimistic. There's a growing uncertainty about the global economy, we do compete around the world, and I think consumers around the world are tentative. We [still] think we can grow our business in this economy by taking market share from other guys.

Holiday is a great time for us. Generally, we do quite well. We'll try to avoid all the crazy promotions out at retail. We'll be as competitively priced as everyone, so the value is there, but we'll be just very focused on the best gifts of the season.

We're trying to bring fresh, innovative products to you before you see them at retail. Like a lot of retailers, we'll also do a great business on Black Friday, but our Black Friday tag line is, "all of the deals, none of the craziness."




Increase your money and finance knowledge from home

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

Add a Comment

*0 / 3000 Character Maximum

2 Comments

Filter by:
Lisa

The article on Mike George and QVC is a joke. Yes, he is making money because they treat their customers with no respect. Look at all the blogs. I understand companies all have things on the internet but when you have hundreds of blogs that say the same thing then you know it is the truth. Mike doesn't realize that what goes around comes around.
October 13, 2011



QVC Incorporated, Office of the President
1200 Wilson Dr.
Studio Park
Westchester, PA 19380

To Whom it may Concern:

I am sitting writing this and shaking. In all of my 72 years I have never been treated in such a manner. I went to buy a computer for my grandson on QVC
And the associate was telling me the date it would arrive and then she said, well it did not go through. I explained that there should be no reason it would not go
Through. I buy things for my daughter, my grandson and myself and spend a lot of money with QVC. I was then told my account was closed, however they did not show a reason and that I would have to write a letter to find out why. Wondering why someone would close an account of a widow that is 72 years old and has a credit score of 850 was beyond me.

I called customer service to speak to a supervisor and they said they had no idea why cancelled. I explained that certainly someone would not cancel my account in August and not notify me of it. I called the corporate office and Inez told me that this was canceled due to someone that I sent something to, but nothing that I had done. I have not done anything but I am being punished. I told her I only send things to my daughter and grandson. My grandson lives in Royse City, TX and has never had an account with QVC. I did not know until I talked to my daughter that she had an account with QVC and they closed it because they said she was abusive to an agent because they had put the wrong size down and then told her she could not order it and she had no unpaid balance with QVC. My daughter is a customer service trainer for an international company and I cannot imagine that she is treating anyone with abuse. She said she wrote a letter and she got a voicemail from Mike that President Mike George had read this and passed it to the appropriate office to review. She was never notified again even after repeated phone calls on this. She said she posted something on the internet and maybe this is retribution for that. She also said Judy had hung up on her and she has voice recordings of those calls to prove it. She said she was told she said a curse word and she explained that QVC has Joan Rivers and the Kardashians on their show and then they profess that they only live up to high standards when these people say curse words on a daily basis.





All that aside, I am my own person. I was told if you send something to someone that has a closed account then QVC will close your account. So if I send something to a random friend and I have no idea their account is closed you will

October 17 2011 at 4:53 PM Report abuse rate up rate down Reply
Marlene

Consumers need to demands new laws where banks should pay consumers (customers), for using our money everyday!
According to Citi Bank there will be new fees; Starting in December, customers who hold its mid-level Citibank Account will be charged $20 a month if they fail to maintain a minimum balance of $15,000 in their combined accounts. Previously, account holders had to carry a minimum balance of $6,000. Everyone should demand that there must be new laws, which the banks should pay consumers a fee for using our money everyday; instead of charging consumers a fee.
“And that’s just my opinion”

October 06 2011 at 2:15 PM Report abuse rate up rate down Reply