A transaction as big as the one between QVC and HSNi doesn’t happen without a tremendous amount of commentary. Below is a compilation of commentary from industry experts, brand owners, and the investment community on the $2.1 billion mega-merger.
Allen Burke, who transformed QVC’s beauty business during his tenure, told WWD, “People have been expecting this to happen for the last 15 years. Today you have to have video assets to utilize all of the platforms. There are some obvious economies of scale,” Burke said. “When I got there in 1997, they were just starting to get on to the Internet. Today it’s half of their business. Down the road, if television viewership continues to decline, [QVC executives can say] ‘I’ve got the assets, I can make the organization a little leaner and I can focus those assets on different channels in a more forward thinking way.'” Burke added, “They are putting more assets now into QVC 2 and Beauty IQ, so they are experimenting with other channels of the broadcast signal and it’s leading them to think, ‘This could all come together.’ On one level you have to ask ‘What took them so long.’” He continued. “As bricks-and-mortar got softer and softer, people did keep watching more and more television for a very long time. The business has great strength.” But TV viewership is eroding, Amazon “is a force to be reckoned with and QVC and HSN have a lot of assets, a lot of understanding on how to present product and bring it to life,” he said.
Greg Renker, co-founder of Guthy Renker, which has sold brands on QVC for more than 20 years, told WWD, “It increases our opportunity to reach more customers through the QVC relationship. We have been very loyal to QVC for many years. The fact that we now might be able to take new products to HSN and have it considered to be part of the family is a wonderful opportunity for us. The scale of television is still extraordinary, and we worship at the altar of television’s success,” Renker said. “Digital is less scalable for us—for us, digital has historically been an order-taking rather than an order-making channel. But that is changing, and we are getting better and better at order-making — i.e., creating customers versus just having created them on television and then they order digitally.”
Suelyn Farel, CEO of the Julien Farel products business, which sells on QVC, told WWD, “This merger can really fuel growth by bringing HSN’s viewer into the QVC fold. … A wider audience attracts new beauty fans and continues to build the Julien Farel brand halo, which … ultimately translates to an increase in sales for both us and the network.”
Kathy Van Ness, chief operating officer of Golden Door, which sells skincare and food on HSN, told WWD, “This is a changing retail world, and we have to become much more creative about how we find and target consumers.”
ScentInvent Technologies co-founders Abby Wallach and Caroline Fabrigas told WWD, “The deal should provide them with global distribution with access to a diverse audience,” as well as “multichannel touch points for on-air and online content and commerce.”
A.J. Khubani, founder of BulbHead.com and founder/CEO of “As Seen On TV” products company TeleBrands, told Retail Dive, “The news on the QVC/HSN merge just sent ripples throughout the direct response and e-commerce space—ripples that are especially being felt by Amazon and Walmart as a finalized merger would position QVC/HSN as the third largest e-commerce company in North America. … There’s one thing for certain—it’s only a matter of time before those ripples become waves.”
“We’re living in an era where the long-term sustainability of direct response and home shopping are being contested, but this is exactly the type of ‘all in’ move the industry needs,” Khubani said. “As a direct response pioneer of over 30 years myself, we’re constantly adapting and innovating based on consumer trends, and making amazing strides. However, with a merger of this scale, you should expect to see groundbreaking innovation across television-enabled commerce and entirely novel shopping experiences to capture the modern consumer.”
Britt Beemer, chairman and CEO of America’s Research Group, a consulting firm, told the Tampa Bay Times, “The consumers who buy on TV aren’t the ones who buy online. The youngest consumers don’t know who they are at all, so their interest has been minimal. They’re going to have to develop a whole new strategy to reach them if they want to expand their online discovery base.”
Budd Margolis, a TV shopping consultant based in London, said to the Tampa Bay Times, “When companies merge, it doesn’t always create a win-win situation. Both of these companies are very conservative. And whenever they change anything, the customer will instantly react. Maybe they can cross-promote between themselves, but their customers aren’t necessarily discriminant. It’s like people who like Burger King or McDonald’s. They’re loyal to their brand.”
“HSN is very vulnerable in this deal,” Margolis said. “But both companies need to be more aggressive and innovative if they want to survive. Amazon is a tremendous threat. Everyone was blaming the election for the decline in sales last year, but in reality, their format hasn’t changed in so long and there are new customers out there that they’re behind in trying to reach. HSN and QVC need to become much more compelling if they want to reach them.”
Tom Caporaso, CEO of Clarus Commerce, said in an interview with the Washington Post, “Both brands already have large customer bases, but the real question will center on how they plan on locking their customers into the HSN-QVC ecosystem and stop them from going to competitors like Amazon. By building a premium loyalty program like Amazon Prime, the new converged brand could start to become a major threat to Amazon’s visions of total domination of the industry.”
“In the retail world, consolidation is the biggest key to staving off the overwhelming threat that Amazon has brought to the industry,” Caporaso told WWD, which helps brands connect with consumers online. With a merger of two major established brands, the converged company will now place as the third largest e-commerce retailer in the country, which will put them on center stage in the fight for dominance,” he said. “If HSN and QVC can build a premium loyalty program such as Amazon Prime to rival the online giant, then they will be a major force to be reckoned with, especially since they already have large customer bases.”
Victor Anthony, an analyst at Aegis Capital, told WWD “acquiring HSN would add scale to QVC’s model, which doesn’t have the weight of brick-and-mortar stores and sees only about 1 percent of revenues go to advertising. That gives the home shopping model margins that are relatively high compared with other retailers.They do have some advantages over traditional retailers, but when it comes to Amazon, it’s a different story,” said Anthony, who has had a “buy” rating on Amazon for more than five years. But while he said Amazon’s Prime membership program and its free shipping benefits could pressure QVC to lower its own shipping costs, Anthony noted Amazon wasn’t so much a direct competitor with the company.
Photography: QVC Linkedin