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Cover Story: Home Shopping’s Hard $ell
With Consumers Cutting Back, Retailers Bet On Web, New Technology
By Luis Clemens -- Multichannel News

As TV viewers sift through news reports of financial bailouts by the government, record gas prices and a struggling economy, home-shopping channels are bracing for a tough winter.

Collectively, the four largest shop-at-home networks are expected to post lower revenue this year, due largely to overall consumer belt-tightening, as well as recent management turmoil at ShopNBC.

The numbers aren’t pretty: August retail sales were down 0.3%, according to the Commerce Department. Unemployment is up to 6.1%. The Standard & Poor’s index of retail shares is down more than 20% from last September. And it doesn’t look like Santa Claus is going to rescue retailers this year: Deloitte Research recently forecast that holiday sales would rise by only 2.5% to 3%.

“Home shopping is one of those discretionary expenditures that is the first to go,” said Chris Haack, senior analyst at market-research firm Mintel.

High-definition television offers a greater opportunity, say home shopping executives. “We’re hoping it increases the sales,” said Al Ulozas, QVC’s senior vice president of affiliate sales and marketing. Several executives interviewed said they hope it will reduce returns, which are significant. In the last quarter, QVC had a 20% return rate, HSN’s rate was 18% and ShopNBC’s was 33%.

The theory: viewers will get a better look at the merchandise and experience less buyer’s regret. JTV’s Lane believes diamonds “will feel more real [in HD] … it is not just the sparkle. The way the eye works with HD, it will bring you into it in a way that you feel almost surrounded by the product.”

QVC rolled out its high-def signal in April; JTV will transmit in HD in October; and HSN will do so next year. ShopNBC does not have a firm date in place.

Securing HD distribution is a challenge because operators have limited bandwidth. Currently, QVC’s HD signal is available from AT&T and Verizon by year end. QVC and HSN may benefit from favorable placement on analog basic, but they are starting from scratch in the high-definition tier.

I am sure Dishnetwork is all over it. The leader in shopping channels.

Yippee!! Maybe D* can use it to inflate their claim of over 100 HD channels.

Wow! Now I can die happy!

If there was ever a waste of bandwidth, this is definately it!

Better take wifey's visa away now..:)

There's a good chance that there plan will backfire. Most of the jewelry they sell is garbage! In HD, it will just be more noticeable :rolleyes:

Jewelry TV Turns To HD

Home Shopping Network Hopes To Ride Out Tough Times With New On-Air Look, Consumer Financing Options

By Kent Gibbons -- Multichannel News, 10/4/2008 6:22:00 AM

Tough economic times can make consumers hunker down and even cut back on the essentials of life.

Like buying fine jewelry.

A September survey of affluent households released last week, by American Express Publishing and the Harrison Group, found only 4% planned to increase spending this year on jewelry, while 27% planned to cut back (by an average of 59%), Nationaljewelernetwork.com reported.

This is bad news for Jewelry Television, the home-shopping channel in 71 million U.S. homes. Sales last year (of which a cut goes to TV distributors) were about $500 million, and spokeswoman Kelly Fletcher said the network hopes to hit that number again. “We don’t expect we’re going to grow this year,” she said.

In hopes of spurring growth, the privately held channel is launching a high-definition version on Oct. 15, emanating from a new 5,000-square-foot studio, and cleaning up its on-air graphics.

It’s also adding new financing options, including the “Bill Me Later” deferred-payment program, a preferred-customer credit card and a buyer-protection plan.

The channel’s also adding home-jewelry-making kits and DVDs to the mix and is getting into collectible holiday ornaments with gemstones. “In this economy and this marketplace, we’ve had to look for things that do apply, because that’s what we do and know, but are a little bit different,” Fletcher said of the 15-year-old programmer, which this past spring laid off about 200 of 2,100 employees at its Tennessee operations to cut costs.

Andy Caldwell, vice president of affiliate marketing, said no distribution deals have been signed yet for the HD outlet. For one thing, Jewelry is trying to figure out the right model for the HD version, which should create “new revenue opportunities” for affiliates.

“We have a couple commitments we don’t really want to talk about yet,” he said. “But probably by first quarter, we should have quite a few different commitments” for HD launches. Jewelry, like other home shopping outlets, provides a revenue split but also guarantees affiliates a given per-subscriber fee, he said.

Fletcher and Caldwell said the glitzy new look for its jewels and gems should help in a tough environment. “Because sales across the board for electronic retailers are down, we’re looking for new revenue streams, new ways to reach customers, to reach a younger demographic. We believe HD is going to do that,” Fletcher said.

If nothing else, Caldwell said, an HD version of Jewelry Television could bring more women viewers to HD tiers currently packed with male-dominated sports channels. “We think that’s a good way to get launches with cable operators.”

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