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HSN, QVC Makeover: Tacky Baubles Out, Couture In

Vogue magazine will co-sponsor a major event during Fashion Week in September. With QVC.

Mary J. Blige on HSN
Source: HSN
Mary J. Blige on HSN

And this month, singer Mary J. Blige’s fragrance launch shattered perfume sales records. On HSN, that is.

No need to adjust your sets.

The TV retailers once synonymous with gimmicky, novelty items with a slightly cheesy edge—think Veg-o-Matic food slicer (“It slices! It dices!”) and glistening cubic zirconia rings—are rolling out exclusive product lines and forging partnerships with fashion forward, status brands that broadcast the message: “This is not your mother’s home shopping channel.”

“We’ve come a long way from can openers,” said Doug Rose, senior vice president of multichannel programming and marketing for Liberty Media's QVC.

The changes have burnished their style, credibility and lured new consumers, including those who once turned their noses up at buying from a home shopping channel.

"We are truly an aspirational and inspirational network of experiences that immerses people in stories, brands and personalities that inspire them so that they want to have the product." -HSN Inc. CEO, Mindy Grossman

It's noteworthy because it comes at a time when other retailers are playing it safe with their merchandise and keeping inventories lean. At the home shopping networks, they are bringing fresh new styles to shoppers hungry for fashion, and often outperforming other retailers as a result.

Nancy Hull, senior vice president of equity research for Ladenburg Thalmann & Co., sees three primary drivers.

“First, they have done an excellent job identifying consumer preferences and responding with the right product assortment to give the customer what she wants," Hull said. "Second, there has been an awakening among brands as to the value of the shopping networks as a marketing tool and the power of reaching 90-plus million households."

The two networks also are successful at driving sales through their Web sites with little incremental costs, she said.

Chris Marangi, an analyst with Gabelli & Co., said the portion of sales coming from the Web sites has been growing steadily.

The home shopping networks are by definition "built for the Internet," with rich video content that works well on the Web as on mobile devices such as smartphones, Marangi said.

HSN Revamped

The debut of Blige's new perfume “My Life” on HSN shows how far the network has come. The launch not only broke sales records for the channel, but it defied the traditional retail route for a prestige perfume debut.

“No prestige fragrance has ever been launched in this channel of distribution,” said Mindy Grossman, the former Nike and Ralph Lauren executive who took the HSN Inc. CEO spot in 2006.

HSN backed the roll out of Blige's fragrance with a documentary that spotlighted her back-from-the-brink story.

Today, 70 percent of the products HSN sells are new or did not exist in 2006 when Grossman joined the company. At that time, sales were stagnant, Grossman said. The company's sales grew 2.6 percent to $2.01 billion last year, outpacing the growth of many retailers.

“HSN at that point was very frozen in time. It was like Miss Havisham in ‘Great Expectations’,” she said. “It wasn’t modern or relevant.”

Grossman pruned $130 million in goods, including housewares that were of generic or dubious quality, and made definitive decisions, like not selling polyester, elastic-waist pants.

The retailer set out to partner with authorities in their fields, such as ELLE magazine for fashion and chefs like Emeril Lagasse for kitchenware.

"Years ago, it was more difficult to get the attention of brands. It’s not difficult for us anymore. More and more often, calls are coming to us, not the other way around." -QVC, Vice President, Doug Rose

Better brands started to come around, such as the high-end independent beauty label Carol’s Daughter, which worked with Blige on her fragrance, and luxury fashion from designers such as Badgley Mischka.

Grossman also revamped the viewing experience, ditching the “very aggressive” on-air selling style, she said. “We didn’t want to pander.

“If you fast-forward to today, we are truly an aspirational and inspirational network of experiences that immerses people in stories, brands and personalities that inspire them so that they want to have the product,” she said.

That concept is embodied by both the Blige fragrance and a 400-item line of products from India, Bali and Italy inspired by "Eat, Pray, Love," the Julia Roberts’ film based on Elisabeth Gilbert’s bestselling memoir of self discovery.

Both HSN and QVC have a wide audience, with incomes higher than one might imagine. HSN said its average customer has a household income of about $75,000, while QVC customers skew a little higher, with a household income between $75,000 and $200,000.

QVC’s Quiet Coming of Age

QVC has benefited as suppliers reacted to an increasingly challenging environment for brand-building through traditional retail outlets and conventional media platforms, according to QVC's Rose.

"The world of better brands has gradually been discovering QVC as a way to augment what they currently do,” he said.

Last year, the network, which has $4.9 billion in sales, partnered with Isaac Mizrahi on an exclusive apparel collection. The network was drawn by the designer, who had both couture credibility and a colorful personality.

QVC continues to build its fashion footprint with the debut of an exclusive line, Liz Claiborne New York. Other recent launches include clothing and accessories line K-Dash by reality TV stars the Kardashians, and MOD by Janie Bryant, the costume designer for “Mad Men,” the hit show set in the 1950s.

QVC also will be back at Fashion Week as a co-sponsor of Fashion Night Out with Vogue magazine. In addition to playing a prominent role in this event, QVC also will have a pop-up store in Rockefeller Center.

“Years ago, it was more difficult to get the attention of brands,” Rose said. “It’s not difficult for us anymore. More and more often, calls are coming to us, not the other way around.”

Questions? Comments? Email us at consumernation@cnbc.com

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