By  on February 1, 1994

DALLAS -- Why would a company that lost approximately $40 million or more on a home shopping venture only a few years ago pour more money into various forms of electronic retailing today?

When the company is J.C. Penney Co., the reason is a strong belief in new technology. The company is testing no less than five forms of electronic retailing.

A longtime innovator in the use of technology, Penney's developed and operated its own interactive TV shopping network, Telaction, in 1988. It lasted a year.

J.C. Penney Television Shopping Inc., a fashion channel, was disconnected in 1991, after two years of lackluster sales. Penney's still owns the network and licenses the cable access to about 6 million homes to QVC.

Penney's said that if it learned anything from the experience, it is that owning and operating a network is not a cost-effective proposition for a retailer. It also concluded that home shopping will succeed only when interactive technology is widely in place.

"Telaction was back in the Eighties," said Al Bell, director of strategic planning for Penney's catalog division. "Because the format at one point doesn't click with customers doesn't mean it won't today. We think it's likely enough that we want to test it.

"Obviously, TV has good potential because HSN and QVC are each doing $1 billion in sales," said Bell. "It's shown a pretty rapid rate of growth so it certainly is an alternative and something J.C. Penney continues to consider and look at."

Much has changed since Penney's launched its home shopping services.

While Penney's network was available in 12 million homes nationwide in 1989, market research at that time showed about 75 percent of Americans saying they wouldn't shop through TV.

Today, QVC and HSN are household words, and the idea of armchair shopping no longer seems quirky.

"Interactive technology has developed a lot faster than any of us thought it would," Bell said. "The cost has changed significantly. To make [Telaction] work, we had to put a box on a telephone pole behind the customer's house to serve a small number of customers -- less than 20. Today a small box at a telephone switch room might serve tens of thousands of customers.

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