HOME SHOPPING CLUB TONES DOWN THE GLITZ AND PUTS ON THE RITZ

Byline: Sharon Edelson

ST. PETERSBURG, Fla.--Home Shopping Club is curbing the kitsch.
Eager to capture a more affluent audience and tap into a viewer shift from glitz to glamour, HSC is going upscale.
Fashion buyers for the billion dollar TV shopping giant have been told to cut back on the sequins, bugle beads, rhinestones and fringe.
"We're paying a lot of attention to trends," said Tom Cagley, vice president of merchandising for soft lines.
Cagley noted that when the
network began offering less embellished styles, customer response was strong.
"Our customers are probably less interested in glitz than they were three or four years ago, when we sold embellished sweaters 70 percent of the time," he said. "Now it's reversed."
For example, HSC recently sold more than 13,000 solid silk jogging sets for $49.94 and $59.95. The heavily embellished jogging suits, by comparison, sold only 1,200 units.
A basic, ribbed sweater coat sold 15,000 units at $29.95, while a model with more ornamentation sold only 900 to 1,200 pieces.
But it isn't just merchandise that's going in a new direction. The sets of HSC's three networks--HSN I, HSN II and HSN Spree--have been redesigned. Where plastic plants and Formica tables once stood, there are now antiques and modern pieces in a living-room setting.
"We've changed half the purchasing staff and it's evident," said Douglas Bailey, president of HSC, explaining that a drive for more experienced buyers has already resulted in a greater variety of merchandise.
Now HSC is broadcasting its new image to the outside world.
For the first time, the network's program listings, including new cooking shows with famous chefs and home shows hosted by well-known decorators, are in TV Guide.
A new consumer advertising campaign running on other cable networks consists of four commercials, including "Shoppettes," featuring a female vocal group bearing a striking resemblance to The Supremes singing the virtues of home shopping.
Although the merchandise mix is showing broader appeal, there is still the gargantuan challenge of applying these same standards to all products. To that end, Home Shopping Network, the Club's parent, brought in David Dyer last month as chief operating officer. Dyer was vice chairman of merchandising and sales at Lands' End in Dodgeville, Wis., and before that, senior vice president of marketing at Burdine's in Miami.
Gerald Hogan, president and chief executive of HSN, the Club's parent,calls Dyer, "my missing link," referring to the company's many years without a chief merchant.
Dyer wants to make apparel a larger part of the merchandise mix and believes HSC can attract more national brands.
"I think the medium works and I feel good about our ability over time to present a platform for a lot of quality brands," he said. "I plan to talk to a lot of people I know in the market."
While declining to name names, Dyer said he is targeting moderate to better lines. He also wants to create new private-label brands for basics, separates and knits, and introduce proprietary lines through the successful celebrity marketing division. Stephanie Powers launched a sportswear collection this month. Priscilla Presley will launch one in November.
"In a lot of women's ready-to-wear, the garment was done more for the style than for the construction," he said, commenting on the quality of some apparel sold on HSC. "I think you can do both."
During a recent visit to HSC, Bede Johnson, buyer for activewear and pants sets, presented some of the network's new fall fashions.
"HSC is going into themes," she said. "Tone-on-tone, animal prints and what we call 'a touch of gold' will be very strong for us."
A group of Lurex sweaters, priced at $19.95, from Victoria Jones, Murada Collections and Cervelle, HSC's private label, represents the latter. There were also silver quilted jackets and two-piece sets of tops with Fortuny-type pleated skirts or pants, at $90. Gold and silver are a concession to glamour for the holidays, Johnson said, noting customers are looking for natural colors.
"Brown is the new black of the fall season," she said, holding up wide wale corduroy separates from S.K. & Co. in browns and plums. A collection of wool and crepe blouses, skirts and blazers in fall colors from Leslie Fay is priced between $29 and $49.
Johnson said HSC shoppers like leopard prints, which appear on everything from loungewear to outerwear. Floral handknit sweaters, imported under a private label, are expected to do well, priced at $29 and $49.
"Customers are spending their money on basic pieces," Johnson said. "The glitz first attracted lots of people to HSC, but now they're taking it seriously in terms of fashion."
With only five million of HSC's 50 million customers at the high end of the income scale, HSC has a lot of proselytizing to do.
"We have to reach out to them--we haven't scratched the surface," said Hogan.
However, referring to the current customer base, he said, "Let's face it, Macy's customer and our customer are not too different demographically. Mervyn's customer and our customer are different."
Citing a National Purchase Panel statistic that gives catalogs only a 7 percent share of the apparel market, Dyer said, "I think there's a tremendous opportunity to gain market share."
That HSN has managed to become a $1 billion-plus business in spite of its seat-of-the-pants merchandising philosophy has amazed some on Wall Street. But competition has accelerated, forcing the company to fine-tune its image and transform itself into a true retail operation. According to Craig Bibb, a Paine Webber analyst, HSN's revenue per cable home is approximately $21, compared with the more profitable QVC, which does $28 per home.
"The business can be run more profitably with a better product selection," said Peter Siris, an analyst with UBS Securities. "What's amazing to me is that it's done as well as it has all these years without a chief merchant.
"The core business could easily grow 50 percent from its current base in the next couple of years," Siris said. "It's been stagnant for a number of years."
"They've been aggressive in trying to get some distribution deals," said Mark Riely, a principal of MacDonald, Grippo, Riely, an entertainment consulting firm. "If you layer stronger merchandising on top of that, I don't see why growth couldn't be excellent.
"Over time, their other battle will be to change their image and the kind of people who shop with them and broaden their base," he said. "The old management painted HSC into a corner with a carnival-type atmosphere."
"Procter & Gamble came here and made two presentations to us," Cagley said. "There are more people coming to the table. With the old company, you didn't get it on the air unless it was 50 percent off. We don't do that any more. I said to Liz Claiborne, 'We'll sell you at full price."'
"We've gotten beyond selling so much schlock," said another HSC executive. "It's beyond sequin dresses and collectibles. We used to buy closeouts. Now we're becoming a real business."

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