NEW YORK — Home Shopping Network president Doug Bailey envisions his company as a “landlord” of the airwaves.
Bailey laid out the strategy for HSN’s TV Shopping Mall at the National Retail Federation’s recent Interactive Shopping Seminar here. HSN’s mall concept will begin airing in September, and the company is actively recruiting retailers to fill its celluloid aisles.
“HSN will act as a mall landlord,” Bailey said. “We’ll provide the studios and show hosts, and we’ll handle the order-taking.”
Bailey said HSN will charge retailers a flat fee for the services. Margins, he said, “will be all theirs.”
The mall service, he said, can accommodate 35 retailers with four hours of broadcast time each per week. Two of the four hours would be prime selling time and two hours off-peak time. The mall service will reach three million cable and 20 million broadcast homes.
HSN is betting that retailers will opt into the service as a way to reach shoppers in areas where they don’t have stores. “We’ll give retailers national exposure,” he said.
Bailey said HSN is negotiating with many retailers who are potential users of the mall service, but declined to name them at this point.
The televised segments will double as advertisements for the stores, according to Bailey. He said shoppers who see a product on one of the televised segments may visit one of the retailer’s stores to try it on before purchasing it.
Bailey also said the service will appeal to shoppers concerned about crime. He quoted a recent study stating that 38 percent of customers who shop at malls said they were concerned about security.
Macy’s has already committed to working with HSN on TV Macy’s. The 24-hour channel will begin airing in test markets this fall and is not part of HSN’s mall service. As with the mall service, HSN will take orders and handle fulfillment.
“HSN has an outstanding fulfillment network,” Macy’s chairman and CEO Mike Ullman said in a separate address at the NRF seminar. “They’ll do our fulfillment, and our vendors will ship directly to HSN.”
Unlike the mall service, however, actual Macy’s salespeople will host the televised programming. “We plan to use our best sales associates on the air,” Ullman said.
Ullman said the chain is turning to television because of lax growth in the department store industry.
“The department store segment hasn’t grown in the last five years,” Ullman said. “We have to reach out to new customers.”
Macy’s is leveraging its name in the experiment. “We have a national name that works across the United States,” he said.
He added that TV Macy’s will reach a different customer than a brick-and-mortar Macy’s. “The current customers who buy from the HSN and QVC formats buy on impulse,” he said. “Department store customers usually know what they want to buy before they go to the store.”
Goods sold on TV Macy’s will be priced the same in Macy’s stores so shoppers can return the merchandise at an actual store if there is one in their area. “We expect to do somewhat better than the current [home-shopping] operators because we have a vehicle to return through our stores,” he said.
Bailey said that despite the mall service and the new relationship with Macy’s, HSN’s core role will remain that of a retailer.