PHILADELPHIA — As the digital revolution rapidly changes the way consumers shop and purchase fashion and consumer products, QVC has found a way not only to stay relevant but to also create new platforms for its business model both here and abroad.
Mike George, president and chief executive officer of the company, talked to WWD during the Democratic National Convention here as Hillary Clinton was set to become the first woman in U.S. history to accept her party’s nomination for President of the U.S.
It was against that historical backdrop that George discussed how the West Chester, Pa.-based QVC has evolved and adapted to keep pace with the ever-changing digital space.
George declined to talk politics (he left that up to the National Retail Federation, which cohosted an event with QVC here), but he did speak at length on a wide range of topics affecting his business and the future of the digital transformation.
WWD: Your roots are here in Philadelphia. How has business changed here?
Mike George: We were founded here in Philadelphia 30 years ago. It has been an amazing community for us. As our business has grown and diversified and taken on a much more digital component with the growth of e-commerce, it’s been fun to make Philadelphia more of a digital hub. There are a lot of interesting companies in the area in digital so it has been a really good home for us.
WWD: Tell me more about the digital revolution. Are you working more in conjunction with digital companies and bringing them into QVC?
M.G.: It changes every day. There is amazing growth in digital. Over half of our business is now e-commerce. Mobile has had huge growth. In that kind of space you certainly try to watch what everyone else is doing and partner with others who can bring new skills and capabilities.
There is a really cool firm here in Philadelphia called Monetate as an example and what they do is they help you to test different ways to communicate with consumers on a digital platform and test the impact of it. It has been fun to see another local company do really well in this digital space.
WWD: What percentage of your business is e-commerce versus television and how has the percentage changed?
M.G.: Ten years ago we were 90 percent TV so digital has grown enormously. TV is still critical but what is interesting about the TV element is that people are experiencing TV in lots of different ways. A lot people do the traditional pay TV platform, but we’re showing here [a new platform] an Apple TV so consumers can interact with us on an Apple TV, not just watching the program but actually clicking the remote to buy and to search other things in our inventory.
Facebook Live has become this new phenomenon where we are broadcasting over Facebook. So as dynamic as the e-commerce space is we are seeing this equal revolution in how people consume television and it’s sort of fun to imagine TV five to 10 years from now and how people will interact with QVC. It is becoming a much more interactive experience where we are engaged with what we are doing on TV.
WWD: How do smartphones play a role in this?
M.G.: Smartphones are a huge part of it. Half of our e-commerce business is done on smartphones. What is interesting about smartphones or tablets is that you are seeing the consumer use them in lots of different ways. She might be watching our live TV programming on a smartphone, tablet or watching it on her TV but then getting additional value added content on our mobile platform. She is often just watching TV and then she can — with one click of her mobile phone — buy the item on TV, so there are many different ways to engage.
WWD: What kind of impact has the digital revolution had on brick-and-mortar stores? You are seeing the shift to e-commerce. It is still a small percentage of overall sales but it is growing.
M.G.: It’s definitely growing and I do think we’re seeing this accelerating shift away from brick-and-mortar. We think we’re a beneficiary of that as the customer has gotten more comfortable with what we have to offer, trusting our experience and realizing that she can get amazing values and have the experience without having to go the store.
We’ve also found that we have this positive relationship with brick-and-mortar, too, because often many consumers will get exposed to a new brand on QVC and they will still go to brick-and-mortar to check it out and to buy. So our friends in brick-and-mortar will tell us that whatever we feature on QVC TV will drive their sales in the store. We don’t really view it as competition. It’s sort of like if we can tell the story of that brand we will lift that brand in all channels.
WWD: What is the next frontier for QVC in the midst of this revolution?
M.G.: For us it’s a few things. One, it is continuing to expand our business around the world. We are in seven countries — we opened up a couple of countries in the last couple of years: China and France. So we will continue to take what we do and spread it around the world.
On the digital side, it’s just trying to stay in front of where the consumer is going. We know she is spending a lot of time on Facebook so we have a lot of engagement of our customer through Facebook and now through Facebook Live she can interact with us without ever turning on her TV.
So different forms of interactivity to let her engage with the content, engage with other consumers in the shopping process, engage with the host. Who knows what is beyond that. I think five years from now we’ll be talking about augmented reality, virtual reality. The QVC host will be in your living room. It really is mind-blowing to see the kinds of investment in areas like virtual reality and how they can transform retailing over the next several years. We just think we’re in the perfect position with the assets we have to take advantage of that.
WWD: What percentage of your sales are apparel versus other consumer products?
M.G.: Our fashion business, both apparel and accessories, is about 30 percent of our business. Beauty is another 20 percent. Jewelry is another 10 percent or so. So that’s 60 percent in fashion categories.
WWD: Do you expect that to grow?
M.G.: Our fashion business, our apparel and accessories business has been growing really dramatically so one of the things we’ve been encouraged by is in a year when apparel and accessories has been really tough in department stores, we’ve seen really attractive growth.
What we’ve tried to do, particularly on the apparel side, is really concentrate on having very distinctive proprietary lifestyle brands like Isaac Mizrahi or Logo by Lori Goldstein. I think being able to present a lifestyle experience to have the designer on the air explaining his or her inspirations [is critical]. It has allowed us to set ourselves apart from retail and not get involved in this markdown war and the sameness you have in traditional department stores.
The consumer connects that the product is only at QVC, that she is hearing directly from the designer, who talks about his or her inspiration. For the consumer it creates more meaning in the product than what you might get from looking at a typical store shelf.