Is TV Home Shopping Still A Player?

thssA succession of new players and formats is bracing to get into the TV home shopping arena as the industry continues its explosive growth.

By the year 2000, electronic shopping is expected to reach $20 billion, according to industry sources. That’s up from revenues of some $3 billion this year.

R.H. Macy, Spiegel and Nordstrom are among these who have announced plans to launch TV shopping ventures in 1994. Now, The May Department Stores Co. reportedly is eyeing electronic shopping vigorously.

“May Co. has been studying this for a long time and is waiting in the wings,” said Todd Slater, vice president of research of UBS Securities. “They have not announced an initiatives because they’re waiting to see how it works for the other guys. They have very sophisticated satellite technology in place and [in this regard] are way ahead of Macy’s.”

May executives did not return phone calls seeking comment.

Another major player that could emerge in 1994 is Fingerhut Co., the monolithic mail-order company based in Minnetonka, Minn. Fingerhunt’s USA Direct division is said to be intent on launching a new 24-hour shopping network.

According to industry sources, possible partners might include Time Warner, ABC or Home Shopping Network. Last year, Montgomery Ward created a catalog company as part of a joint venture with Fingerhut, called Montgomery Ward Direct.

While this joint venture continues, Ward’s said it will announce a TV shopping service of its own in 30 to 90 days.

The muscle in TV home shopping in 1993 was provided by primarily two players — QVC and Home Shopping Network — each reaching sales of $1.2 billion this year. The infomercial industry tacked on nearly another $1 billion.

Still, this electronic supermall is only in its infancy. It will take on new dimensions with interactive technology, which will be in place in 13 million homes by 1997, according to Bill Harvey, president of Next Century Media Inc., a consultant in the interactive field.

Fare that will be carried on interactive services is currently being tested across the country.

For example, Time Warner’s test in Orlando, Fla., includes Spiegel, Eddie Bauer and other catalogers. Viacom is lining up retailers for its Castro Valley, Calif., trials next year.

“There are 104 differetn interactive test beds,” said Harvey, referring to the regions around the country where interactive testing is being conducted. “A great many of them will make it possible to shop for fashion and beauty items with the same degree of choice that you have been you’re in a store. On HSC and QVC, and have to choose what’s presented to you.” He envisions this becoming a reality some time next year.

AT&T, Bell Atlantic, U.S. West, Nynex and most of the other major phone companies are exploring the fashion aspects to interactive TV shopping.

While QVC chairman Barry Diller has been involved in a Wall Street battle of epic proportions for control of Paramount Communications, he has left a stable management team in place at the home shopping giant’s West Chester, Pa., headquarters.

For four months, Diller and QVC have been fighting Viacom Inc. for the right to merge with Paramount. Last week, Paramount’s board of directors recommended QVC’s bid of $10 billion. Viacom, whose bid was valued on Monday at $9.6 billion, could still come back with a higher offer.

Even with Paramount in tow, industry experts said QVC will continue its expansion path. It has already launched in the United Kingdom and Mexico. According to sources, QVC may be targeting Canada. In addition, QVC will launch Q2 and On-Q, two new shopping channels next year.

Last week, HSN established a new division, Home Shopping Network International, as a joint venture with cable giant Tele-Communications Inc.

“HSN has greater distribution with the worldwide partnership created with TCI,” Slater said. “HSN also announced a deal with the Black Entertainment Channel and is talking with the Disney Channel.”

HSN would provide fulfillment and other services for those channels.

Meanwhile, the infomercials industry blossomed to $900 million this year, up from the $150 million racked up in 1991, according to the National Infomercials Marketing Association. A 1992 figure was not available.

Advertising agencies are starting to steer their Fortune 500 client toward infomercials. Firms such as Estee Lauder, Marshall Field’s and Carter Hawley Hale have produced infomercials, which promises to elevate the venue from its humble beginnings.

Still, infomercials are not as easy as they look. According to industry experts, only one out of 10 suceeds. Yet despite the bad odds, Hollywood had embraced the medium. The three top talent agencies — William Morris, Creative Artists Associates and International Creative Management — have all started infomercial divisions.

And it’s not just aging stars and fading starlets shilling on the tube. Some big names that made infomercials this year include Burt Reynolds. Raquel Welsh and Jane Seymour.

They won’t be seen nationally, however. In market tests, they flopped.