Shopping channel QVC has a degree of customer loyalty that other retailers would kill for. In the week that Retail Week met chief executive Steve Hofmann, 450 of its customers had been to the office for a tour and promotional gem event. Some of the excited visitors even told Hofmann: “Coming here was better than our holidays.”
Home shopping is often overlooked in the retail sector, and certainly not perceived as the sexiest
end of the market, but with comments like those it can’t be knocked for loyalty. “We have a very loyal group of customers,” Hofmann says. “Around 5 per cent of our customers buy from us 90 times a year
on average.”
This loyalty is rewarded with regular events at its Battersea head office in London, and QVC’s top shoppers are even sent personal Christmas cards. Hofmann believes that such interactivity gives QVC the edge. Alongside the events, customers are encouraged to call into the show and ask questions during live product demonstrations.
“We can show products off better than anyone else in the country with, for example, the managing director of Dell in to sell and explain the product,”
he says. “You don’t get that in an electricals store.”
Customers are also encouraged to rate all its products and 1,500 reviews appear on its website each week. Hofmann says: “85 per cent of our products get four or five stars out of five. When they are not satisfied we take feedback and change the products or go back to the manufacturers.”
Service is something that is essential to Hofmann and he says he will keep working to improve it. This ethos was drilled into him during his tenure at Japanese shopping channel the Jupiter Shop Channel. “In Japan the execution is flawless,” he says. “You would get a complaint there if the box you sent a product in had a mark on it.”
Every bit the retailer
Hofmann comes from a financial background and has held several roles in finance and TV channels in New York, as well as spending eight years working in Japan. However, he is quick to stress that his role at QVC, where he took the helm last year, is very much that of a retail boss. “We are not a TV company or a broadcaster; we are a retailer,” he says.
Up to 65 per cent of QVC’s business consists of fashion, jewellery, accessories and beauty products. It even launched a dedicated beauty channel in September. The rest of its sales come mainly from homewares and electricals.
The retailer faces the challenge of constant product flow. “We bring 700 to 1,000 new products in each week and we see which ones work for customers and just bring those ones back,” says Hofmann. “Some products sell and sell for years on end, even some fashion items.”
The model is working. Having just celebrated its 15th year in the UK – it was founded in the US by broadcaster Joseph Segel in 1986 – QVC is now in
144 million homes across the world, 22 million of these being in the UK. Sales in 2007 for its UK arm reached£352.6m.
Hofmann is aware the climate has changed, though. “Clearly we are operating in a very challenging environment, with consumer confidence at an all-time low,” he says. “Customers are being more selective and looking for the right product at a good price from a retailer they trust.”
He is also keenly aware of the challenges the new retail environment is bringing from high street competitors. “We might get caught by discounts on the high street – DSGi can cut the price of large-screen TVs and we are not the cheapest place,” he says.
Excluding promotions on individual items, QVC only goes on Sale for three and a half days twice a
year. “We are very rigid about pricing policies and we build up a level of trust with customers so they know how it works,” he explains.
However, Hofmann is confident that its older customer base will remain more resilient to the credit crunch. And with digital switchover meaning that all British homes will have Freeview by 2012, QVC’s penetration of the market and opportunity to entice more customers is poised to grow.
Behind the scenes
Age: 43
Family: married
Hobbies: squash, tennis, walking the dog
Career history
2008: chief executive, QVC UK
2003-07: various roles; last two years as co-chief executive officer, Jupiter Shop Channel, Japan
1999-2003: chief financial officer, Jupiter TV Company, Japan
1996-99: starting in New York, Hofmann held several roles with NBC, including vice-president and chief financial officer, CNBC Asia and National Geographic Channel Asia
1994-96: assistant vice-president – audit manager, Credit Suisse First Boston New York
1988-94: audit manager, Price Waterhouse, New York
1987: graduated from Lehigh University, Bethlehem, Pennsylvania
No comments yet