Italy is in crisis, with surging unemployment, political upheaval, and declining consumer spending. Yet all of that is non importa for QVC, the home shopping network owned by Liberty Interactive (LINTA). Two years after QVC entered the country, Italians have become the channel’s best customers. On average, QVC’s tele-shoppers in Italy spend $1,900 a year, about 58 percent more than the channel’s sales average. At 44 purchases a year, they’re buying about twice as often as QVC shoppers elsewhere.
Italians have taken to QVC with gusto because customer service at stores is often lacking and e-commerce is less developed than in other industrialized nations, QVC Chief Executive Officer Mike George says. “We recognize there are short-term challenges that are very severe,” he says. “But we also see it as an opportunity. It is a time when other retailers are avoiding the market.”
Globe-trotting in search of growth isn’t new for QVC, which last year accounted for 86 percent of Liberty Interactive’s $9.6 billion in revenue. Its first overseas QVC channel launched in the U.K. in 1993, followed three years later by Germany, then Japan in 2001. The foray into Italy was QVC’s first new international channel since then. (It began a joint venture in China in July.)
QVC reaches 25 million Italians—almost half the population—and is taking on Mediaset’s Mediashopping, the network controlled by former Prime Minister Silvio Berlusconi. The barriers to entry were relatively low because local broadcasters, who are losing advertising revenue during the economic crisis, are hungry for the carriage fees QVC pays networks to run its programs, George says.
The channel’s liberal return policy is a revelation in a nation where many stores limit exchanges. QVC also benefits from the dearth of online shoppers—Internet penetration in Italy is among the lowest in Europe. Only 0.1 percent of retail sales happened online in Italy in 2011, according to researcher Euromonitor International, compared with 5.8 percent in the U.S. and 1.6 percent in the U.K.
When QVC started the Italian channel in October 2010, its staff was convinced viewers would prefer local goods, George says. Instead, shoppers flocked to a variety of foreign merchandise, including Stoneline, a German cookware brand. Only one or two of the channel’s top 10 best-selling brands hail from Italy. Italian customers favor the same kind of goods QVC shoppers like elsewhere, including housewares and consumer electronics, although they tend to have a larger appetite for fashion and beauty items. About 85 percent of QVC’s shoppers are women.
While QVC’s Italian business is still small, with sales of $35 million in 2011, its first full year, it’s growing quickly. For the third quarter, ended Sept. 30, revenue was €17 million ($21.9 million), an almost 140 percent increase from the previous year’s quarter. There’s still plenty of room for growth. Just 2 percent of Italians shop from their TVs, says Lisa Byfield-Green, an analyst at Planet Retail, a London consulting firm. By comparison, 6 percent of Americans shop via television.
QVC could find itself under pressure as more online retailers make their way into the market, says Daniel Lucht, an analyst at ResearchFarm, a London-based consulting firm. “This will mean stronger competition for QVC,” Lucht says. George is sanguine, noting that QVC’s own online operation will welcome more Italians as they embrace e-commerce. He says the Italian expansion is serving as a warm-up for a possible move into another battered economy: Spain. Given QVC’s propensity for challenged markets, is Greece on the shortlist, too? Says George: “We’re not that gutsy.”
The bottom line: Television shopping service QVC’s Italian channel, which grew 140 percent in the past year, benefits from a drought of local e-commerce.
