Must See SHOPNBC

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Television shopping continues to expand and with it, the on-air sales of fine jewelry, which is the category leader for the major shopping networks. According to 2003 annual reports, three of the top 15 publicly-traded U.S. jewelry retailers are television merchants. The television shopping industry, with approximately $7 billion in annual sales across all categories, perhaps a third of them in jewelry, also enjoys a double-digit annual growth rate.

Audiences are primed by the fine jewelry salesmanship offered on-air. The complex features and benefits of fine jewelry and watches are tailor-made for on-air dissertations, which can go much further in explaining complicated topics than even the best bricks-and-mortar countertop exchange.

For retail jewelers, many who have designed and marketed their own web sites, the television competition is a bit more difficult to confront. Still, says Jewelers of America's CEO Matthew Runci, it's something retailers need to understand and a challenge that they should come to grips with. "Home shopping," says Runci, "and Internet sales both offer customers the convenience of shopping from home at a time of their own choosing. Savvy jewelers are incorporating this convenience factor into their business models by building web platforms to complement their stores."

But there is still something to say about the benefits of buying in person. "Jewelers offer their customers the benefit of a wide-ranging inventory of pre-selected brands and products, together with a trained staff of sales and bench professionals who can assist with the choice of the right item for that customer's needs and then see to those needs after the sale with service."

Adds Runci, "The professional jeweler is just that-a professional. He or she is not just a merchant that happens to be selling jewelry at the moment because it fits into their current business model. Selling fine jewelry and watches is the jewelers' business model. That carries enormous added-value for consumers."

At ShopNBC, the Eden Prairie, Minnesota-based, ValueVision Media-owned cable home shopping network with more than $600 million in sales in 2004, the home shopping formula has worked exceedingly well for jewelry. By the company's own estimates, ShopNBC will ring up over $400 million in jewelry sales by the end of 2004, up from $290 million in 2000, with the goal of being a billion dollar company in the years to come.

Though number three in size (QVC and HSN rank first and second), ShopNBC is a significant competitor to traditional jewelry retailers, with its formula of selling better goods at higher price points. ShopNBC's average fine jewelry sale is $185, much higher than both QVC and HSN, which currently reach almost one-third more than ShopNBC's 60 million American homes.

The company's vision, says ShopNBC's executive vice president of merchandising, Brenda Boehler, is to position itself as the leading multi-channel retailer (on-air, on-line, and print) of better quality merchandise across all categories. Jewelry continues to be a significant part of the shopping network's merchandising mix (65 percent at present) with sales of gems, gold, and watches topping the list along with a cubic zirconia and silver business.

IMAGE UP, PRICES DOWN

Upgrading the quality and price of merchandise sold is a recurrent theme at ShopNBC. The company revamped its image last year with the launch of a new format that allows for more product viewing time, cleaner graphics, and an overall livelier image. "As part of the NBC family [GE Equity and NBC own 40 percent of Value Vision Media], the quality of our image is everything," says Boehler.

ShopNBC's relaunch also included a new aggressive selling vehicle called "Our Top Value," which might sound familiar to those familiar with the other shopping networks. While not an original concept, it is certainly a proven one, notes Boehler, who intends to differentiate ShopNBC's strategy by offering consumers upscale merchandise at an "exceptional value."

The daily product offering is aired briefly up to eight times per day until the product sells out or the 24-hour mark is reached-whichever comes first. All of the jewelry and watches in the category, says Boehler, must sell for considerably less than at competing retailers. ShopNBC is also actively recruiting vendors to supply them with upscale product for this merchandising strategy.

ShopNBC's first Top Value was a pair of 14k yellow gold hoop earrings featuring a full carat's worth of diamonds. The appraised value? $1,000 with a manufacturer's suggested retail price of $610. ShopNBC s price for the day? $297. The airing was a sell-out. "We are so thrilled with the success of Our Top Value so far. It's also a great way for us to get new customers, and a great opportunity for us to recruit new vendors, grow our business with our current vendors, and expand our overall vendor matrix," says Boehler.

In any given week, there are 168 hours of broadcast time that need to be used to the shopping networks full advantage. "Every day, we want to make the most of that time," she says. "From our vendors, that means products that show uniqueness and differentiation." In addition to more traditional jewelry offerings, ShopNBC has also worked with some independent designers.

Getting more consumers to experience ShopNBC's product quality is a targeted mission, but it also allows for a way to increase sales across the board. Building on the days offering with cross-referenced, related products gives ShopNBC and its vendors the opportunities to sell more products. In the case of a recent offering of Tahitian pearl earrings (with a price tag of $198), Tahitian pearl pendants, rings, and other jewelry were offered both on-air and through the ShopNBC web site.

The relaunched site, www.shopnbc.com, puts more emphasis on information and education with plenty of room for product pitches. The web site as a complementary sales vehicle has grown even more quickly than the shopping network, contributing sales across all categories of $111 million in 2003.

ShopNBC's jewelry buying base appears uniquely positioned to take advantage of either venue. Customers tend to have higher annual household incomes than the national average ($75,000 per year as opposed to $63,000) and are also slightly older, ranging from 45 to 60 years of age. Its most loyal customers (85 percent of them are female) purchase in excess of 26 times per year.

The hope is that the program will lure new customers to ShopNBC and make them want to come back for more. The company has an aggressive and targeted direct marketing program consisting of trigger mailings offering dollars off the next ShopNBC purchase as well as e-mail alerts that can help build enthusiasm among the loyal customer base.

That loyalty allows ShopNBC to offer surprisingly high price points. During the busiest selling times-Saturday and Sunday afternoons-it's not unusual, says Boehler, to sell out of stock on a Swiss watch with a retail price point of $2,000. ShopNBC's formula of breaking the payments out into smaller, more manageable chunks also appears to be helping fuel sales among consumers who are able to digest the idea of paying $500 over the course of four months rather than making a lump sum or credit card payment.

"Our customers tell us that they buy from us because it's all about being good to themselves," says Boehler. "We take that information to heart in every marketing and merchandising move we make, and in turn help each customer live a larger lifestyle."