QVC Develops "Beauty Channel" Focus, Burke Says

QVC's internal beauty strategy for the home shopping business will evolve into "The Beauty Channel" for consumers, Cosmetics Director Allen Burke announced at the IQPC-sponsored Beauty Online conference in New York City July 18-19.

"The beauty channel...is our vision, our passion," Burke said. "We want to be the channel that is known for beauty products." The site may be a first stop for cosmetics shoppers because they are more willing to purchase products from alternative channels, Burke maintained.

Today's consumer "has a mind of her own, she knows who she is, she's developed her own personal style, she knows quality better than we think, she expects it, she wants information....She is time-poor, so she has to shop on her own schedule [and] she is ready for something new," he said.

QVC can sell "trend-right prestige quality products at affordable prices," he added, noting additional retail product costs are derived from advertising and staffing expenses, as well as incentives such as gwps.

As part of its beauty strategy, QVC envisions partnering with traditional retailers. Working with distributors could allow the two marketing worlds advantages not available to them individually, which can drive one another's growth, Burke said.

"What if it turns out that a customer wants not one channel, but a combination of channels that fit her life," the exec asked conference attendees.

With a retailer/QVC partnership, a manufacturer would agree to sell products exclusively in those two channels. In return, the manufacturer would receive premium store space, exposure in QVC's 73 mil. homes, a long-term commitment from the retailer, reduced marketing expenses and brand control, Burke explained.

The store, in turn, would gain a point-of-difference from competitors at little to no advertising expense because of traffic and brand awareness resulting from TV exposure, the exec added. QVC is discussing a relationship with one retailer outside the beauty category, he noted.

"We think retail exposure is a plus. It's not a minus, as long as it is the right kind of exposure. We are very open to partnerships," Burke maintained.

QVC opened a store in Minneapolis' Mall of America July 17 to explore retail alternatives. The move is not a signal that QVC will open additional retail locations, but more to "build brand equity [and] show people who we are," the exec said.

Product demonstrations on QVC can drive sales at retail, Burke insisted, pointing to one case where QVC helped generate the success of chef Emeril Lagasse's cookbook Life Is A Party on Amazon.com after featuring it on the show for a weekend.

The same can be said for cosmetics; for example, SmashBox Cosmetics products moved from a relatively insignificant position in Bloomingdale's to the main aisle of the store since appearing on QVC in October 1998, Burke pointed out.

QVC sold out of SmashBox products during the first hour of their introductory appearance, he said. Sales for the brand on QVC were between $5 mil. and $10 mil. in 1999 and are projected to be $10 mil.-$15 mil. in 2000.

Likewise, products offered by Philosophy sold out within the first hour of their initial appearance last June, Burke continued. Sales for the brand are expected to total $5 mil.-$10 mil. in 2000.

Other cosmetics brands sold on QVC "look like they would be sold at a specialty store," such as Carson's Dermablend, Poetic by Bliss Spa, LVMH's Givenchy and Hard Candy, Borghese, Yves Saint Laurent Beaute and Coty's Lancaster. The TV retailer also recently launched a skin care line by Joan Rivers.

The high-end positioning further enhances the concept that despite QVC's somewhat closet-shopper image, the average consumer likely has a household income of $60,000-$75,000, shops at Lord & Taylor and Neiman Marcus and reads Allure and Glamour, according to the electronic retailer.

Overall, QVC's cosmetics sales reached $154 mil. in 1999, a figure that already has been surpassed in 2000. Sales are expected to be more than $200 mil. this year and $250 mil. in 2001, Burke predicted. Online cosmetic sales are expected to reach $15 mil.-$20 mil.