Shoes on Sale: Q&A with QVC’s Mike George

Putting on a charitable event in the middle of a recession is no easy task, but QVC CEO and President Mike George is confident his team is up to it.

“Of course we recognize that in these times the customer has been a little more selective,” he said. “But we’ve got the vendors with us, the customers will be with us and the QVC team is certainly behind us.”

With more than 100,000 pairs of shoes donated from about 90 brands, George said he is optimistic about Tuesday night’s broadcast but isn’t setting any specific goals.

“We plan to sell as much as possible and raise awareness, which is important in the long term for supporting breast cancer research,” he said.

QVC’s participation says a lot about its commitment to the cause, given the tough year it has had. The second quarter of 2009 saw a 4 percent drop in consolidated revenue and operating income, which was an improvement over the previous quarter.

However, George said he is forging ahead with growth initiatives. QVC plans to expand its reach internationally, add new vendors to its lineup and use social networking to further boost business and online sales, which are up 10 percent compared with last year.

FN: Why is it so important for QVC to be a part of the Shoes on Sale benefit?
MG: It’s probably our most visible, memorable charitable event for the year, and certainly the total funds we’ve raised — [$30 million and counting] — exceed anything else we’ve done. [Breast cancer is] also something that affects the lives of many people at QVC. In many ways, [our participation has] been even more meaningful this year with the state of the economy, because [we continue] to stick with it and try to make a difference.

FN: How has the event changed over the years?
MG: The added dimension over the past several years has been the Internet. We have a lot of product with not necessarily enough volume to present on the show, but those items will sell on the Internet.

FN: Why do you think vendors continue to donate, even in these tough times?
MG: All these vendors know this cause touches their customers in a very profound way, so the ability to be part of it is important. There’s also the benefit of being able to expose your brand and your story on-air to 95 million homes in a way that’s attached to a very meaningful cause.

FN: With Jessica Simpson as your host, do you expect a younger audience for the show?
MG: She’s been fabulous and has really gone out of her way to support us with the PSAs, as well as hosting the event. She has a really broad reach — and a young reach, as well. I’m hopeful that she might bring in new viewers that may not have seen the program before. And it’s a meaningful cause for her, as her family has been touched by [breast cancer].

FN: Aside from Jessica Simpson debuting her shoe line on QVC this month, what new footwear initiatives are under way?
MG: We just did a couple of runway shows at [New York] Fashion Week in which we broadcast live under the tents at Bryant Park and launched a new footwear vendor there, BZ by Banfi Zambrelli, which did extremely well. One of our hottest handbag lines, B. Makowsky, is launching footwear next year, and we’ve got some new offerings by Clarks and Shape-Ups by Skechers.

FN: In general, how is the home shopping category changing?
MG: For one, there is the explosion of video over the Internet — video on demand, on mobile phones — and it’s really adding a new dimension to the business. We’ve got 27,000 product videos on QVC.com. The whole rise of social networking platforms is exciting, and we do a lot of cross promotions with Facebook and Twitter. We’ll be doing more with Facebook as an integral element of the programming, where people can engage with their friends on Facebook while watching the show.

FN: How has the tough economy affected your ability to secure new vendors?
MG: In some ways, [the category] is almost aided by the tough economy in that vendors are increasingly looking to QVC as a place where they can tell their brand story and inspire customers. [On QVC, they are] not trapped into some of the challenges that are pervasive at the typical mall-based retailer, which has become a tougher environment as of late. Rachel Zoe, who we premiered during Fashion Week [in September], was off the charts in terms of sales results. She brought in more new customers for her accessories items than I’d ever seen in accessories before.

FN: Both international and domestic revenue for QVC dropped in the second quarter. What are your predictions for the next quarter?
MG: We’re definitely not immune to the recession, so we clearly saw some softness in sales in the back half of last year. But we feel good about our results in the second quarter. Though sales were down, they are better than the prior couple of quarters and better than the rest of retail. We feel like we’re on a good trajectory to gain some share and outrun this recession. It’s hard to get a gauge on it, but things have at least stabilized. Maybe we’ll get an uptick [next quarter], but we’re certainly not counting on it.

FN: What are the major growth avenues for QVC right now?
MG: We’re really excited about QVCHD. Watching QVC in high definition creates a better shopping experience, and as of last week, nearly 22 million of our [shoppers] had access to QVCHD. We wanted to get to 95 million, but 22 million in the first year is a really good start. Also, we continue to expand our mobile offerings … and if Japan is any indicator, there is opportunity there. More than 10 percent of our revenue in Japan is coming through mobile phone services. QVC Italy is on track with a launch in October of next year, and we’re looking at other countries, though we haven’t made any decisions yet.

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