Liberty Interactive, the owner of QVC, is joining forces with long-time rival, the Home Shopping Network (HSN), in a $2.1 billion QVC and HSN Merger deal. This bold move merges the two home-shopping television networks at a time when the retail world is experiencing an unprecedented upheaval.
What’s even more surprising is that the merger will take them a totally different path – they will now be curating experiences, conversations and communities for discerning shoppers. The new company will be known as the Qurate Retail Group and will specialize in making shopping a more pleasurable customer experience.
QVC’s SEO Mike George will become the new CEO and president, while Greg Maffei, currently president/CEO of Liberty Interactive, will become chairman.
Combined Power for a Competitive Edge
Maffei believes that the increase in the scale after the merger will allow them to effectively compete in the evolving retail and digital environment.
It is also significant in terms of what the merger hopes to achieve. The new company is named Qurate, with the logo to match, expounding on creating a new user experience for buyers. The emphasis is no longer on selling individual items on TV.
Rather, there will be curated content catering to specific market segments. The product curation will also extend to feedback with the customers, instigating conversations over the long term.
According to Mike George, “Our new logo and name reflect our unmatched expertise in curation, which goes far beyond product.”
The idea behind curation is to allow the customers to choose to follow product segments and groupings according to their individual preferences. Although this is done by online stores, this has not been attempted on TV buyers before.
“We will be unrivalled leaders in curating experiences, conversations, and communities for millions of highly discerning shoppers — bringing joy, inspiration and humanity to shopping,” says Mike George.
Qurate will be made up of eight retail brands, QVC, HSN, Zulily, Ballard Designs, Frontgate, Garnet Hill, Grandin Road and Improvements. Each one is focused on taking shopping beyond websites and traditional brick-and-mortar stores.
The new company will be riding on the influence of social media and social networking sites such as Facebook, Instagram, and Snapchat to get a pulse of what buyers want.
Variety quoted Maffei in a statement: “Qurate Retail Group will be a new venture in more ways than just a change of name. We will be a select group of like-minded businesses that provide customers with curated collections of unique products, made personal and relevant by the power of storytelling, combining the best of retail, media and social.”
Qurate has also formed a new ventures deal which is tasked to develop new retail concepts and as well as explore expansion opportunities. This arm is being led Darrell Cavens, co-founder of Zulily.
Keeping Up with the Changing World of Retail
The merger between Liberty Interactive and HSN happens just as Amazon seems to be non-stop in its dominance in the online marketplace. At the same time, rival Walmart is refocusing its attention on e-commerce by purchasing promising startups, which include Bonobos and Jet.
The continuous rise of e-commerce in the retailing world has resulted in trendy clothiers like J. Crew to struggle for survival. A number of retailers such as Radio Shack and American Apparel have filed for bankruptcy protection.
The once dominant home-shopping television networks are not exempted from the crippling online competition. Both HSN and QVC are experiencing a decline in their sales. As QVC’s sales have slowed, HSN experienced a 3% decline in its sales last year. A sign that not all is too well with HSN was the departure of its long-time executive Mindy Grossman, who is now running Weight Watchers International.
The rationale behind the merger of the two home-shopping television networks is to combine resources and cut costs and at the same time gain scale. The two networks, QVC and HSN, will remain as stand-alone operations under the new QVC Group structure after their merger.
The merger deal is an all-stock transaction. Liberty Interactive is technically buying the 62% of HSN that it does not own yet. Liberty Interactive will then spin off the company’s non-retail assets, such their stakes in the cable operation of Liberty Broadband and Charter. Liberty Interactive will rename what remains of their operations as the QVC Group. The new company will be composed of HSN, QVC and Zulily, which Liberty bought two years ago for $2.4 billion.
HSN, which is based in St. Petersburg, Florida, broadcasts to 95 million households in the US via cable and online streaming. It sells home apparel brands through the company’s Cornerstone business through catalogs, e-commerce websites, and 14 outlet and retail stores. The Cornerstone brands include Ballard Designs and Frontgate. The company, which employs about 6,000 workers, has a reported sales of $3.6 billion in 2016.