Business June 2010

The Genius of QVC

How the shopping network became one of the most effective retailing machines ever invented
Leeay Aikawa

You may not know it yet, but you want to buy something from QVC.

You disagree. You are not one of those people, trying to plug your gaping inner emptiness with cut-rate consumer goods. You are a discriminating shopper, a person of real substance, a unique snowflake. It doesn’t matter. QVC has something you want. And—odds are—has it at a price you can’t resist.

While researching this article—that is, watching QVC in earnest—I made the mistake of suggesting to my television-hating mother that she should tune in to a presentation of some Reed & Barton flatware, which she’d wanted to buy for a cousin’s wedding gift.

“You want me to buy something from the television?” Her tone suggested icy Thanksgiving dinners and rewritten wills.

And to be fair, 30 minutes later, she had not bought any flatware. Somehow, though, our family came to own three jumbo sets of Lock and Lock storage containers, in Kiwi, Fuchsia, and Coral—one for each of us, and one for my sister. Now that we each had a color-coded personal set, my mother explained, the McArdle women would never again tussle over the Tupperware.

This power to turn the most resistant foe into a QVC shopper has made the network one of the most effective retailing machines ever invented. Founded by the same man who started the Franklin Mint, the company began broadcasting on November 24, 1986, when it sold $7,400 worth of merchandise. Since then, QVC—it stands for “Quality, Value, Convenience”—has become one of America’s largest jewelry retailers and a leading importer of Irish goods, and has earned other superlatives too numerous to elaborate.

QVC’s merchandising power has nurtured blockbuster brands like Spanx body shapers—and whole sub-industries that help entrepreneurs get their products onto the shopping network (or at least claim to). The company’s allure is so powerful that Marlon Brando reportedly sought to become one of its celebrity presenters during his final, cash-strapped, obese, and depressed years.

Naturally, a company this closely tied to the decades-long American consumer boom has been hit hard by the recession. Consumer credit problems and falling sales in 2008 and early 2009 forced QVC to lay off staff, close a call center, and cut inventories. But lately, its fortunes have rebounded. In February, Liberty Media, QVC’s parent company, announced that the network’s operating income in the fourth quarter of 2009 was up about a third from its dismal 2008 level.

That’s good news for closet fans like me, who furtively watch its broadcasts without ever really buying. But it’s less clear what that says about the health and sanity of the American consumer. Does it mean we’re getting back on our feet? Or does it mean that we’re still in way over our heads, unable to pull ourselves out of our obsessive overspending?

To appreciate QVC’s consummate skill in separating its customers from their money, you have to travel to its headquarters, tucked behind an obscure office park outside Philadelphia. For $75 you can take the “All Access Tour” of its vast facility, which spans a lot the size of 15 football fields.

QVC cultivates an air of intimacy; many of its sets are designed to look like rooms in a home. Even though you already knew those rooms aren’t real, a walk into the cavernous QVC studio space still comes as a shock. Beneath crisscrossing strips of lights and cameras, 17 sets nestle next to each other—a sort of Potemkin villa. And yet the place feels eerily empty. The vastness dwarfs the stagehands and models. Only the hosts, talking merrily to thin air, seem able to overcome all that empty space. They’re the only ones who manage to look life-size.

A QVC host receives six months of training, and when you watch a broadcast close up, you can understand why. QVC hosts are not just preternaturally peppy people who can talk about anything—although they are that. They must master the details of dozens of products, and talk about them while monitoring a split screen that shows both the current shot and the next one. They must deal with a steady stream of spokespeople and customer call-ins. Oh, and they have to convince you that you want to buy a product you can’t touch or see up close.

The night before we went on the tour, my fiancé flipped on QVC in the hotel room. An earnest young woman was extolling the many varieties of Philosophy perfume.

“This one’s very spiritual,” she said. “It’s good if you’re especially prayerful.”

Even I found it hard to explain where this was coming from. The perfume in question reminds me less of God than of grandmothers and old dresser drawers. After a moment, however, her pitch started to make sense. After all, as Peter asked, how do you sell perfume on TV?



Video: Megan McArdle explains how QVC manages to sell perfume on TV

The answer is that you tell a story—a story about the viewer, and the product’s place in her life. That’s how my mother knew she wanted color-coded storage containers, and thousands of other viewers knew they wanted perfume they couldn’t smell.

Ten hours later, we stood a few feet from a buxom host as she gushed over the virtues of some nice-looking silver earrings. Her task was especially challenging, since she was selling alone. QVC hosts usually work in a team, with either a product spokesperson or another host. That fosters what one spokesperson I talked to called the “over the backyard fence” feeling of QVC broadcasts. The model is less a sales pitch than a coffee klatch where friends trade tips on hot new products. “They tell you over and over,” the spokesperson said, “you’re having a conversation with the host.”

So, apparently, are many of the viewers—at least in their heads. As one young woman said about her grandmother, whom she was accompanying on the tour, “She talks about them like they’re her friends.” Her grandmother also buys half a dozen items a week. QVC is expert at creating what consumer psychologists call “parasocial relationships”—bonds that tickle our subconscious in many of the ways that real friendships do. And as anyone who has ever been to a Pampered Chef home selling event can testify, when a friend is pushing the goods, it’s very hard not to buy something.

Projecting that sort of intimacy when you’re alone on a set isn’t easy. As if we weren’t watching, the host checked her camera angles, and ran her fingers over the earrings while chatting gaily to the open space. “It’s almost like they’re coins you’ve been collecting for years, and you had them made into jewelry.” She beamed at the camera. “There’s a very Aztec feel.”

I’m pretty sure that the Aztecs didn’t have metal coins, but whatever: QVC isn’t selling the earrings so much as the feeling that you’re the sort of person who might spend years collecting coins, and then whimsically turn them into jewelry. All commercials foster some illusion about yourself, of course, but on QVC the illusion is four to six minutes long and runs while you shop.

Unless you’re an uncommon tightwad, shopping produces a pleasurable sensation in the brain. Dopamine receptors light up, as the brain anticipates the reward of a shiny new object—and the more objects they have to contemplate, the longer our receptors are kept in an agitated state. When you’re watching QVC, the hosts provide social cues that enhance these sensations, inviting you to imagine all the ways that you might use the product—amping up the anticipated reward.

Meanwhile, they stress the status-enhancing aspects. Compulsive shoppers (most of whom seem to be women) tend to zero in on jewelry, makeup, clothes, and consumer electronics—in other words, status goods. The hosts play up how the products will improve your appearance or your parties, or, when given as gifts, endear you to your friends.

Disastrously for compulsive shoppers, QVC shopping strips away the negative cues, separating the pain of paying from the joy of buying. All transactions are handled electronically, which, studies show, makes them seem less real; that’s why so many people get themselves into trouble with credit cards. QVC takes this one step further with its “easy pay” system, which allows shoppers to split the cost over as many as five credit-card payments, without incurring any finance charges.

Lots of stores take credit cards. But only QVC strips away all the negative cues. Compulsive shoppers can get a huge rush out of buying, but they also may feel deep shame about their spending binges. The anonymity of QVC’s automated ordering allows them to avoid the shame—yet QVC still provides those “parasocial relationships,” a simulacrum of the camaraderie that most women enjoy when shopping with friends. There are no good data on what percentage of shopping-network customers are spending too much (my fiancé would say “All of them”). But some analysts think that compulsive spending is on the rise, in part because we are richer, but also because the Internet and the shopping channels stimulate it.

The QVC process is so finely calibrated that a producer watches call volume in real time; whenever it spikes, the host hears a voice in his or her ear: “Whatever you just said, say it again. It’s working.” The lessons are disseminated to other hosts, and to the product spokespeople, who must spend hours training before they may present their products on air.

QVC has not created any of these techniques; it has only mastered them. Which is why QVC’s relationship with its customers tells you a lot about what America has been doing for the past 20 years or so. More and more buying on credit, fewer real-life interactions, a proliferating array of products to tempt us—and of “new media” outlets allowing companies to better target their audiences with parasocial fantasies. No wonder we’ve got a bit of a hangover.

But the people on my tour didn’t go away disillusioned after learning the art of the hard sell; as soon as the tour was over, they gang-rushed the QVC Studio Store.

I shouldn’t have been surprised, really, since most of the QVC fans I know savor the variations on the hard sell. In fact, that’s part of the fun; you can’t help but enjoy the skill with which they sell you things you don’t quite need.

Unfortunately, it’s not so enjoyable for the substantial minority who can’t control themselves when access to credit (and new goods) is too easy. Worse, more and more Americans seem to have lost that self-control, which is why our household savings rate fell to barely 1 percent five years ago. That’s bounced back to 4 percent—better, but nothing compared with the more than 10 percent in countries like Germany and France. And though the total amount of Americans’ outstanding credit-card debt has fallen, a recent survey by the site Card Hub implies that this decline is largely due to credit-card companies’ write-offs of bad debt, rather than consumers’ reductions in spending. In retrospect, the idea that the Great Recession would dramatically alter our spending habits seems as wishful as the idea that 9/11 heralded a lasting change in our civic conduct.

But QVC is hardly to blame for our abiding profligacy. With more than 50 million QVC customers worldwide, the majority of them in the United States, simple arithmetic suggests that most of the network’s shoppers are probably not addicts. Their dopamine rush is innocent fun—no less valid, and considerably safer, than the same sensation obtained from rock climbing. Besides, many of the customers use the channel the way my small-town relatives do: to get goods of higher quality than they can buy locally. Indeed, the company’s unparalleled ability to mass-merchandise even fairly specialized goods means that almost anyone can find something she can’t get elsewhere.

As I snooped around the QVC store, trying to figure out whether perfume can really bring you closer to God, Peter wandered into the housewares section. A moment later he wandered out again, clutching a device that I’d never seen before—a double-ended grinder, one side for rock salt and the other for peppercorns. “Look at this!” he said. Then, seeming to realize what he’d done, he thrust it into my hands and looked away.

The combo grinder, it turns out, is an astonishingly useful thing to have next to your stove. It hasn’t revolutionized our cooking. But it’s made things, well, just a little bit better. It lacks only one thing to make it perfect, and that’s for Peter to admit to other people where he bought it.

Megan McArdle is The Atlantic’s business and economics editor, and the editor of the business channel at TheAtlantic.com.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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