QVC shops for ideas for future sales

Fashion designer Chloe Dao easily plays to the QVC studio cameras, making it seem as if hawking clothes on live TV at 1 a.m. is as natural to her as stitching a hem.

In a yellow blouse with polka dots, she chats with QVC host Jacque Gonzales about her Simply. Chloe Dao line to get the phones to light up with buyers.

"I love your clothing," Gonzales coos, calling pieces "too cute" and "adorable." Dao, a winning designer on reality TV show Project Runway, caresses a tunic top: "It is 100% silk. Luscious silk. Dreamy silk."

The banter may be casual, but behind the scenes in the shopping network's studios, the pace is anything but. Models in an off-set changing room hastily switch in and out of Dao's fashions. Nearby, a QVC crew lays out necklaces and earrings for the "designer jewelry gallery" show coming up at 2 a.m.

One level above the stage, a line producer scans screens that constantly update call volume and sales figures. He directs camera angles for product-enhancing shots, while feeding dialog tips into Dao's and Gonzales' earpieces.

But all moving parts mesh into a well-oiled selling machine. Less than one minute after a mention of Dao's yellow shirt, it sells out. A blue version of the $49.75 top also sells out, with more than 990 orders in all. By the segment's end, thousands of items — priced from $39.50 to $59 — are sold.

After 22 years in business, QVC has made an art of hawking everything from computers to crab cakes. Many of its TV segments — live, 24 hours a day, every day except Christmas — are as successful with direct sales as Dao's.

But looking ahead, QVC must figure out how to keep the business healthy as the media and retail landscapes undergo seismic shifts. It needs to remain "relevant" (in marketing speak) to consumers while enticing a new generation of shoppers and battling a perception that direct-response TV retailers sell just hokey, flimsy or kitschy goods.

Among efforts so far, QVC has added more brand names to its product mix, upgraded its website to reflect its increasing importance to overall sales and launched its first national multimedia ad campaign.

The initiatives come as QVC copes with a slower economy. Revenue rose 5% in 2007 to $7.4 billion, vs. 2006. The average yearly growth from 2001 through 2006 was 12.3%.

Consumers are "being more cautious with their dollar," says CEO Michael George. "We are by no means immune."

Increasing challenges faced by West Chester, Pa.-based QVC:

•More competition for cautious shoppers. Rivals on every front — stores, other direct sellers and e-tailers — are scrapping for every dollar. "It's more competitive than ever," says Dan Butler, merchandising vice president at the National Retail Federation.

Rival shopping network HSN, for instance, also just upgraded its companion website and is ramping up its advertising.

•More choices for TV viewers. QVC keeps its prime channel location — with about 80% of its programming on channels 35 or lower — by paying cable operators a percentage of net sales, as well as extra fees. But new services, such as video on demand and TV shows streamed via the Web, could dilute the value of that real estate.

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