The merger of QVC and the Home Shopping Network will bring together two marketing giants and a wealth of attendant customer loyalty.
Liberty Interactive, which owns QVC, will acquire the 62 percent of HSNi it does not already own in an all-stock transaction. Based on the Series A QVC Group common stock’s closing price as of July 5, 2017 and the number of HSNi undiluted shares outstanding as of May 1, 2017, this equates to a total enterprise value for HSNi of $2.6 billion, an equity value of $2.1 billion.
HSN, Inc. is a $3.5 billion interactive multichannel retailer with strong direct-to-consumer expertise among its two operating segments, HSN, and Cornerstone. HSNi offers innovative, differentiated retail experiences on TV, online, via mobile devices, in catalogs, and in brick and mortar stores. HSN, a leading interactive multichannel retailer which offers a curated assortment of exclusive products combined with top brand names, now reaches approximately 91 million homes (with live programming 364 days a year)
“The addition of HSN will enhance QVC’s position as the leading global video ecommerce retailer,” said Greg Maffei, Liberty Interactive President and CEO. “Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms. The value of the combined QVC, HSNi and zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures.”
Mike George, QVC president and CEO, said: “We’re thrilled to welcome the HSNi team to our company. HSNi founded the industry 40 years ago and helped it grow with exciting initiatives like Shop By Remote and media integrations with leading content producers. By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth. As the prominent global video commerce retailer and North America’s third largest mobile and eCommerce retailer, the combined company will be well-positioned to help shape the next generation of retailing.”
Liberty Interactive officials believe the acquisition of HSNi will provide the following benefits:
Increase scale, enhancing the competitive position of QVC Group
Meaningful synergies through cost reduction and revenue growth opportunities
Increased development of ecommerce, mobile and OTT platforms
Optimize programming across five U.S. networks
Cross marketing to better engage existing and potential customers
Financial optionality due to HSNi’s lower debt leverage
Imagine Experience founder and CEO Bill McCoy told Loyalty360 that one of the reasons large companies are successful is because their customers identify with them and are very loyal.
“While it likely makes business sense for industry leaders to merge, it doesn’t automatically make customer sense,” McCoy explained. “The reason customers have chosen QVC over HSN and vice versa is because they like one over the other. During the transition, it’s important to understand what customers like about each brand and clearly communicate to them, however, that’s not enough. Ensuring the experience that the customers receive is as rewarding as possible should be the priority moving forward. As consumers, we may not like every detail of the product we’re purchasing. But if we have an incredible experience when purchasing, that’s what stays with us long term and that’s how loyalty will be enhanced when two competing companies join forces.”
Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, told Loyalty360 that QVC and HSN have both quietly changed the way many retailers think about ecommerce and retail.
“While their video content comes from a traditional model, they’ve quietly changed customer experience standards through their seamless integrations with ecommerce and mobile—they’ve greatly enhanced the way we think about cross-channel consistency and strategies to engage customers,” Magliocca explained. “QVC acquiring HSN enhances their reach, corners the video ecommerce market, and empowers them to take bolder steps in their ecommerce and mobile initiatives.”
Last year, Loyalty360 spoke with Doug Rose, SVP of programming and marketing for QVC about the company’s approach to customer experience, customer loyalty, and customer engagement.
“At QVC, we’ve found that the key to sustained success is understanding how our brand can uniquely leverage each new technology to provide meaningful, differentiated experiences that underline what our brand stands for,” Rose explained. “With video so central to our brand experience, it’s not surprising that QVC customers have rapidly adopted tablets –both web and app – as one of their favorite ways to shop with QVC. And as wearables become an extension of the mobile and tablet experience, we’ll be there: The introduction of the QVC app for Apple Watch in April 2015 demonstrates QVC’s commitment to investing in new technologies that deliver a fun, seamless and intuitive customer experience.”
In recent years, QVC has undergone an extraordinary transformation, from a TV shopping company to the third largest multi-category retailer in mobile commerce and sixth largest multi-category ecommerce player.
“As the needs of our customers have evolved, so have our mobile, social, and ecommerce platforms,” Rose explained. “But rather than changing our brand, these new platforms have created new ways to introduce our brand to newcomers, and to extend and deepen relationships with our existing customers. Amid the rapid transformation of our business, our recipe for cultivating loyalty has not changed: To deliver a shopping experience that fosters enduring relationships, rooted in trust.”
Rose said that defining loyalty may be easier by defining what it isn’t.
“True loyalty can’t be ‘bought’ with incentives like discounts and points,” he added. “It can only be earned by delivering a shopping and service experience worthy of repeating. Differentiated, quality products, presented in a pleasant and engaging way, with friendly, anticipatory service–those are the foundations of loyalty at any good retailer. By any metric, QVC enjoys remarkable levels of loyalty with our customer community. In six markets around the world–U.S., Japan, Germany, UK, Italy, a joint venue in China, and beginning this summer, France−our brand inspires a level of trust and loyalty that is arguably unmatched among major global retailers.”