Rival TV Retailers QVC and HSN Unite In $2.1 Billion Merger
An effort to cut costs, resurrect revenue streams and compete online
Last Thursday, two industry giants announced their plans to merge to combat market suffocation by its competitors, Amazon.com and Wal-Mart Stores Inc. A $2.1 billion deal has solidified a merger of infamous TV retail brands QVC and the Home Shopping Network (HSN). Combined, the rivals are anticipating the merger to reel in a boost in performance that would garner $7.5 billion in online sales and another $4.7 billion in mobile sales.
Now owned by parent company Liberty Interactive, the two brands will still retain their given identities, instead acting as complimentary services with shared revenues. Liberty Interactive plans to cut ties with its stakes in consumer cable operations, Charter and Liberty Broadband, to make room for a new division called the QVC Group. The division will consist of QVC, HSN and the flash-sale website Zulily, purchased back in 2015.
The two retailers are keen on building their brands as differentiators over the year, with HSN focusing on bringing lifestyle-driven home goods to consumers and QVC presenting a variety of fashion, tech and more. However, analysts are hopeful that the merger will create an overarching shopping experience with seamless interactions moving forward.
This merger isn’t the first of its kind – in recent months companies have been clamoring to compete with the booming and debatably avaricious business model of Amazon. Interestingly, the fight for marketplace supremacy has created chaos within the brick and mortar business community but it is now branching out to impact online and television retailers as well. Once a unique business model, QVC and HSN were the first to grasp longevity with this style of retail; it’s worrisome to see another niche style being directly impacted by an almost entirely digital entity.
In recent months, Amazon moved into the world of groceries with its $13.7 billion acquisition of Whole Foods, and Wal-Mart took a dig at the online retailer by purchasing Michigan-based outdoor retailer Moosejaw for $51 million, as well as fashion hub Bonobos and Modcloth for $310 million and a nondisclosed amount of $51-75 million, respectively.
The move comes to some as a surprise, but foreshadowing is somewhat evident. HSN’s sales have dropped 3 percent in the past year, with QVC taking a slightly less noticeable decline. The key component of this merger will be the respective brands’ abilities to combine resources to cut costs and operations bloating, bringing together the best aspects of both retailers. The duo will still rely on their charismatic hosts and impulse driven sales pitches to push products, but will it be enough to stand up to the growing giant that is e-commerce?
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