TV Retail A Sale With a Face

German teleshopping channel HSE24 has had a banner year, something the CEO attributes to the emotional power of television versus the cold efficiency of Amazon.
Richard Reitzner knows how to sell you a dream.

Richard Reitzner's career began at the German-Mexican Chamber of Commerce in Mexico City. He later joined TV channel ProSieben in 1994 and was the first employee when the HSE (formerly HOT) home-shopping channel went on the air in 1995. Today, the 50-year-old is CEO at the TV- and online-shopping platform. Mr. Reitzner spoke with Catrin Bialek and Kai-Hinrich Renner of Handelsblatt.

 

Handelsblatt: Mr. Reitzner, your home-shopping channel has been growing for years. Is the market not saturated with leisure wear and skincare products yet?

Richard Reitzner: On the contrary, the market is growing. HSE24 and our competitors made gains in the past year. The buying potential is great. How much it grows depends on how good your product range is.

How much did HSE24 grow last year?

About 7 percent. In 2014, we reached sales of €587 million.

Where does the growth come from?

Home-shopping channels are growing, especially in fashion, cosmetics and beauty. These are the driving forces for HSE24. The average price of our products is about €37. That makes emotional impulse purchases easier – buyers don’t have to think long about it.

Is HSE24 a retailer or an entertainer?

Definitely an entertainment medium. Our clients do not make rational purchases as they do at Amazon. They want to be entertained and advised. Depending on how strong the product range is today, purchasing impulses will be triggered. I am consciously saying “today,” because each day, each hour, we present something new.

How many products do you present on television on a normal day?

Between 200 and 300 items.

Your rival QVC is not growing as fast as HSE24.

We have different approaches. Years ago, we started moving more to lifestyles. Our product range is trendier and changes more quickly. In the past year, we spent €9 million on renovating our studios and production technology to make our channel more of a display window.

Is HSE24 a seducer?

I defend myself against the word “seduction.” Look at the online business. There, one puts out limited inventories, hourly special offers, individualized customer service, storytelling – everything that we have been practicing for years. I would call that “emotional,” not “seductive.” But if you prefer that term, please use it also for our competitors, such as Zalando.

Despite your growth, competition is getting tougher. The online business is booming. Could that not cause you trouble someday?

Clearly there is a lot of competition, including online. But there is also a lot of potential. People want advice, inspiration, emotion.  Many customers find Amazon, for example, to be unlikeable – too perfect and cold. One uses it because one needs it. But no one loves Amazon.

But you want to be loved?

We are loved.

By whom? Who is your target group?

Our core target group is female and in the mid-50s. Our new customers are almost a generation younger. They shop with us because they really like us and know our brand.

In what ways can HSE24 grow in the future?

We have not yet exploited our full potential. We have about 1.2 million steady customers, who watch our program up to three hours a day and buy from us at least once a year. On average, each of them spends about €350 a year with us. We also know from market research that we have 1.5 million viewers who have not bought anything from us yet – but they might consider it someday.

When is primetime for HSE24?

On weekends, Sundays and evenings. But what do we mean by “primetime?” In most households, there is more than one television. To give you an example: During broadcast of the Germany-Argentina World Cup final last year – from the starting whistle at 9 p.m. to the final whistle at 11:30 – we sold fashion, jewelry and cosmetics worth over €300,000.

You complain that many of your critics would not understand your business model. What is so difficult to understand?

Home shopping is a complicated business. It is about having the right quantity of items ready at the right time. If I offer home wares on Monday morning, I have to have a different quantity ready than if I offered it in the evening. We have already planned products into May.

How is it going with your digital strategy?

Digitalization has sped up our business – 22 percent of sales come from online, and 23 percent of those online sales are done on mobile devices. That is strong. Nearly 50 percent of our new customers come through the Internet.

Do you also have male customers?

Our male share is about 15 percent. The items that men seek – everything that has a plug – do not fit into our business model. We have men’s fashions, but they are mostly purchased by women for their men. Women simply like to shop. They spend four times more time on a page, click back and forth. Men on the other hand, get to an item with five clicks and are gone again after three minutes.

HSE24 has subsidiaries in Italy and Russia. Are you also reaching out to other countries?

We would like to expand internationally. We find France very exciting – but it is difficult to start a channel there due to media laws. Turkey is also an option that we are looking at very carefully. It has many households with TV and high viewership numbers. Our target group is very well represented there – a booming middle class of strong consumers that is oriented towards the West. We see great potential there.

When do you want to start in Turkey?

Ideally, this year.

You have financial investors as owners. Are there exit strategies?

Private equity companies as a rule do not fall in love with one stake. At some point, there is always an exit. In our case, investors only got on board two and a half years ago.

Items that are shown on HSE24 often have subtitles such as “Order! Now!” Does this high-pressure pitch bother you?

I’m relaxed about that. It is important to me that we reach customers and they see us differently. Today, HSE24 is a successful and socially accepted brand, where already one out of every 10 Germans has bought something. That’s exactly what I wanted to reach, and I got there.

Video: The hugely popular Magic Bullet informercial in the U.S was a classic of the genre.

 

Catrin Bialek is an editor in the companies and markets section at Handelsblatt. Kai-Hinrich Renner is responsible for media coverage. To contact the authors: [email protected]; [email protected].