CAMPAIGN REPORT ON GERMANY: Why Germans love TV shopping

By BELINDA ARCHER, campaignlive.co.uk, Friday, 18 April 1997 12:00AM

Retail regulations and cable TV have conspired to make consumers more familiar with the living room than the high street. Belinda Archer report.s

Retail regulations and cable TV have conspired to make consumers

more familiar with the living room than the high street. Belinda Archer

report.s



Germans, it seems, can’t get enough of home-shopping. The average mensch

in the strasse evidently loves nothing better than to curl up on a sofa,

pick up a catalogue or tune into a TV channel offering gloriously

in-depth demonstrations of squeegee cleaning tools or non-stick frying

pans, and let rip with the credit card.



The explanation lies in the country’s relatively prohibitive

shop-opening hours. Shops are firmly shut on Sundays, while activity on

the high street grinds to a halt at lunchtime on Saturdays and late-

night opening during the week is an unknown concept to the German

consumer.



Because of this, the country has established a strong tradition of

distance shopping, embracing a massively successful mail-order

industry.



Germany has the highest per capita direct mail spend in the world - more

than the US or Japan - with more than half of German homes owning a copy

of Quelle Shikendanz catalogue, the second-largest selling catalogue in

the world.



Add to this the fact that Germany has the largest cable TV market in

Europe - about 20 million households are cabled, representing 60 per

cent of the country - and soaraway success beckons for the fledgling

home-shopping television market.



Budd Margolis, an international home-shopping consultant and former

senior producer on QVC in the UK, says: ’Mail order has become an

institution in itself in Germany. It is among the most sophisticated

industries in the country, selling vacations and insurance rather than

just products, and the people who use mail order also order from the

TV.’



There are, in fact, only two home-shopping TV stations in Germany, but

the market is nevertheless one of the prime sites in the world, with the

greatest potential for growth.



Home Order TV, or HOT as it is fondly called, was the first dedicated

home-shopping channel to launch into the strictly regulated German

market in October 1995. It has five lavish sets, 25 glamorous presenters

plugging top-of-the-range goods, and high production standards to match

the high-quality broadcasting of other German stations.



The latest figures released show that the station, which is 31 per cent

owned by Europe’s leading mail-order house, Quelle Shikendanz,

broadcasts to about 6 million households via satellite and cable,

representing more than half of German homes with satellite receivers and

750,000 cable households.



The second to launch was QVC Deutschland, which began transmitting on 2

December 1996, and was positioned as a more downmarket, budget- shopping

channel with just one set and four hosts.



Both HOT and QVC are 24-hour channels, although HOT has only 11 hours of

live programming and QVC has just eight.



Statistics show seven times more sales are achieved via a live format

than through a recorded format.



Karoline Gallasz, the spokeswoman for HOT, believes the advent of QVC

helped to set the German home-shopping TV market alight. ’We were one

year old when QVC arrived, but it has made home-shopping so much more

popular in Germany.’



HOT has about 130,000 clients (viewers who have ordered featured

products at least once) on its database. Most people order more than

once, with 35 per cent of purchasers having used the service between

three and four times. Seventy per cent of the clients are female, hence

the female bias of much of the product demonstration.



’Germans love this way of buying and selling,’ Gallasz says. ’There used

to just be catalogues, but now they can buy through television, which is

better because of the three-dimensional quality and the demonstrations

by the hosts.



Neither HOT nor QVC derive any income from conventional advertising.



Regulations restrict them from earning money from commercials, so their

only revenue is from product sales.



Leslie Gross, a spokeswoman for QVC, comments: ’We carry no

advertising.



It is all programming, based on thematic scheduling such as clothing, or

cookery or jewellery. Our business is retailing.’



Oliver Cleaver, the managing director of Germany’s fourth-biggest media

house, MQI International, sums up the feelings of the agency community

towards shopping channels.



’The opinion is that these stations could well open up more creative

media avenues to us, offering opportunities for product placement and

event marketing, say, but that they do not offer enough critical

mass.



They do not market themselves aggressively enough and they are not yet

highly visible to the German consumer.’



Aside from HOT and QVC, neither of which have broken even (predictions

suggest that HOT will reach that point once it has access to 10 million

homes - possibly by 2000), there are strong signs the market is set to

ignite.



Industry observers estimate it will be worth dollars 3-4 billion by the

turn of the century, and the fact that Rewe Zentral AG, owner of the

country’s second-biggest food retailer, has snatched a 40 per cent share

in the commercial TV network, Pro-7, is symptomatic of German retailers’

ambitions to become media owners.



Indeed, Rewe is expected to launch a home-shopping channel as soon as

digital TV becomes established there (Germany ran its first digital

tests last summer).



Margolis says: ’The market is very healthy.



HOT and QVC bring a great deal of maturity and experience to the market,

and several other home-shopping channels are known to be interested. If

they weren’t, it would be like De Beers saying it wasn’t interested in

the diamonds in Russia.’



This article was first published on campaignlive.co.uk

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