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Virgin Megastores

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For the now separate UK division of Virgin Megastores, see zavvi.
Virgin Megastores
Company typePrivate
IndustryRetail
FoundedOxford Street, London (1971)
Headquarters
London
,
England, UK
Key people
Sir Richard Branson, founder
ParentVirgin Group (Japan)
Related Companies (USA)
Lagardère Group (International)
WebsiteVirgin Megastores International portal
Virgin Megastores USVirgin Megastores Middle East

Virgin Megastores is an international chain of record shops, founded by Sir Richard Branson on London's Oxford Street in January or February 1971 (exact date uncertain)[1]. Virgin Megastores is best described today as entertainment retailers.

In 1979 the company opened their first Megastore at the end of Oxford Street and Tottenham Court Road[2].

Ownership

Like many of Branson's Virgin brands, Virgin Megastores is not wholly owned by the Virgin Group. By 2001 the Virgin Megastores worldwide were split between the Virgin Group and the Lagardère Group. The Virgin Group kept the UK, Ireland, USA and Japan outlets while the Lagardère Group obtained the shops in France and travel retail locations globally including Australia, China, United Arab Emirates, Qatar, Greece, Egypt and Lebanon[3].

Virgin Megastores in the Middle East currently trades as V Star Multimedia LLC[4]

In August 2007 the real estate company Related Companies announced their intention to acquire the majority controlling interest of Virgin Megastores North America.[5][6].

The UK and Irish underwent a management buy-out in September 2007 which resulted in the Managing Directors taking the company on as the largest independent entertainment retailer in the UK. Extensive rebranding began in November 2007 to "zavvi" in November 2007[7].

Store experience

Product range

Virgin Megastore Paris

Virgin shops have a wide selection of CDs, games, books, DVDs, vinyl records, MP3 players, magazines, accessories and additional products such as calendars, board games, and Virgin branded items. Note that not all of these products (e.g. vinyl) are stocked by all Virgin shops, though the larger stores do stock the full product range. All US Stores have increased their focus on fashion[8]. Other categories of fashion (Street, Urban, Movie & TV)complement the music, DVD and video games offers. Virgin Mobile products can also be found in separately run Virgin Mobile Concessions within most Virgin Megastores[9][10]. Some shops also house cafes/coffee shops run by external companies[11].


Technology

In 2005, Virgin Digital was launched to cater for those that bought their music digitally or wanted to rip and burn their current music collection. This is designed to add to the services provided by Virgin, rather than replace the Megastores[12]. The download service has faced some criticism from consumer groups due to its in-compatibility with the highly popular iTunes program. The service has since been discontinued[13].

Locations

Legend:
  Former Locations
  Current Locations
  Future Locations
  Zavvi (Former Virgin Megastores)
  No Data

Europe

France

There are 36 Virgin Megastores in France. In March 2008 the French Megastores enlisted Kyriba Corporation's real-time, on-demand cash and treasury management solution[14].

Germany

Virgin Megastore withdrew from the German market in 1994, amid complaints that the country's shop-closing law was too restrictive[15]. However, Virgin returned to Germany with a new store (not a "Megastore") that opened in the Berlin Hauptbahnhof central station in Berlin in May 2006.

UK / Ireland

File:VMlogo.PNG
The former Megastores UK logo
Main article: zavvi
zavvi, Northumberland Street, Newcastle upon Tyne

Virgin Megastores was started in the United Kingdom in the 1970s. In 2007 the Virgin Group was looking to sell the UK and Ireland stores. On 17th September 2007, it was announced that only the UK arm of the Virgin Megastores brand is to break away from the Virgin Group. A management buy-out offer was accepted. [16] EUK, the company's main stock supplier, also the supplier to shops like Woolworths and Sainsburys, have helped out with the MBO by investing heavily to support the new management team. With the change of ownership the Virgin Megastores disappeared and was replaced with a new name "zavvi". All 125 stores remained trading and the change was implemented by late November 2007. In January 2008 the online system was also rebranded to "zavvi.co.uk" and Virgin Megastores Ireland changed to 'zavvi Ireland'.

In-stores

A service called Virgin Music Radio (VMR) used to broadcast from its home in the Oxford Street store to the rest of the Megastores. Later this service was stopped and shops played CDs from stock over their own in-shop stereo systems.

Employees of Virgin Megastores and Virgin XS/Xpress in the UK and Eiré wore Virgin branded black T-Shirts with "Need Help? Just Ask" written on the front and "The V Team" on the back. Senior members of staff wore a MOD (Manager On Duty) lanyard. Only the Assistant Manager and Store Manager wore name badges, which also stated their position. zavvi employees are identified by their zavvi branded black T-Shirts with a zavvi logo on the front and "staff" on the back.

Virgin Megastore in Oxford Street
Technology

The computer system at the heart of the UK Virgin Megastores was ELVIS (EPOS Linked Virgin Information System) which was designed for Virgin in 1991. ELVIS collects data from shop's point-of-sale terminals for stock and sales reporting; provides instant information for customers on all the shop's product lines, holds play list information for Virgin Megastore Radio (accessible by all shops simultaneously); and allows for electronic re-ordering from suppliers. As of September 2006 ELVIS was updated to utilise RealTime Polling. This means that now all inventory updates every 15 minutes, giving an accurate representation of on hand stockholding as well as being a useful tool for producing Best-Seller reports.

Virgin also had an online service, http://www.virginmegastores.co.uk,[17] which stocked the same entertainment products as the high street shops and had a 48-hour home delivery guarantee with gift wrapping. An individual service is used by stores to deliver items currently out of stock to customers. The system is called 'web-enabled store' (WES).

Virgin XS
Virgin XS, Royal Quays

Virgin XS was the clearance arm of Virgin Megastores. There were approximately 17 Virgin XS shops and they were generally located in small units within outlet centres throughout the UK. Virgin XS shops stocked the same charts as normal Virgin Megastores but they also sold all Virgin Megastores sleeveless stock (stock without their original packaging) at reduced prices as well as having various multibuy offers on back catalogue stock.

The chain was originally part of the Sound and Media Group (which itself was part of the Virgin Group). It was set up by Peter Collins, Phil Worsfold, Christian Michaels and Chris Tuft. The Virgin XS stores were also sold to zavvi in 2007[18].

Middle East

The owners of Virgin Megastores in the middle east is V-Star Multimedia. There are currently stores open in Bahrain, Egypt, Kuwait, Qatar and the UAE. There are plans to open more stores in Bahrain, Jordan and Oman[19][20].

Bahrain

Nisreen Shocair, President of Virgin Megastores Middle East recently announced in an interview with Business 24-7 that there are plans to open the first Virgin Megastore in Bahrain in the future[19].

Egypt

As of May 2008, the only Virgin Megastore in Egypt is located in the City Stars (Cairo) Shopping Mall[21].

Kuwait

As of May, 2008 there are two Virgin Megastores in Kuwait. One in the Marina World Shopping Mall, Salmiya and a second in Kuwait International Airport.

Qatar

Virgin Megastores currently has one store in Qatar, located in the Villagio Mall Italian themed mall, Doha which is the shopping centres main anchor. There are plans to open a second store in the future[19].

United Arab Emirates

The first Middle Eastern Virgin Megastores opened in the United Arab Emirates[22]. As of May 2008, there are five Virgin Megastores in the UAE[23]. One is located in the Mercato Shopping Mall, a renaissance architecural style, a second in the BurJuman Shopping Mall, a third in . As well as being a entertainment retailer, the company also acts as a venue, with artist signings,quiz nights and a newly launched boutique section offering everything from movie memorabilia to jewellery[19].

North America

USA

Virgin Megastore in San Francisco.

The first Virgin Megastore in the United States opened in 1992 on Sunset Strip in Los Angeles, and there are now 11 stores nationwide[24]. The USA website, virginmega.com, also ships goods to Canada and the UK.

As of May 2008, Related Companies is exploring the possibility of selling their One Union Square, New York store in early 2009[25].

In-stores

Most shops include an in-store radio station. In the USA these are branded Virgin Radio. USA Virgin Radio is not a broadcast radio station, however, DJ operated hard-lines system which broadcasts throughout the shop, and the complex in which the shop is located. For example: in the Times Square shop, not only can the DJ's selections be heard from the retail floor, but also in the office areas, processing areas, and even out on the shop's Broadway pavement.

All employees of the USA Virgin Megastores can be identified by their trademark red t-shirts which have the Virgin logo on the front and the word STAFF on the back, as well as required lanyards with their first name printed on them.

Technology

The Virgin Megastore chain in the USA has a different GSA look-up system to other the international arms of the chain. This is a private network that links to all of the North American shops, and updates each shop's product inventory every 24 to 48 hours. The GSA is accessible from the internet if one can obtain the exact internet address.

Virgin Megastore (US) implemented a near real time data warehouse in 2004. The data warehouse is called Crescendo and collects POS transactions, along with customer traffic counts and generates KPI reports in near real time. The near real time information helped the managers identify trends quicker and react. The USA shops shared their experience with the real-time warehouse and UK now does a similar process.

Named after the computer in the Stanley Kubrick film, 2001: A Space Odyssey, HAL is the name of the inventory replenishment system used throughout the American chain of Virgin Megastores. It got its name from many of the Virgin staff who were tired of the way the program works. [citation needed]

Virgin Megastore (US) have implemented a new Customer Loyalty Program - Virgin V.I.P. The new Program uses the read/write GraphiCard. Every time a member purchase is made, the Graphicard is swiped through the POS Graphicard Terminal. Members points are instantly updated on the face of the card[26].

Canada

The first and only Virgin Megastore in Canada opened in December 1996 on the corner of Robson Street and Burrard Street in Vancouver, British Columbia. The 40,000 square foot, three-level store was located in downtown Vancouver, the city’s busiest and most prestigious retail destination. The building was previously home to the central branch of the Vancouver Public Library. The Virgin Megastore ceased it's operations in Vancouver on September 4, 2005 when on June 28, 2005, HMV announced it was planning to expand the store and rebrand the location into the HMV brand. The acquisition took effect immediately and on September 5, 2005, HMV was opened.[27]. However, due to the dominance of HMV in Canada, Virgin decided to exit the Canadian market entirely[28].

Competition

Virgin Megastore in Piccadilly Circus

As more and more high street shops and e-tailers enter the entertainment sales market, it becomes more competitive. Big name supermarket chains in particular stock popular music and DVDs at ever-lower prices. The video game market is also increasingly competitive. These trends have affected Virgin Megastores profits. A report published in August 2005 stated that Virgin Megastores had lost £260m in the past two years according to accounts filed with Companies House, and remained solvent only with the help of significant loans from other Branson companies. The retail chain borrowed £287m from related companies in the Virgin group, a debt that grew by £117m in the financial year to March 2004. Chairman John Jackson, a long-standing Branson lieutenant, said that since then the retailer had borrowed more from the parent company. Virgin Megastores planned to break even in the 2006-2007 financial year. "A lot of hard work has been done to get the business into good shape," he said. Jackson said the first 18 weeks of 2006-7 had shown like-for-like sales similar to the year before, which was better than in the overall entertainment market.

The lenders in other Branson companies are charging the retail chain 14% interest. A Virgin Group source said the company charges the rates that a venture capital firm would expect as a return. The accounts stated that the music and video retailing business was still a "going concern" because the parent company had formally said that it would provide enough funding for it to trade for at least 12 months. According to the accounts filed in Companies House, the Virgin Megastores group made an operating loss of £112m in the 14 months to the end of March 2004 due to escalating costs at the retail chain and the cost of re-organisation. A contributing factor was the inclusion in the accounts of the loss-making smaller shops, which were closed. Jackson said this should also lead to a loss for the next financial year.

The year before, the operating loss had been £146m due to a writedown of the Our Price chain, which was bought from WH Smith in the late 1990s but struggled and was turned into V Shops in 2001. Turnover increased in the 14 months to the end of March, compared with the 12-month period previously, because the smaller shops were included.

"During the year, the group encountered a difficult trading environment with significant price competition being experienced, in particular from supermarkets, that affected sales and margins," the company said in a review of the business in its accounts.

It said this prompted a "strategic review", which led to a £31m charge to cover leases and other restructuring costs. Despite massive amounts of money being spent on refits over the last few years and more focus being spend on their bigger shops the company as a whole struggled to break even, no profit being made during the period 2002 - 2006. Sales of HMV Europe, Virgin's biggest competitor, grew to £986.0 million with operating profit of £96.8 million for the full year ended April 2005[29].

In response to the increasing choices available to purchasers of entertainment media, the Virgin chain had employed several strategies in an attempt to secure customer loyalty, and focussed on higher standards of customer service. The 'Addict card' was introduced in 2005, offering customers a stamp for every £10 spent in the shop; 10 stamps entitled the customer to £10 off their next purchase[30]. Also introduced was the 'Mega-sharp' approach to customer service: staff were encouraged always to ensure that customers found everything they were seeking.

Competition against independent retailers mainly in the music sector did not pose a major threat for big companies such as the Megastores at the time of the zavvi rebranding. However, customers with a specialist taste usually found the independent shops more appealing, offering more hard-to-find and rarer titles also the growing competition from online retailers[31].

See also

References

  1. ^ "About Us". Virgin Mega. Retrieved 2008-05-26.
  2. ^ "Who's Richard Branson". Virgin Group. Retrieved 2008-04-11.
  3. ^ "Lagardère Media acquires Virgin Stores in France". Lagardère Group. 2001-07-26. Retrieved 2008-04-11.
  4. ^ "Privacy Policy". VMegaNews. Retrieved 2008-05-27.
  5. ^ "Related Companies to Acquire Virgin Entertainment Group Virgin Megastores North America". PR Newswire. 2007-08-17. Retrieved 2008-03-28.
  6. ^ "Related Companies to Acquire Virgin Entertainment Group Virgin Megastores North America". Related. 2007-08-17. Retrieved 2008-04-11.
  7. ^ "Branson sells Virgin music stores". BBC News. 2007-09-17. Retrieved 2008-03-28.
  8. ^ "Virgin Entertainment Group Launches Ben Sherman Boutiques Inside Select Virgin Megastores". Access My Library. 2003-02-12. Retrieved 2008-05-26.
  9. ^ "Virgin Mobile to set up outlets in Megastores". Access My Library. 2003-08-04. Retrieved 2008-05-26.
  10. ^ "Virgin Mobile USA is Virgin Megastores' One and Only". Access My Library. 2002-06-20. Retrieved 2008-05-26.
  11. ^ "SSP wins contract for French Virgin Megastores". CatererSearch. 2001-07-26. Retrieved 2008-05-26.
  12. ^ "Virgin Digital sets US, UK debut dates". Register. 2004-06-23. Retrieved 2008-05-26.
  13. ^ "Q&A: Virgin's digital shutdown". BBC News. 2007-09-28. Retrieved 2008-05-26.
  14. ^ "Qualcomm, Superior Energy, Virgin Megastore, Arianespace and Boiron Labs select Kyriba for their Treasury Management Solution". Bob's Guide. 2008-03-11. Retrieved 2008-03-29.
  15. ^ "Virgin Learns You Can't Always Get What You Want". International Herald Tribune. 1995-09-11. Retrieved 2008-05-26.
  16. ^ "Branson sells Virgin music stores". BBC News. 2008-09-17. Retrieved 2008-04-11.
  17. ^ "Virgin Megastores launch new transactional website". Access Library. Retrieved 2008-05-26.
  18. ^ "Branson lets go of record store chain". Financial Times. 2007-09-16. Retrieved 2008-04-05.
  19. ^ a b c d "Mega makeover in store for Virgin". Business 24-7. 2008-05-24. Retrieved 2008-05-27.
  20. ^ "Mega makeover in store for Virgin". VMegaNews. Retrieved 2008-05-27.
  21. ^ "Store Locations". VMegaNews. Retrieved 2008-05-27.
  22. ^ "Company Profile". VMegaNews. Retrieved 2008-05-27.
  23. ^ "Store Locations". VMegaNews. Retrieved 2008-05-27.
  24. ^ "About Us". Virgin Mega. Retrieved 2008-04-11.
  25. ^ "Virgin may give it up next year at megastore location". The Villager. 2008-05-21. Retrieved 2008-05-26.
  26. ^ "Virgin Megastores Continue Commitment to Music Retail by Unveiling New Customer Loyalty Program". PRNewswire. 2006-10-11. Retrieved 2008-05-26.
  27. ^ "HMV to open Canada's largest dedicated music, DVD store". HMV Group. 2005-06-28. Retrieved 2008-04-28.
  28. ^ "Virgin Closes Sole Canadian Store as HMV Expands". CIRPA. 2005-07-25. Retrieved 2008-05-26.
  29. ^ "Virgin Megastores lose £260m in two years". The Guardian. 2005-11-08. Retrieved 2008-04-11.
  30. ^ "Virgin Megastores launch national loyalty card scheme". Borkowski. 2007-05-03. Retrieved 2008-04-11.
  31. ^ "Branson sells Virgin Megastores". The Guardian. 2007-09-17. Retrieved 2008-04-11.
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