Branson pulls out of Virgin music retail
Zavvi replaces Virgin Megastores on high street
The Virgin Megastore brand is the latest marquee name set to vanish from the streets in what has been an eventful year for the music retail sector.
This week’s management buy-out means that Virgin’s 125 outlets across Ireland and Britain will be rebranded as Zavvi stores in the coming months, with four new stores also set to open in Ireland.
The new owners, led by current Virgin Megastore boss Simon Douglas, are not planning to rock the boat too much and will continue to sell entertainment products of every stripe. Douglas says he sees Zavvi as “an independent entertainment specialist that puts customers, product, service and personality at the top of the agenda.”
Many other stores had similar high hopes, but changes in music consumption have scuppered any such ambitions. The disappearance of the Tower Records chain in the United States and the Fopp and Music Zone shops in Britain in the past 12 months, as well as previously reported losses at HMV and Golden Discs, are all indications of challenging times for those who sell music for a living.
Here at home, the latest shop to close its doors is the hugely-respected Mulligan outlet in Galway. It joins Black Spot (Limerick), Synthetic (Cork), Carbon (Dublin) and Selectah (Dublin) on the growing list of Irish casualties, with other shops downsizing, cutting the size of their music catalogue and diversifying into DVDs and games in order to survive.
Branson will no doubt harbour some personal regrets at seeing his Virgin brand disappear from the high street. However, he and his advisers are in no doubt that they’re getting out of the entertainment retail sector in the nick of time, with even Branson’s reported £100 million investment in the stores over the past few years failing to stop the rot.
The stores contributed only 5 per cent of the Virgin group’s turnover in 2006 and incurred a pre-tax loss of £82.2 million in the year to March 2006.
As with his disposal of the V2 label, Branson knows that business is no place for sentiment and was happy to do a deal with management.
For the sake of Zavvi’s 2,500 employees, you really hope that Douglas and his team know what they’re doing in what are increasingly difficult retail conditions.
Richard Branson waves goodbye to high-street music retail