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USA

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. The original 8000 Sunset Boulevard location at the end of the Sunset Strip has since been closed and is being converted to other stores^[25].

As of May 2008, Related Companies is exploring the possibility of selling their One Union Square, New York store in early 2009^[26].

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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.

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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^[27].

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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 its 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.^[28]. However, due to the dominance of HMV in Canada, Virgin decided to exit the Canadian market entirely^[29].

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Competition

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^[30].

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^[31]. 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^[32].

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See also

• zavvi

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References

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External links

• Virgin Megastores France
• Virgin Megastores Greece
• Virgin Megastores Japan
• Virgin Megastores US
• Virgin Megastore Gulf countries and Egypt

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