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Virgin Megastores
Type	Private
Founded	Oxford Street, London (1971)
Headquarters	London, England, UK
Key people	Sir Richard Branson, founder
Industry	Retail
Parent	Virgin Group (Japan & USA) zavvi (UK) Lagardere Group (International)
Website	Virgin Megastores US Virgin Megastores UK

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).

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

Contents 1 Ownership 2 Store experience 2.1 Product range 2.2 Customer service 2.3 In-store audio 3 Technology 4 UK / Ireland 4.1 In-stores 4.2 Virgin XS 4.3 Competition 4.4 Rebranding to zavvi 5 References 6 External links

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

In August 2007 the real estate company Related Companies announced their intention to acquire Virgin Megastores North America.^[1]The UK and Irish shops were sold to senior Virgin Megastore staff the following month, with extensive rebranding to "Zavvi" in November.^[2] The worldwide stores are not rebranding however.

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- with Rock & Pop Culture tee shirts having the biggest assortment. Other categories of fashion (Street, Urban, Movie & TV)complement the music, DVD and video games offer. Virgin Mobile products can also be found in separately run Virgin Mobile Concessions within most Virgin Megastores. Some shops also house cafes/coffee shops run by external companies.

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.

Most shops include an in-store radio station. In the USA these are branded Virgin Radio, although are not related to Virgin Radio in the UK.

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.

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.

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. 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.

Main article: zavvi

Although Virgin Megastores was started in the United Kingdom in the 1970s, Virgin Group sold the UK and Ireland stores to zavvi in 2007.

A service called Virgin Music Radio (VMR) used to broadcast from its home in the Oxford Street Megastore to the rest of the Megastores. Later this service was stopped and shops had to play 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.

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 - www.virginmegastores.co.uk - which stocked the same entertainment products that could be found in the high street shops, and had a 48 hour delivery guarantee with gift wrapping. This same service was used in-store for those customers whose item is currently out of stock. The system was called 'web enabled store' (WES) and guarantees the customer the item within 48 hours and home delivery.

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.

As more and more high street shops venture into the media sales market keeping up with competition is proving to be a hard fought battle for the UK Megastores. Big name supermarket chains in particular have adopted stocking popular music and DVD titles at increasingly low prices. The popularity of Video games has also seen cheaper competition keeping the customers away from the Megastores. A report published in August 2005 stated that Virgin Megastores have lost £260m in the past two years, according to accounts recently filed with Companies House, and remains solvent only with the help of hefty loans from other companies in Sir Richard's empire (Branson is passionate about his music shops, as it was the foundation he built his business on). The retail chain has 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 has borrowed more from the parent company. However Virgin Megastores plans 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 this financial year had shown like-for-like sales similar to the year before, which was better than in the overall entertainment market.

The lenders in Sir Richard's empire are charging the retail chain an interest rate of 14% on the debt. 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 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 last year. 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 re-fits over the last few years and more focus being spend on their bigger shops the company as a whole struggles to break even. No profit being made during the period 2002 - 2006. This is a hard blow to the company who blame downloading and illegal copying as some of the major factors affecting their lack of sales. Sales in HMV Europe however, Virgin's biggest competitor for the full year ended April 2005 grew to £986.0 million and operating profit was £96.8 million.

In recognition of the increased choice the customer is now offered when it comes to purchasing media, the Virgin chain had employed several strategies to secure customer loyalty as well as focus on higher standards of customer service. The 'Addict card' introduced in 2005 was brought in offering customers a stamp for every £10 spent in the shop. The idea being that once the customer had collected 10 stamps, they are awarded with a discount of £10 off their next purchase. Also introduced was the 'Mega-sharp' approach to customer service. Staff were encouraged to ensure customers found everything they were looking for each and every time a customer walks through the door.

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 of a variety of 'hard to find' and 'rarer' titles.

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 which will now see the Managing Directors taking the company on as the largest independent entertainment retailer in the UK. 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 name will now disappear and will be replaced with a new name "zavvi". All stores will remain trading and the change will be implemented by November 2007. By January 2008 the online system will also be rebranded to "zavvi". Virgin Megastores Ireland will change to 'zavvi Ireland' in January 2008.

• Virgin Megastores Australia
• Virgin Megastores France
• Virgin Megastores Ireland*Coming Soon
• Virgin Megastores Greece
• Virgin Megastores Japan
• Virgin Megastores UK
• Virgin Megastores US
• Virgin Megastore Gulf countries and Egypt
• zavvi.co.uk (Site under construction)

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