Virgin Megastores

Company type	Private
Industry	Retail
Founded	1976; 48 years ago (1976) on Oxford Street in London, England
Founder	(Sir) Richard Branson
Headquarters	London , England
Number of locations	Various
Areas served	North Africa, Western Asia
Products	Books Consoles DVDs Games Magazines Music T-Shirts Tickets
Parent	Virgin Group
Website	Virgin Megastores International portal

Virgin Megastores is an international entertainment retailing chain, founded in early 1976 by Richard Branson as a record shop on London's Oxford Street.

In 1979 the company opened their first Megastore at the end of Oxford Street and Tottenham Court Road.^[1] The company expanded to hundreds of stores worldwide in the 1990s, but has lost a large number of stores in recent years, largely with the sale and eventual closing of the European, North American, Australian, Japanese and Chinese stores. By 2015, it operated only in the Middle East and in North Africa.^[2]

History

Branson's early business ventures

Richard Branson and Nik Powell had initially run a small record shop called Virgin Records and Tapes on Notting Hill Gate, London, specialising particularly in "krautrock" imports, and offering bean bags and free vegetarian food for the benefit of customers listening to the music on offer.^[3] After making the shop into a success, they turned their business into a fully fledged record label, Virgin Records. The name Virgin, according to Branson (in his autobiography), arose from a colleague of his when they were brainstorming business ideas. She suggested Virgin, as they were all new to business, like "virgins". The first release on the label was the progressive rock album Tubular Bells by multi-instrumentalist Mike Oldfield in 1973.

Virgin Megastores

Virgin's first formal store opened 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 Marble Arch. Virgin Megastores and Virgin Records operated as entirely separate entities, like many of the other Virgin companies. Throughout the 1980s and 1990s Virgin Megastores opened over 100 stores in the UK, and many others around the world, including expansion into Asia Pacific and North America, under the leadership of Ian Duffell – President & CEO of Virgin Entertainment Group until 1998.^[4] Simon Wright – Chief Executive of the Virgin Entertainment Group from 1999 to 2009 was instrumental in the growth of the stores in particular developing the stores in the Middle East before their eventual disposals under license detailed under Ownership.

Ownership

Like many of Branson's Virgin brands, Virgin Megastores is not wholly owned by the Virgin Group. During the early to mid-2000s Virgin Group decided to sell off most of its Virgin Megastores to various companies, including the Lagardere Group. By 2001 the Virgin Megastores worldwide were split between the Virgin Group and the Lagardère Group.^[5] The Virgin Group kept the United Kingdom, Ireland, United States 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, Italy, Egypt, Lebanon and Jordan.^[6]

Virgin Megastores in the Middle East currently trades as V Star Multimedia LLC.^[7] Culture Convenience Club owns what was Virgin Megastores Japan, which have since been rebranded as Tsutaya. The Australian Virgin Megastores and Virgin at Myer concept stores were operated by Brazin Limited.^[8] (Sanity Entertainment after 2009) until all were closed in 2010; Brazin also ran local HMV outlets, in addition to their own Sanity brand. In December 2007 Butler Capital Partners announced their intention to mount a majority takeover of the French arm of Virgin from Lagardère. This deal was finalised in February 2008.^[9]

In 2007 the real estate company Related Companies and Vornado Realty Trust acquired Virgin Megastores North America.^[10] Related and Vornado were the landlords for the two most profitable stores in the United States and those stores were profitable because they had long-term leases in which rents were locked in at an extremely low rate. Both real estate companies wanted to break the leases and replace Virgin with new tenants that were willing to pay the then current higher rental rates that would make an entertainment retail business unprofitable.^[11] They have since decided to close all the American stores.

Territory	Megastore owner/operator	Megastores	Books and Music	Number of Megastores
UK and Ireland	Zavvi Entertainment Group (2007–2008)	N	N	125, all closed
France	Butler Capital Partners (80%) / LS Travel Retail (15%) / Virgin Mobile France (5%)	N	N	35, all closed
La Réunion, France	SA Mediastore (100%) under Virgin Group Licence	N	N	1, all closed (licence broke in 2010)
Australia	Brazin Limited/Sanity Entertainment (2001–2010) HDS Retail Asia Pacific/LS Travel Retail (2004–2012)	N	N	24, all closed
USA	Virgin Entertainment Group (Related Companies / Vornado Realty Trust)	N	N	23, all closed (2 Virgin Books and Music stores)
Japan	Marui Co/Culture Convenience Club/Tsutaya Stores Holdings (1990–2009)	N	N	22, all closed
Greece	Vivere Entertainment	N	N	15 in 2005 – all closed
Hungary	Fotex Records	N	N	1 in 2000 – all closed
Italy		N	N	4, all closed
Spain	Virgin Retail Europe/ Virgin Retail España	N	N	9, all closed
Germany	HDS Retail/LS Travel Retail	N	N	All closed (5 Virgin Stores)
The Netherlands	Free Record Shop group	N	N	4, all closed
Canada	Virgin Entertainment Group	N	N	All closed (1 Virgin Books and Music store)
Middle East (UAE, Qatar, Bahrain, Egypt, Jordan, Oman, Kuwait)	Virgin Megastores Middle East (Azadea Group)	Y	N	12 in UAE (2015)[12] 4 in Qatar (2015)[12] 3 in Egypt (2015)[12] 2 in Jordan (2015)[12] 1 in Bahrain (2015)[12] 1 in Oman (2015)[13] 1 in Kuwait (2020)[14]
Lebanon, Saudi Arabia	Megastores of Lebanon S.A.L.	Y	N	6 in Lebanon (2015)[15] 5 in Saudi Arabia (2015)[16]
Morocco	Best Financière (Label Vie Carrefour)	Y	N	5 (2015)[17]

Store experience

Product range

Virgin shops have a wide selection of CDs, games, books, DVDs, vinyl records, magazines, portable media players, accessories and additional products such as calendars, board games and Virgin branded items. Larger stores also stock electronic equipment and computer peripherals. Not all of these product categories are stocked by all Virgin shops, though the larger stores do generally stock the full product range.

In 2003, all US Stores increased their focus on multiple fashion categories^[18] spanning Pop culture, Street, Urban, Movie & TV to 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.^[19][20] Some shops also house cafes or coffee shops run by external companies.^[21]

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.^[22] The download service faced some criticism from consumer groups due to its incompatibility with the popular iPod music player. The service has since been discontinued.^[23] Around the world there were other Virgin branded digital music retail websites, such as VirginMega.fr, France's number 2 music download website.

Operations

Europe

Austria

In 2003, the first and only Virgin Megastore in Vienna, on Mariahilferstraße, was sold and closed.^[24]

France

There were 35 Virgin Megastores in France. Twelve additional stores in France were branded Furet du Nord, and about ten international stores were owned by the same company. The French Megastore business was launched in 1988 by Branson and Patrick Zelnick, CEO of music publisher Naïve.

Lagardère Group bought the chain in 2001. In December 2007 Butler Capital Partners announced their intention to mount a majority takeover of the French arm of Virgin from Lagardère.^[25] This deal was finalised in February 2008.^[9] According to the Lagardère 2007 report, 80% of the Virgin stores was to be sold by Lagardère Services at a value of €76.4 million, and 20% would be kept. Prior to this sale 51% of VirginMega, France's number 2 music download website, was transferred to the Virgin Stores company (sold to Butler), and the remaining 49% was kept by Lagardère Active.^[26]

In July 2012, LS Travel Retail announced that they will phase out the Virgin Entertainment brand in France, commencing 2013, converting all remaining Virgin travel outlets into larger sized Fnac formats stocking the same range in addition to more product lines.^[27][28]

In January 2013, Virgin Megastore France filed for bankruptcy. At that time there were 26 Megastores in France, employing 1,000 people, after two years of cutting over 200 staff and several shops. The company had taken steps to terminate the lease on its flagship Champs-Élysées store in Paris after 25 years on the famous avenue.^[29][30][31] In June 2013 the company was finally liquidated and ceased operations after 25 years.^[32]

Germany

Virgin Megastore withdrew from the German market in 1994, amid complaints that the country's shop-closing law was too restrictive.^[33]

The Virgin name is used by the Lagardère Group to brand a small number of convenience stores within airports and railway stations. In September 2019 there were seven Virgin shops, of which four are in or adjacent to Frankfurt airport.^[34]

Greece

As of June 2005 there were 15 Virgin Megastores in Greece, operated by Vivere Entertainment.^[35] As of 2015, no Virgin Megastores exist in the country.

Hungary

In 1996, local merchandising group Fotex opened the first and only Hungarian Virgin Megastore (1000 m2) in the first "western" shopping mall, Duna Plaza, in Budapest.^[36][37] It was operated under a franchise until 2000. Between 2001 and 2006, Fotex operated the store as "Hungaroton Gigastore". The shop was closed in 2006 and no more Virgin Megastore shops were opened in Hungary.^{[citation needed]}

Ireland

Virgin Megastores opened its first store in the Republic of Ireland in Dublin in 1986.^[38] More stores opened in Ireland from the early 1990s including Cork City.^[39] The company had planned to launch an online store specifically for the Republic of Ireland at virginmegastores.ie however plans were shelved when its Irish operations were sold in 2007. At its height of success the company owned 6 stores in the Republic of Ireland, however, by 2002 stores began to close.^[40] The Virgin Group sought to sell its Irish operations during 2007, and on 17 September 2007, it was announced Irish and UK stores would separate from the Virgin Group. A management buy-out offer was accepted.^[41] Stores were rebranded as Zavvi.

Following the collapse of Zavvi's supplier in December 2008, stores in Ireland were immediately closed in January 2009 with the hope Irish stores could be sold to another buyer unfortunately all were closed with some taken over by other music retailers.^[42]

Italy

In February 2004, the Virgin Megastore in Piazza Duomo Milan closed.^[43] Currently this building is occupied by a Mondadori retail store.^{[citation needed]} After the Italian franchise Virgin Retail Italy filed for bankruptcy and liquidation, the Italian bankruptcy court ordered in May 2004 the immediate closure of three out of four of the remaining stores while allowing the store in Bergamo to remain open for a few additional months to allow the company to depose of its remaining inventory.^[44]

The Netherlands

Virgin Megastores entered the Dutch market in the 1990s and operated four stores (Amsterdam, Rotterdam, The Hague and Maastricht). In 2000, it decided to exit the market. Three stores were sold to the Free Record Shop group, while the Maastricht branch was closed. Free Record Shop also acquired three Virgin Megastores in Belgium.^[45][46]

Spain and Portugal

Virgin Retail España, S.L. opened its Barcelona store in November 1992, just after the Barcelona Olympics. This opening was followed by another Megastore in Seville^[47] (1993) however the opening of a flagship store in Madrid eluded the retailer, because at that time, cinemas and theatres in the Gran Vía (Madrid's most popular commercial thoroughfare) could not easily be reassigned for commercial use. The Spanish company diversified by opening small outlets in busy Spanish and Portuguese airports. In 1994, Virgin Retail España reached an agreement with the department store chain Galerías Preciados and opened small concessions in their Madrid stores (Callao, Goya, Serrano, La Vaguada and Parquesur). Galerías Preciados ceased trading the following year and Virgin Retail España quickly re-organised its operations and opened medium-sized stores in ABC Serrano (Madrid), La Coruña, Vigo,^[48] Málaga, Bilbao and Santander. Larger stores followed in Portugal (Lisbon and Oporto) but by 1997 the impact of digital technology had already hit their distribution model very hard. Music was by then being traded freely on the Internet but the major music labels did little to help support high street retailers. Inevitably, the Virgin Retail Group took the difficult strategic decision to close all of Virgin's high street stores in southern Europe. In July 1998 Virgin Megastores closed its southern European flagship store in Barcelona^[49] on the corner of Passeig de Gràcia and Gran Vía de les Corts Catalans. This building is currently occupied by Zara clothes store.^{[citation needed]}

UK

The first Virgin Megastore opened in the United Kingdom in 1979 and between the 1980s and 1990s, the chain grew, including via its merger with Our Price whilst under the ownership of WH Smith. By the 1990s Virgin Megastores had become an international franchise as part of the Virgin Group.

The Virgin Group sought to sell its UK and Ireland stores during 2007, and on 17 September 2007, it was announced that the UK and Ireland arm of the Virgin Megastores brand was to break away from the Virgin Group. A management buy-out offer was accepted.^[50] Stores were rebranded as Zavvi.

Following the collapse of Woolworths, which owned Zavvi's supplier Entertainment UK, Zavvi entered administration on 24 December 2008 as it had been unable to source stock from other suppliers under favourable terms.^[51] By February 2009 Zavvi had closed its stores, selling some to rival HMV, and a few to Simon Douglas and Les Whitfield's Head Entertainment.

Turkey

Virgin entered the Turkish market in March 2011 with a store located in the Demirören shopping centre on Istiklal Street near Taksim, Istanbul. The product mix of books, digital media and electronics failed to compete with better established chains and the store closed in autumn 2012.^[52]

Arab world

The Azadea Group of Beirut, Lebanon has an exclusive license since 2001 to operate Virgin Megastores in many countries within the Middle East, except for countries which already have a franchise.^[53] Operating as Virgin Megastores Middle East, Azadea has stores in UAE, Qatar, Bahrain, Egypt, Kuwait, and Jordan.

Megastores of Lebanon S.A.L. has an exclusive franchise to operate Virgin Megastores in Lebanon and Saudi Arabia.

Best Financière (Label Vie Carrefour) of Rabat has an exclusive license to operate Virgin Megastores within Morocco.^[54] Since 2010, Best has been opening a new store nearly every year.

Antar Group of Damascus has an exclusive to operate Virgin Megastores in Syria since 2007.^[54] Since the Syrian Civil War has caused most normal economic activities to virtually cease in the country since 2011, all megastores in the country are currently closed and may not return until political stability returns.

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