Branson launches next-generation stores revamp

Srichard Branson’s ambitious plans for reviving sales at his Virgin Megastores is beginning in San Francisco, where shelves will soon be stocked with sex goods and a 24-hour street vending machine that dispenses the latest CD and DVD titles.

Branson, chief executive of Virgin companies and founder of Virgin Entertainment Group, was in San Francisco yesterday to promote the changes. He hopes to boost sales by tapping into products popular among music fans, such as hip urban clothing and cool electronic gear like mobile phones and MP3 players.

Selling shelves of music was no longer enough for a “megastore”, Branson said.

“We used to be the best music store in town – the best range of music. But music has declined,” Branson told The Associated Press in an interview in the book section of his three-storey Virgin store.

“It may decline a little bit more. What we realised was it’s because young people of this generation, they’re spending money on mobile phones. They’re spending money on clothes. They’re spending money on electronics. ... quite a few items which the previous generation, they weren’t doing. They were just buying music.”

The Virgin Megastore in San Francisco now looks to fill all of those shopping needs with the new makeover, yet perhaps at the expense of music.

There are Ben Sherman “creased used” new jeans and Hello Kitty backpacks in a corner of the store that used to brim with electronica CDs and listening stations.

Other new plans include allowing music CDs, video games and DVDs to be returned to Virgin stores for some store credit, and erecting a large concert stage for live in-store performances.

The new vending machines will be stocked with the latest music and movie releases and will dispense titles on the spot, just like canned drinks.

And there will be a selection of erotic material that includes books and DVDs.

Branson and other music retailers face a glut of new competition, such as from online shops like Apple’s iTune Music Store, for music sales worldwide.

The National Association of Recording Merchandisers, citing a survey of its members and Neilsen SoundScan data, claims there were about 28,500 music retailers in the United States in early 2002. About 1,500 shut down, NARM reported. The figures do not include mass merchants or chain electronics stores.

“We’ve been through some very tough times the last couple of years,” said Glen Ward, CEO of Virgin Entertainment Group for North America. “I’m encouraged that the last two to three months the market seems to be pulling itself together. There’s some good music out there. The economy seems to be lifting.”

Branson said Virgin would be launching its own online downloading site for music within the next three months.

“It’s important that people want to buy it that way. They should be able to do it,” he said.

The Recording Industry Association of America continues to crack down on the illegal downloaders. The umbrella organisation for the recording companies blames illegal file-sharing, in part, for dwindling music sales over the past few years.

The RIAA announced that its lawyers had filed 41 new suits against file sharers this week and sent 90 lawsuit notification letters to people alleged to have engaged in similar activity.

Virgin has 23 megastores in North America. The stores are privately held and exact sales figures were not available.