Virgin and the Demise of the Megastores: A Cautionary Tale

February 27 2013

With guest blogger, Cedric Littman, The Cheese Advisor

The Virgin Megastore in Paris has closed.  There has been bad publicity, and the unions have said that there are "too many unanswered questions." One union said,  "We are in a fighting mood. We're not going to go quietly.”

This looks pretty bad for Virgin, a company that presents itself as customer friendly, even customer centric. Virgin’s brand and notoriety has been partly built upon the adventurous exploits of its founder, Richard Branson, who attempted an Atlantic crossing on a balloon and is booking flights to the moon. The Virgin Megastores were the retail face of a brand that was considered to be visionary in its day.

          Image via Reuters

The Virgin store in Paris was bought from the Virgin Group ten years ago, although it was imperceptible to the consumer. Why did Virgin allow its name to be used by another company over which it seems to have no control? Even worse, the company they sold it to later sold it to yet another company, so that the retail operations were further and further away from the core brand, and not under the Virgin brand umbrella and management.   

The Virgin group also sold its retail operations in the UK, the US and Ireland, and all of the outlets have closed with at least one of the parent companies going into liquidation. At its height, the French store, on the Champs Elysees, must have been a substantial asset as it was on one of the world’s most famous thoroughfares. But now one of the most visible Virgin stores, as well as the whole chain, have closed with a loss of 1,000 jobs. How did Virgin make such a mistake?  Surely they saw the demise of traditional music retailing on the horizon, otherwise why would they have sold their retail operations? The real question is why they allowed the new owners access to the Virgin name, logo, store design, and brand equity.

This cautionary tale makes it clear that brands equity should be protected by a little, or a lot, of forethought. Even those of us with smaller brands need to take control and take charge of our brand. We may not face the same problems as the Virgin Group and we may never sell part of our operation, but good brand management is key no matter whether you are a solopreneur, a small business, a non-profit or anyone who puts a product or service or offering into the marketplace. As Beth often says in her talks, perception is all. There is the fact of your brand (where you really are in the marketplace right now) and then there is where your audiences think you are. Although they are a thriving company, the closing of the Virgin Megastores (albiet by a third party) would leave their audiences with the perception that the company is out of step with their needs, and that the business itself is in trouble.

The message: Protect your brand equity. Learn how to do it from an expert, and then don’t forget to continue to pay close attention to your brand as time goes on. After all, you have too much to lose. 

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