V Shop to disappear after Sanity deal

Virgin Entertainment Group is to re-unify its entire UK High Street operations under the Megastores brand, after selling off 41 stores to Australian retailer Sanity.

It has agreed a seven-figure deal with Sanity to hand over part of its loss-making V Shop business and is now putting in place a rapid conversion programme to have the remaining 60-odd stores in the chain rebranded as Megastore Xpress stores by mid-November.

Virgin Retail managing director Andy Randall believes the move to a single Megastores brand will simplify its message to customers. It gives the retailer 167 Megastore or Megastore Xpress stores across the UK and Ireland, compared with 155 for the specialist retail market leader HMV, which expects its store numbers to rise to more than 160 by the end of the year.

"As far as I'm concerned, this is about us repositioning all of Virgin's High Street stores as Megastores and Megastore Xpress stores," adds Randall. "It gives us one brand and makes us extremely focused now as a group."

The decision to sell off 41 V Shop stores comes just over a year after Virgin struck a first deal with Sanity for the Australian independent to take over 77 stores which were then being run as Our Price outlets. It also finally brings to an end a lengthy period of uncertainty for the one-time Our Price chain, dating back to 1998 when Virgin acquired the 75% of Virgin/Our Price it did not own from WH Smith.

The Our Price part of the business was then subject to management buyout negotiations before being partially converted to V Shops with the rest of the stores sold off. Just two years after the first V Shop opened, the group started rebranding the chain as Megastore Xpress stores in July, with those now already converted all instantly claiming sales uplifts of around 30%.

"Going back three years, when Virgin Our Price was bought out from Smiths, the intention was to retain Virgin Megastores and to sell Our Price and as time went on what we've ended up doing is breaking up the Our Price business," he says.

Randall says the group selected which V Shop stores to keep, based on their size and position in the local market in relation to competition.

For Sanity, the acquisition will leave it with a chain of around 120 stores. It also coincides with the launch of a new store in Conswater in Northern Ireland, which is due to be followed in November by new stores in Southsea and Walton Cross. At least 10 new stores are planned for next year, says Sanity UK managing director Shane Fallscheer, who believes the chain has opportunities to establish itself in markets that do not already have a specialist music retailer.

He adds, "Until we took over these stores we were probably a bit below where we wanted to be as far as stores opened in this country, but this now puts us ahead of schedule."


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