Last night I had the opportunity to attend the grand closing party of the Virgin Megastore in Times Square, NYC. This marks the end of an era--both for the music business, and in my mind, for Virgin as well. Virgin's SOUL is music, just as LoveSac's soul is the Sac. Although we will likely sell 10 times the Sactionals than we have sold or will sell Sacs, we will never abandon the Sac. It is our namesake--it is our soul. [RIGHT: Scott McDonough (my former biz partner), Tiffany, Me, Alex & Sarah Rhodeen attended the Virgin finale on March 26th in Manhattan.]
I am sure that much thought and consideration went into the decision to sell the Megastore business. Knowing what I know of the organization (excluding Richard) I am sure it is just a financial consideration, no doubt. In fact, this segment from an article in the NY Times summarizes it nicely:
It has remained “very, very profitable” by shifting its merchandise toward apparel and electronics, including iPods, he said, adding that those two categories accounted for about 25 percent of sales during the holiday shopping season. (Simon Wright, Virgin MegaStore's CEO)
But the chain’s owners, two big New York-based real estate development companies, saw greater potential in leasing the prime space to Forever 21.
The Virgin chain, once part of Sir Richard Branson’s business empire, has been owned since 2007 by the Related Companies and Vornado Realty Trust. It comprised 11 stores when it was acquired, but now will be down to just five, two of them in California. Virgin closed other stores late last year. (visit: http://www.nytimes.com/2009/01/15/nyregion/15virgin.html to read the entire article)
It is obviously the new Real Estate Group's perogotive to do whatever they like with the business they bought. My argument is that Virgin should have never sold the Megastore (especially not the Times Square one) in the first place. The real estate behind them clearly had value, which could have been realized sub-leasing under-par locations to any other concept, but as the article above states, the store itself was very profitable. Virgin should have taken less money (the ongoing profits from the store), kept its soul and continued to focus on its other businesses.
I'm sad to see Virgin Mega NYC close its doors - just watch any movie that shows Times Square...Virgin Mega WAS Times Square. But what do I know about building a mega-brand...I'm just the Rebel Millionaire. Last I checked, the Rebel Billionaire is doing just fine.
-- Shawny D.
[ABOVE: Me, Simon Wright & Lori Levin. All ex-Virgins. Simon, CEO of Virgin Mega was a board member at LoveSac for 3 years. Thanks for everything Simon!]
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