SAN FRANCISCO -- Richard Branson's ambitious plans for rejuvenating sales at his Virgin Megastores begins in San Francisco, where shelves will soon be stocked with sex-related merchandise and a streetside vending machine that dispenses CDs and DVDs, 24-hours a day.
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Branson, chief executive of Virgin companies and founder of Virgin Entertainment Group Inc., was in town Wednesday to promote the changes. Branson hopes to boost sales by tapping into products tied directly to the hearts of music fans, such as hip urban clothing and electronic gear like cell phones and MP3 players.
Selling shelves of music simply isn't enough anymore for a 'megastore' anymore, 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 at the San Francisco Virgin Megastore.
"It may decline a little bit more," Branson said. "What we realized 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, perhaps at the expense of music.
There are $89 Ben Sherman "creased used" new jeans and $70 Hello Kitty backpacks in a corner of the store that used to brim with electronica CDs and listening stations. Near the front of the store, sheer belly dance wraps with glittering adornments can be had for $45.
Other new plans include allowing music CDs, video games and DVDs to be returned to Virgin stores for a store credit, and erecting a 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 soda.
And there will be a selection of erotic media that includes books and DVDs.
Branson and other music retailers face a glut of new competition for music consumers. Online shops such as Apple's iTunes Music Store and the relaunched Napster are vying for customer dollars alongside brick-and-mortar stores like Virgin.
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 reports. 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 will 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.
Meanwhile, there are still roughly 3 million users logged onto the file-sharing service Kazaa each day at any given time, trading music for free.
The Recording Industry Association of America continues to crack down on the illegal downloaders. The umbrella organization for the recording companies blames illegal file-sharing, in part, for dwindling music sales over the past few years.
The RIAA announced Wednesday that its lawyers had filed 41 new lawsuits against file sharers this week and sent 90 lawsuit notification letters to people alleged to have engaged in similar activity.
Virgin Entertainment Group has 23 Virgin Megastores in North America. The stores are privately held and exact sales figures are not available.
http://www.virgin.com
http://www.riaa.com
