Los Angeles: Virgin Megastores, the music and lifestyle retailer, is pulling out of the US, closing its six stores across the country over the next few months.
The decision by Virgin, which has been in the country since 1995, represents the latest blow to music stores. Tower Records shut down in 1996, leaving Wal-Mart as the leading CD retailer in the US. The biggest music retailer is Apple’s online iTunes service.
Virgin’s decision was prompted by falling CD sales as consumers move to online retailers, as well as the general downturn in the economy. It is also the result of the sale in 2007 of Virgin Megastores to the real estate groups Related Companies and Vornado Realty Trust. At its peak, the chain had 23 stores in the US, down to 11 by the time it was sold.
The six remaining stores occupy prime sites, from what is dubbed “the world’s largest music store” in Times Square New York, to a prominent position on San Francisco’s Market Street.The closure of the Times Square store was announced last month, with the company hoping to refashion its remaining stores. The chain has already diversified into DVDs, clothing and accessories.
But, according to Virgin Entertainment Group chief executive Simon Wright, that opportunity was stymied by the economy. “It’s sad news, but it has nothing to do with the stores,” Wright told TheWrap website. “In this economy, we can’t justify the other stores to replace the Times Square store.”
The owners, Wright said, were more interested in the real estate opportunities offered by the sites. “In an ideal world it would have been possible to both have that real estate and develop the business along a different strand. But the economy has cut off that option,” he said. Virgin was paying $54 a square foot in rent for the 60,000 sq ft Times Square store. Market rent in the area is closer to $500.
The Times Square store will be taken over by the clothing retailer Forever 21.
The closing down sale at the Time Square branch is already underway, with the final closure expected in April. The other stores – in Los Angeles, San Francisco, Denver, Orlando and a second New York store – are expected to follow suit.
The closures will see the loss of around 100 corporate jobs and nearly 1,000 retail positions.
Filed under: Chain Stores, Entertainment, Leisure & Lifestyle, News & Articles, Online Shopping | Tagged: Clothing Retailer, Forever 21, Lifestyle Retailer, On-line Retail, Retail Chain stores, Time Square store, Virgin Megastores |