It's not easy to run a retail operation in times where online stores compete with physical outlets, where logistics shifts from trucks to bandwidth and where free distribution of goods seems to become the rule for anything digital. How can a retailer still make money?

Successful traditional retailers (both on- and offline) are usually strong in logistics. It's not so much marketing strategy, positioning or communication tactics that makes them thrive. Moving boxes in the most efficient way is what makes retail work. Even the iTunes store is about getting moving files from one place to another as frictionless as possible. It's money that matters. But what happens to retail if the main economic drive (money) is completed with two new drivers: time (attention) and reputation? Worse even, what happens if music is distributed for free, so the traditional economic driver simply disappears, if music definitely enters the freeconomy. How do you run a Virgin Megastore if Radiohead gives their music for free and everybody listens to internet radio (e.g. TMF Radio)? Moving to an online store concept such as iTunes is not the answer.

Retailers need to make a shift from logistics thinking to experience thinking. Take the example of the Virgin Megastore. Why pay for expensive high street locations to store thousands of plastic boxes that everybody can easily download? My recommendation would be to drastically shift from a Virgin Megastore to: "the VIRGIN METASTORE".

The mission of the store would be: "To be the market leader in share of attention when it comes to entertainment (music, video, games)."

The business model goes in different directions:

"Acquire attention from the customer, sell it to the music publishers and artists."
"Buy (or produce) physical stuff from artists (that includes their time) and sell it to the customers."

In fact, the business model will not be a traditional one-way exercise (buy > sell) but a balancing exercise with multiple parties where the sum of all the transactions in the store's ecosystem gives a positive ROI. I guess the finance department is up for a challenge there.
What does this mean for the Virgin Metastores:

  • Throw out all standard the CD's, put them in the attic or the cellar and people can order them at the counter, at in-store kiosks or online.
  • Customers can also choose to download the songs to their MP3 player in the store or online, some will be for free (could be back catalog, extra remixes, ...).
  • Use the free space to create experience corners where customers can enjoy different atmospheres. These could be linked with music genres (e.g. R&B, Classical music, Party, Alternative, etc.), popular artists (whoever happens to be in town that month) or particular themes (e.g. Christmas).
  • Sell all popular devices to enjoy music, video and/or games.
  • Organize workshops (like in Apple stores) to make your own music and video, learn how to convert your old vinyl LP's to MP3 or have a musicologist analyze the work of a specific artist.
  • Sell concert tickets. Sell complete travel arrangements to go see an artist in another country (including flight, hotel, meet & greet, etc.)
  • Organize mini concerts with for up and coming talent.
  • Have major artists over for in-house concerts and meet & greets with fans
  • Sell everything that goes beyond a standard CD: Gift boxes, full repertoire sets, CD + book, fashion, posters, gadgets, memorabilia, etc.
  • Obviously there will be a Starbucks (or similar) in the shops, a healthy snack corner and some free water fountains.
  • Sell music instruments
  • Match up people who want to start a band, shoot a movie or go to concerts
  • ... put 5 creative people in a room and 50 more ideas will spring up ...

Anyway, if anyone has Richard Branson's e-mail address, feel free to send him a link to this post :)

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