Virgin megastore, à 22 million d'euros failure.

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Executive summary

Introduction

Virgin Megastore is an international retail company. It sells entertainment and cultural goods such has books, music records video games or concert tickets. The first Virgin Megastore opened in the 70’s, since then the group has known a worldwide expansion with hundreds of stores in Europe, North America and Japan. In 2005 some of these stores started to close and in 2013 Virgin Megastore France, which owned the last stores, was filed for bankruptcy and ceased all of its activities after 25 years.

In 2015 Virgin Megastore relocated its activities and opened new stores in the Middle East and North Africa. There are currently around 40 stores.

Analysis

External analysis

Porter’s 5 forces:

1- Competition in the industry

Virgin Megastore did not have a lot of direct competitors where it was implanted, a few big entertainment retailers per country (FNAC, HMV) and also non-specialized retailers.

Their main competition was indirect with websites such as Amazon or EBay

2- Potential of new entrants into an industry

Virgin did not really have to fear from new entrants into the industry, it had and still has a strong brand image. In addition potential competitors would have needed to make big investments in order to enter the market

3- Power of suppliers

In this particular market, the relationship between suppliers and retailers is different from every other market. Indeed, the retailer needs to have a big variety of products and cannot advantage a particular supplier. In the other hand, suppliers need their products to be displayed everywhere.

4- Power of customers

5- Threat of substitutes

This was the main problem for Virgin Megastore, the market completely changed

http://www.lsa-conso.fr/virgin-la-chute-d-un-modele,137062

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