French mourn Virgin's 'funeral march'

 
Virgin Megastore on the Champs Elysees, 5 January 2013 Whatever happens to the company, Virgin's flagship Paris store will disappear

When it comes to the business of selling music, they do things differently in France.

From its humble beginnings on the UK High Street in the 1970s, Sir Richard Branson's Virgin record shop chain grew to become an international phenomenon.

At its height, it had stores throughout Europe and North America, as well as in Asia and the Arab world. But from the start of the 21st Century, the Virgin Group began selling off most of its music megastores to local companies.

This proved an astute move for Sir Richard. One by one, the newly spun-off operations began to go bust.

In 2007, the UK and Irish Virgin music and DVD shops were rebranded as Zavvi following a management buyout. But the chain later went into administration and closed its last stores in 2009.

That same year, Virgin megastores across the US shut their doors for good, as economic hard times and digital downloads took their toll.

Liberation newspaper from 8 January 2013 with Virgin France loyalty card Virgin's struggle is front-page news in France

But somehow, through all this turmoil, Virgin carried on thriving as a music retailer in France, with a 4,500-sq m flagship outlet on the Champs Elysees in Paris and dozens of other shops elsewhere in the country.

Now changing times have finally caught up with Virgin France, as the prospect of insolvency looms. But while Anglo-Saxons saw the chain's demise as just one business failure among many, the French are viewing it as some kind of cultural apocalypse.

"Funeral march for megastores", screamed one headline this week in the left-wing newspaper Liberation. Underneath, the paper lamented the "merciless economic Darwinism" that has left Virgin and its rival Fnac unable to compete with Apple's iTunes digital music service.

'Unfair' competition

When the Zavvi group finally disappeared from the UK and Ireland in February 2009, it meant the loss of 125 stores and 2,300 jobs.

Despite this, the closures went ahead with no government intervention.

In the case of Virgin Megastores in France, the company has a smaller presence. Majority owned by the French investment company Butler Capital, it employs 1,000 people in 26 stores.

Members of Virgin's works council meeting to discuss the firm's plight Virgin's staff are grimly aware of the firm's plight

Even so, no-one seems to think it strange that the country's minister of culture, Aurelie Filippetti, should be having meetings with management and union representatives in an effort to keep the firm alive.

Without naming Apple or Amazon, Miss Filippetti complained in a radio interview about the emergence of big websites that "completely escape any kind of fair competition, because they don't pay the same taxes as the others, being based elsewhere than in France".

In other words, the decline of bricks-and-mortar shops selling music and books, which other countries view mainly in terms of technological change, acquires more than a tinge of economic nationalism in France.

Lurking behind all this is the fear that Virgin France and its bigger rival, the Fnac chain, will be wiped out by US multinationals who will come to dominate the French market.

By the book

So how did it come to this? And how likely is it that the fears of the French will be fulfilled?

Well, both Fnac and Virgin saw the digital wave coming. Since 2004, the Virginmega.fr website has been offering MP3s, followed by film and e-book downloads.

Fnac, which is the biggest bookseller in France as well as the biggest music chain, offers e-books and e-readers in partnership with the Kobo firm. But it closed down its Fnacmusic digital download service at the end of 2012, admitting that it was unable to win market share from iTunes.

Virgin, likewise, appears to have done too little, too late to keep up with changing times.

Fnac store in Paris showing Christmas 2012 gift ideas Fnac is a big bookseller as well as a CD and DVD retailer

However, Fnac's greater share of the book trade may prevent its going the way of Virgin. Unlike CDs, books are not the same product everywhere in the world: they have to be translated into different languages.

A quarter of the US book market is now digital, but in France, only 2% of all books sold are e-books. And whereas Amazon can use deep discounts to sell physical books in other countries, another piece of French government action, introduced by former culture minister Jack Lang, fixes the price of books and severely limits discounting.

Nonetheless, the French seem unconvinced that their cultural champions can play the game of market forces and win. There are already calls for the French state to follow its instincts and intervene, in the interest of creating a more level playing field.

Liberation, for one, is denouncing what it sees as "unfair competition, founded on fiscal dumping".

Its editorial concludes: "The phenomenal power of the digital revolution does not exclude regulation: it requires it."

 

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  • rate this
    0

    Comment number 64.

    12.Sue Doughcoup
    With so many shops becoming empty perhaps retail property rentals will come down
    -
    They won't. The land is owned by pension companies (as is most national debt). The smoking ban adding years to life expectancy means the pension companies need more than every penny they can get. The real cause of the worldwide economic problems and casino banking

  • rate this
    -1

    Comment number 63.

    56. helo thar
    Never been to a record store in my life. They are where old people who don't have the internet go to get music right?
    ///////
    I used to go to record stores to meet members of the opposite and sometimes same sex and enjoy everything that came with those encounters. It was a lifestyle. You yourself would probably need to get a life first to even start appreciating that.

  • rate this
    +2

    Comment number 62.

    #55.
    littlemisterfurious

    "Good.

    Serves Richard Branson right."

    People who are happy with inferior downloads of music don't appreciate detail in anything. If 'littlemisterfurious' had any critical faculties, he would have read that Branson sold off the Virgin music business long before it collapsed. That's why Branson is a content multi-billionnaire and 'littlemisterfurious' is just - furious.

  • rate this
    -1

    Comment number 61.

    60. penguin337
    The French are totally paranoid about their culture being munched up by the USA and being "Anglicised"
    It's a very big deal for them
    ////////
    Not sure it's paranoia, but it's very effective as they remain unmistakenly French, whereas we just pop onto our backs whenever the US ask us to do so. Where is Cameron's outrage at the US Government's comments on the UK's EU membership?

  • rate this
    +1

    Comment number 60.

    The French are totally paranoid about their culture being munched up by the USA and being "Anglicised"

    It's a very big deal for them

  • Comment number 59.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +2

    Comment number 58.

    56.helo thar

    "...Never been to a record store in my life. They are where old people who don't have the internet go to get music right?..."

    ===

    ...and those who want to hear it without an unacceptable degree of data compression too.

  • rate this
    +1

    Comment number 57.

    Isn't the crux here that the French (like us Brits) are having to wake up to the downside of EU Tax law? Bricks and Mortar cannot compete with online only retailers. Perhaps EU tax law must change so a company which trades in a territory, pays corporation tax in that territory. Would only work if applied unilaterally across all EU states and DC's probably not man enough to get EU agreement.

  • rate this
    -1

    Comment number 56.

    Never been to a record store in my life. They are where old people who don't have the internet go to get music right?

  • rate this
    -2

    Comment number 55.

    Good.

    Serves Richard Branson right.

  • rate this
    +1

    Comment number 54.

    12.Sue Doughcoup

    "...With so many shops becoming empty perhaps retail property rentals will come down..."

    ===

    Councils could compulsarily change use to residential, and sort the so-called "housing shortage" (yet with many places having a problem with derelict homes).

    But I suppose this wouldn't help the aim of the further billions about to be thrown at propping up the bubble...

  • rate this
    +1

    Comment number 53.

    If people are "mourning" the loss because they believe Virgin is a funky brand owned by Sir Richard Branson don't bother.Virgins so called companies are owned by Bransons equally posh and tax evading friends, the huge banks and Middle East Royalty. Mourn the tax lost in the off shore trusts Bransons set up and for being taken in by the snake oil salesman!

  • rate this
    +4

    Comment number 52.

    I think the main reason HYS chooses odd stories is due to the immense negativity the UK has towards the Tory party. The feeling is so overwhelmingly hostile towards them they fear an online riot. I may even join in if one does materialise, maybe throw one or two virtual rubbers if I get bored..

  • rate this
    +1

    Comment number 51.

    They took our jobs!

  • rate this
    +2

    Comment number 50.

    The loss of any large retailer is depressing - even if it is not in the UK. but surely there are more important topics - should we not be discussing Obama's desire to influence our government on EU membership? Another example of a HYS on a trivial issue whilst serious stuff is protected from comment - IMHO someone is pulling Auntie Beeb's strings!

  • rate this
    +3

    Comment number 49.

    Outside of supermarket lines, retail is finished except for clothing. City centers will have to concentrate on that and entertainment. To become parks if we are to bother to visit them in future. Distance selling regulations already mean that you are better off buying online where you can return the item for the postage - a lower cost than parking in most cities.

  • rate this
    +2

    Comment number 48.

    So, we have HYS on free phones in Nigeria and this. And HYS used to be so good up until 18 months ago - but its clear the BBC doesn't value it no more no more.

  • rate this
    +5

    Comment number 47.

    On a positive note, Swansea beat Chesea 2-0 in the League Cup.

  • rate this
    +1

    Comment number 46.

    Music stores were such great places to meet people.

  • rate this
    -1

    Comment number 45.

    Oh Good Grief! As if Branson wasn't ultra millionair enough. And what is it with the French anyway must everything be a melodrama. Life goes on it did after the acien regime collapsed. France will survive Depardeu's tax tantrum (he can stay in Russia forever) and it will survive the closing of a music store however popular it was. Things always come and go.

 

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