"Virgin" moves to the Middle East

Virgin eyes Middle East expansion

The music industry scene is changing rapidly, with many people opting to download songs rather than buy CDs. With films too, many people are turning to download services. Where does that leave music franchise Virgin Mega Stores, whose revenues still relies heavily on the sale of CDs and DVDs?

Virgin Mega Stores Middle East believes people in the region will still want to buy CDs for at least the next 13 years. The company has just renewed its right to run the stores in the Middle East with Virgin Stores France for that period of time, with plans to further expand into untapped regions. The UAE is Virgin’s largest market in the Middle East, accounting for half of its turnover. And according to Nisreen Shocair, President of Virgin Mega Store Middle East, UAE residents have shown much more acceptance for the concept of Virgin, mainly because of the country’s demographic mix.

Untapped opportunities

Currently, Virgin has four stores in Dubai and one in Abu Dhabi, and is looking at other emirates such as Sharjah as the potential location for future stores. As of now, nothing is confirmed, the reason being Virgin’s lack of feel for what is going on in these locations Shocair admits. 'We have big interest in expanding more in Abu Dhabi, but it has been difficult finding a big format store. It’s easy to find an 800sq metre store, but quite impossible to find a 2,000sq metre store, which is what we’re looking for. We’re also looking for the right client mix within a mall and when we find that our second store will find its way into Abu Dhabi,’ Shocair says. Dubai is the shopping capital of the UAE, if not the Middle East, and has plans to open many more shopping malls over the coming few years. But Shocair doesn’t expect to be in every one of them, as the company is trying to strike a balance between being located where the communities are and remaining a destination that people visit. However three stores are due to open within the next 18 months in the emirate. Virgin’s expansion plans include entering Bahrain, its seventh Middle Eastern country after the UAE, Lebanon, Jordan, Egypt, Kuwait and Qatar.

Adding curves

Those who visited Virgin Mega Store in the Mall of Emirates in Dubai recently would have seen a car inside the store. This is just one of the ways the company is trying to focus on the lucrative youth market. It also wants to attract more women into its stores, with design changes aimed at its female audience. 'An organisation run by women will end up having more curves. And we’ve certainly tried to add more curves in our stores in an attempt to catch female attention. To this end, a redesigning process took place recently, with fashion magazines and books that interest women moved to the front of the store, in addition to increasing the range in our virgin boutique,’ Shocair explains. In terms of concept, Virgin Mega Stores Middle East positions itself as an entertainment destination. However, when it comes to individual market sectors, Shocair claims they have no idea what Virgin’s share is in the overall gaming or books markets. And it’s the dealers that are to be blamed for that. 'In our deals within all the market sectors we have asked our partners to give us such data, but they still feel this is their own information, and they gain power by keeping it. There’s a fear that we might use this information against them, while the fact is that it would help us work together better,’ Shocair says.

Digital threats

Downloading music from the internet is an increasingly attractive choice, making it harder for music dealers and retailers to increase sales figures, but Virgin does not believe digital downloads will threaten its survival. 'We are lucky, we launched our concept in 2001 and could clearly see the future. We were dealing with a completely different industry and overnight things changed. We were fortunate that from day one we knew what we were dealing with, but the Middle East was not ready for the future. It’s hard to believe that in 2008 people in the region still want music cassettes. The problem is the old cars owned by a lot of people still have a cassette deck,' Shocair adds. Yet, Virgin is determined to capitalise on downloads with a new product offering that will be available in stores by the last quarter of 2008. Shocair told AME Info that Virgin will introduce 'cool format’ kiosks from which consumers can download music onto their memory stick or mobile phones. It hasn’t been decided yet whether this is going to be a paid or free service, but either way, this would definitely be Virgin’s access card to the youth market, enabling it to reach out to this group.