Virgin Territory - old but relevant
Richard Branson invades US with try-before-you-buy kiosks
by Kit Davis, Contributing Correspondent
More than tea was flowing at the Mad Hatter's launch party for the new Boston Megastore.
Web-enabled kiosks that let customers sample merchandise and buy from a vast virtual inventory seem tailor made for selling entertainment and media-a fact British entrepreneur Richard Branson has seized upon on both sides of the Atlantic. His Virgin Group Ltd. spans over 200 businesses from airlines to music stores to cell phones, all coordinated via the Web, despite Branson's personal disinterest in technology (he avoids computers and cell phones himself).
Brash Virgin
Virgin Entertainment Group-the world's leading multi-channel music and entertainment retailer-pioneered the music store "listening post" concept in the 1990s. This application, which allows customers to hear tracks from featured CDs, was subsequently adopted by other music stores across America. So this brash Virgin has taken the concept one step further with a unique, in-store digital preview system.
Virgin Megastore customers can now scan a product's bar code at an IBM NetVista kiosk to download samples from the Web for an in-store preview of more than 250,000 CDs and 11,000 DVDs. Virgin developed the new system in-house with IBM business partner Retail Store Systems, using server and client software technology from Microsoft and entertainment data from Muze and Video Pipeline. Called "MegaPlay," this new system made its debut last summer in Dallas and Los Angeles, where the units were occupied almost two-thirds of the time and getting 32,000 page views a week. Virgin has now installed 20 of the new kiosks in its Times Square Megastore in New York City, as well as 15 in its Boston Newbury Street store. Glen Ward, CEO of Virgin Retail, tells KB: "We plan to roll them out across the chain over the course of the next 12 to 18 months."
When asked about ROI, Jan De Jong, VP of information technology for Virgin Entertainment Group, reports, "We are still going through the evaluation of the results. The hardest part is to prove that a CD that was scanned was actually sold." Each Megastore tracks which items are scanned and compares this data against products sold through the registers within 60 minutes. "The results of this are above expectations," says De Jong. "We have done customer surveys to understand customer reaction and needs, and it is very clear that the system is well appreciated." Results just out show shoppers buying products they've previewed at a rate that's triple Virgin's original expectations.
As with any new project, some tweaking is required. According to one industry analyst, "There's a huge database to build up-so much is not there yet. The content is a mile wide and a quarter-inch deep." Future enhancements are planned to facilitate digital downloads, infrared transmissions to portable MP3 players, and loyalty applications for handheld devices.
Megaplay kiosk users scan barcodes for
an in-store preview of more than 250,000
CDs and 11,000 DVDs.
'V' for Victory
On the other side of the empire, Virgin deployed Web-enabled kiosks to rescue its money-leaking V Shops with a combination of traditional retail and virtual shopping. An average of four "Find and Buy" kiosks per store now offer online access to 110,000 SKUs of music, DVDs, games, and videos; each store stocks no more than 2,000 of the most popular products. By halving its inventory, each store saves around $300,000 a year, and breakeven for the project is expected within two years. Monthly sales are up an average of 40 percent, and staff has been freed up to sell mobile phones and improve customer service. Interestingly, only 10 percent of customers opt to pay with debit or credit card at the kiosk; the rest print a receipt and pay at the till. Home delivery is usually the next day. Says Virgin Entertainment CEO Simon Wright: "Technology has enabled us to put a dying business back on its feet and to make a small store big."
The rollout involved deploying 500 kiosks to 97 stores throughout the UK in a record-breaking 9 weeks-from conception to delivery. Neil Verma, head of new channels for Virgin Retail and V Shop, says over six companies were involved, and the challenge was to implement an integrated solution without its feeling "Webbie." Partners included Kudos for software, ePoint for hardware, and Uovo for the application and interface. "We put a concept into the marketplace that nobody knew about, in a large scale way," explains Verma. "Expectations were quite high. We had three months to purchase kiosks and backend servers, design, develop, and implement the kiosk offering, and review and implement a new wide area network infrastructure."
Another advantage of the V Shop has been integration with other Virgin businesses. "We're developing the kiosk concept for Virgin Megastores in the UK," says Verma. The idea is to import the Megaplay kiosk from the US, offering location maps, news and reviews, digital downloads, and real-time music sampling from in-store CDs-"deep range catalog stuff from 170,000 titles," explains Verma. "Virgin businesses work very closely together. And there's no sense reinventing the wheel." This transatlantic technology trade bodes well for the future of international kiosk projects. Branson plans to expand US operations from the present 21 Virgin Megastores to 40 by 2005.
Neom says GO!
