Virgin Retail - Case Study

Virgin Retail

The client

First established in 1971, the music retailer has moved through several re-brands, including Our Price and V Shop, before developing the current Virgin Megastores brand which has been in existence for the last five years, with a turnover of £400million and boasting 125 stores throughout the UK. Music retail is widely recognised as one of the toughest sectors and retailers cannot afford to rest on their laurels. It is vital that they continually develop their products and processes to keep up with the changing landscape as it is easy for businesses to fall behind and become staid in a fast-moving sector.

The challenge

As part of a UK-wide campaign to modernise and optimise performance, global music retailer Virgin Megastores has introduced cutting-edge customer counting and analysis systems across its network of UK retail outlets. Virgin worked with Experian FootFall to implement the system which has allowed it to analyse footfall trends and gain an unprecedented understanding of customer behaviour in-store.

In Virgin’s case, many stores were simply in the wrong locations, as popular shopping destinations and customer behaviour had shifted over time. This led the company to decide that a strategic and well-planned fight back was needed to radically shake-up the business and move it into the future.

The company had a clear vision for the business, with the ultimate goal of becoming the destination for entertainment retail. As well as relocating a number of stores and revamping many others, a key part of this plan was to begin really understanding the stores and the customers within them, as influencing customer behaviour is the crucial differentiator between success and failure in a competitive retail marketplace.

The approach

Experian FootFall worked with Virgin to create an advanced customer footfall analysis system. Experian FootFall installed unique overhead thermal counters in all stores to monitor shopper activity and produce accurate daily breakdowns. Once compared to sales data, this allowed Virgin to calculate customer conversion rates – a vital measure of success for retailers. Identifying ‘missed opportunities’ is a key factor in maximising sales – learning how many people are not buying and why gives retailers insight into customer shopping habits and the tools to begin converting footfall into sales.

The implementation

Experian FootFall set up further systems to produce simple, usable information from the data collected. Customer counts, conversions to sales and average transaction values (ATVs) could be compiled and analysed by time (hour, day, week, period or year) and by section (company, division, region or store). The resulting information could be fed down to all layers of the company, with daily and weekly automated reports to the board and senior management, and access to data for store managers via Virgin’s intranet and Experian FootFall’s interactive software. In this way, valuable information could be utilised by every internal department, including operations, marketing, products and finance, as an instant guide to which initiatives were successful and which were failing to take effect.

The results

After implementation, Virgin and Experian FootFall ensured critical buy-in from the entire business team and a clear understanding of how each department would interpret the information. In order to influence the key indicators, Virgin held a launch event to introduce the concept to the company and build enthusiasm amongst staff.

So far, the observations made across all stores have been invaluable. Virgin has noted significant differences in performance between stores, with as much as 20% difference in ATV and a 15 point difference in conversion rates between the highest and lowest performing stores. By recognising these subtle differences, the company has been able to develop tailored approaches for improvements and growth. The key strengths and weaknesses of various stores have been used to educate the whole network to add value or instigate change.

"From the outset we linked the footfall information to our store customer service programme which has been extremely effective in creating a clear understanding of how service drives conversion.
We will be year-on-year with footfall in June, which will provide us with another level of information to better understand what is driving good or poor performance at store level. This provides us with the ability to develop and improve on current systems and find unique strategies that appeal to the customer profile of each individual store and area." Quote: Jason Toy - Virgin Retail

10/09/2007