Published: 19 May, 2008
Entertainment retailer Zavvi is a new name on the UK high street, only emerging last year when Virgin Megastore's managing director Simon Douglas and finance director Steve Peckham took over the portfolio from Richard Branson in a management buyout.
Despite only launching in September 2007, their two major KPIs - sales performance, which has been up 10 per cent like for like, and footfall, which has also improved - are already indicating the retailer is meeting its customers' needs, succeeding where others have failed.
"We both worked in the Virgin business and we felt that with the right funding there was a gap in the market for an entertainment retailer," says Douglas, chief executive officer of Zavvi. "Music Zone, Fopp and MVC have all gone into administration along with Silverscreen, which left HMV, the supermarkets and the internet. We felt therefore that the market could sustain another entertainment retailer.
"We also felt that although we were inheriting 120 stores, the Virgin brand was independent retail rather than a music retailer."
Douglas and chief financial officer Peckham are currently investing in a book offer along with a clothing and merchandising offer. They're also working closely with Apple, in order to sell more of Apple branded products in Zavvi stores. This is evident in the new Belfast store where a new look has been created for Apple branded products and where the book offer is significant.
"We've rolled the book offer out into five stores already," says Douglas. "We plan another 10 before the end of June and more before the end of summer. We're not pretending to be Waterstones, but we're looking at cult fiction, aiming for a more eclectic offer around the customer base rather than mainstream. And we're looking for niche areas that perhaps haven't been exploited; so it's a different offer, I think, to what's currently available on the high street."
Despite this move into other areas, music, games and DVDs still remain the core of the business.
"Virgin is associated with music but we want to bring games, DVD and Blu Ray to the forefront of our store," says Douglas. "However, music remains one of our core products. Our philosophy is about customer service - the customer is king at the end of the day so we're working very hard on the experience our customers get in store, whether that's the ambience, what music is being played or what's on the screens. We encourage interactivity. Customers can listen to products, play with the products and watch them on high definition TVs. The aim is to create a great shopping experience."
Recent store signings to add to the portfolio have included Victoria Square in Belfast and The Atrium in Camberley, as well as Cabot Circus, Bristol and Liverpool One, which both open in September. The company is set to announce two or three more deals shortly and plans to open up to 10 stores a year over the next three years. Eight stores are currently under consideration for 2009 in Newcastle, Bath, Blackpool, Cardiff, Wakefield, Warrington, Doncaster and Cambridge.
"We've a targeted number of cities and shopping centres where we're not represented and would like to take stores if the right deal came along," says Douglas, who lists Guildford and Bath among their top prospective towns. With only one store in Wales, Douglas believes there's plenty of scope for new store openings there, as well as in the Republic of Ireland, where he says there remains a very poor representation of entertainment retailers.
While choosing a difficult time to launch in the retail market, Zavvi has got off to a strong start. And although Douglas and Peckham are not complacent, the future looks bright for the brand and this dynamic duo.
=== Statistics ===
Christmas 2007 like-for-like sales (4 weeks ending Jan 5): Up 10.2 per cent
Christmas on-line sales growth: Over 70 per cent up
Number of stores: 125, including 12 in the Republic of Ireland
Average store size: 4,500 sq ft
Total selling space: Just under 820,000 sq ft
Letting agent: Colliers CRE
Ratio of stores: 50 per cent shopping centres; 35 per cent high street; 15 per cent retail parks/outlet malls
Chief executive officer: Simon Douglas
Chief financial officer: Steve Peckham