Virgin launches high street Internet stores
Sir Richie lets slip about retail plans while announcing Virgin Energy
A tired and slightly distracted Richard Branson let slip about Virgin's plans to set up Internet one-stop shops in old Our Price stores this lunchtime.
The mention of "V-shops" was made during a press conference announcing the launch of Virgin Energy - the entrepreneur's latest venture into the utilities market. Talking about his grand Internet-based vision, Sir Richard said people would soon be able to book/buy/review the whole range of Virgin goods through the virgin.com portal.
Access could be achieved "at home, work or through V-shops". The casual mention was missed by most, but a few puzzled hacks (The Reg included) looked at one another and quizzed Richard later.
"The V-shops are a rebranding of the Our Price stores," Rich told us. "They will be open in three weeks and are basically hi-tech Net shops. They will still sell music, but not as much as currently, mobiles and hi-tech Internet equipment - Virgin Net products."
The total of 350 Our Price shops UK-wide will give the mobile arm greater exposure - more stores than Carphone Warehouse, he told us. Megastores will have a V-shop inside them.
As for rollout, 100 stores should be ready by Christmas and then the remainder six months after that.
Although Richie looked knackered - it would seem as though he and his advisors are still sharp when it comes to an idea. The V-shops are an obvious step - but then, as ever with Virgin, one that no one seems to have thought of doing before.
We should really talk about Virgin Energy seeing as that was what it was all about. Basically, Virgin has gone into the gas/electricity market (with London Electricity) and guarantees cheaper prices (or your money back with interest). And, being Virgin, it promises to be customer friendly. That is, based over the Internet.
There's quite a lot of info packed into this announcement, so we'll split it up:
It's gonna be cheaper you say
That's what they say. A lot cheaper. Example: Three-bed semi in the south of England - £66.42 cheaper per year (Virgin figures of course).
How? Aren't British Gas going to run them out the market?
Exactly what was passing through our minds. Fortunately, John Kinsey (Virgin Energy MD) is a straight talker. "Okay. British Gas buys gas on a 10-year contract at a fixed price. It has paid a high price for it and so because we buy in a smaller timescale [annually] we can charge less. Even though the price is higher now, the actual price [medium to long-term] is much lower." Is that it? "No, because we are running it through the Internet we have none of the enormous costs of thousands of people that the others do." Are these operating costs large enough to be able to consistently undercut other operators? "Yes." So there you have it.
Over the Internet? Sounds like hassle
Well, if it all goes according to the blueprint, this is a bloody good idea. Registering on its website www.virgin.com/energy should be all you need to do (well, you'll have to set up a direct debit too). Virgin will look after the rest (cancelling existing providers etc etc). Not only is this good business sense, it is also essential if people are to bother. The customer service bit is that those who sign up will be given a username and password to get access to their own personalised billing and information. We like this too.
A lot of trouble for what must be tiny profit margins. Actually, does it actually plan to make a profit?
Yes it does. Some bods that know all about the gas industry pointed to the rising price of gas. Sir Rich said he was prepared to cut profit margins to keep the public's faith, but, yes, they expect profit. As for why - well, this is more interesting and is part of the big vision. Sir Rich told The Reg he wants virgin.com to become a kinda cradle-to-grave service for people. That's why he has launched into so many seemingly disconnected markets. People will buy a train ticket (don't even go there, girlfriend) and then check out a mortgage while they're in the Virgin portal, according to Branson's vision.
"Virgin has always been a consumers' champion," he said. "The Net has helped us rationalise Virgin and use it to get to consumers". Customers will have one bill with everything from mobiles to car hire to flights to CDs on it, available instantly on the Net. The plans get bigger too. "We will fill in the gaps in Britain and then grow out abroad". There is also the possibility that all the Virgin Net companies will be run into one in the future.
He answers our last question before we've asked it. "Why do I do it? Because I love the challenges." Oh, and the UK should join the euro as soon as possible. ®