AGENDA: Virgin makeover for unhealthy Vie - Virgin is pushing its well-known name to rescue cosmetic chain Virgin Vie from obscurity. But is it too little, too late? Lisa Campbell investigates

When Virgin Vie opened last October, its launch ad mocked the cosmetics industry, ridiculing the cold and intimidating nature of its stores and staff. Little did it realise that just eight months later, it would stand accused of the same crime.

When Virgin Vie opened last October, its launch ad mocked the

cosmetics industry, ridiculing the cold and intimidating nature of its

stores and staff. Little did it realise that just eight months later, it

would stand accused of the same crime.



Virgin Vie is struggling. Last week it made redundancies in marketing

and retail departments following poor sales figures, rising losses and

the decision to refocus resources on the more successful direct business

(Marketing, October 8). Among the departures were retail director Keith

Jones, head of retail Carol Bolton, along with a technical manager and

two product managers. Chairman Ian Pluthero, who joined in April, also

retired from the company last week and was replaced by group finance

director Stephen Murphy.



When it launched, the company intended to fill a gap in the market with

a new proposition - premium quality products, but at affordable

prices.



This, combined with the Virgin name to give the brand a strong heritage,

would aid its rapid expansion. Twenty stores were planned for its first

financial year, rising to 100 by its fifth. International expansion was

also on the agenda.



In reality, Virgin Vie has only six stores with just four more opening

this year. It refuses to commit on how many will open next year. Sales

from last October to June stand at just pounds 2.6m, while parent

company Victory Corporation, 52% owned by Richard Branson’s Virgin

Group, announced it will not break even for at least another two

years.



So what went wrong? Beyond the rising rent problem was a fundamental

misjudgment of the power of the Virgin name. When the flagship store

opened on Oxford Street, the company was told it could keep advertising

to a minimum as the mighty Virgin name would do its marketing for it. So

a two-week cinema ad and the usual Branson PR stunts were all that

announced its birth. The five subsequent stores received no marketing

support whatsoever.



’It was a mistake to think that the Virgin name itself would be enough

and that we didn’t have to spend money on advertising. So we are now

investing heavily in a campaign,’ says Virgin Vie co-managing director,

Liz Warom.



According to a recent poll by NOP, commissioned by Marketing, 72% of

consumers claim Branson’s endorsement of a Virgin product would make ’no

difference’ to their buying decision, with 53% saying they would turn

their back on Vie Cosmetics.



But sales and marketing director Ros Simmons argues that the problem

isn’t the weakness of the Virgin name; rather that Virgin Vie hasn’t

used it enough.



Nick Bubb, SG Securities retail analyst, agrees. ’Consumers haven’t

fully understood the concept. It’s called Virgin but when they see the

store, they’re not sure why,’ he says.



Rather than expressing the humorous, challenging and down-to-earth

Virgin values, the stores have been described as forbidding, clinical

and upmarket.



To address the problem, Virgin Vie has upped the Virgin factor for its

four new stores opening this month.



’The emphasis will be on fun. The red logo will appear on the facia and

on key products,’ says Simmons.



Other attempts to make the store more approachable include a wider

entrance and more defined categories, replacing the confusing array of

500 products.



And this time the new stores will be supported by local and ’obviously

Virgin’ ad campaigns by Mellors Reay, breaking this week. A national

campaign is planned for next year.



Meanwhile, the company is investing heavily in its direct business, with

almost 2000 consultants holding home visit-style cosmetic parties.



’There’s no doubt the Virgin name is effective when used on a one-to-one

basis,’ says Virgin Vie finance director, Richard Knight.



Yet the real issue is whether Virgin can translate into upmarket

propositions such as cosmetics and clothing when its strength is cheap

and cheerful, mass-market products.



Only time will tell, but as long as the changes at Virgin Vie are more

than just cosmetic, there’s hope.



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