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
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
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
’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,
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
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
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.