Sir Richard Branson at NRF: Are retailers looking outside the box?
“People who own retail stores should not think of only being retailers, they need to be entrepreneurial and spin off businesses off the back of the retailer to make them money to help the retail stores survive.”
That’s according to Sir Richard Branson, founder of Virgin Group, who spoke on Monday at an NRF keynote session, “Undying Brand Engagement in an Age of Continuous Disruption and Reinvention.”
The Virgin empire now extends to over 400 businesses including soft drinks, airlines and a soon-to-launch first commercial space line. But the business started in retail with the Virgin Megastores record chain.
In 2001, the iPod was launched and the company soon “saw the writing was on the wall on music retailing.” But Sir Branson recognized “we don’t have to stay a retailer just because we are a retailer,” and explored which products were selling well at the Virgin Megastore chain. The company moved into mobile phones and video games, both in the early stages of their growth cycle, and realized revenues “much, much bigger than our retail stores ever could have been.”
Sir Branson’s underlying point was that retail companies could explore other ways to help support the core retail side of their businesses.
In the fireside chat with The Container Store Co-Founder and Chairman Kip Tindell, Sir Branson did note he has made sure that any of Virgin’s extensions did not damage the brand’s overall reputation.
“Virgin is a way of life brand so people don’t mind if you’re trying and failing as long as they don’t leave people with debt and they keep their reputation intact. Fortunately, we’ve had more successes than failures.”
Sir Branson’s discussion stressed the importance of having a good staff, letting employees make mistakes and making sure they “enjoy coming into work in the morning.” He said capitalism today involves becoming “more than just a money making machine,” not just for societal reasons but for employee morale as well. Said Sir Branson, “People within the company will work that much harder if they feel they can be proud of the company.”
DISCUSSION QUESTIONS: In our disruptive business environment, do retailers need to be more entrepreneurial in exploring alternative revenue streams, including non-retail? Or would your basic advice be to stick to their core expertise?