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France

Virgin Megastore France falls victim to the internet

© AFP

Video by FRANCE 24

Text by FRANCE 24

Latest update : 2013-01-10

Virgin Megastore France, once part of a global brand in CD and DVD high street retail, has filed for insolvency. Its 26 French stores, among the last Virgin stores in Europe, are victim to the digital revolution and a change in shopping habits.

Music, film and book retailer Virgin Megastore France filed for insolvency on Wednesday, citing high debt and an inability to compete with online retailers like Amazon and Apple’s iTunes service.

The demise of the brand, which first opened in France in 1984 and now employs 1,000 people in 35 stores, marks the end of a retail era while fanning unease over the Internet’s role in providing media entertainment at the cost of French jobs and tax revenue.

Virgin’s Richard Branson, who founded the first Megastore in London in 1971, began selling off the brand in the late 90s.

One by one the sold-off stores went bust as shoppers turned increasingly to the Internet for their music, films and books.

The only Megastores still doing a growing business are in the Middle East, where they retain a certain chic among fashionable shoppers.

Not so for Virgin Megastore France, whose owner since 2007 Butler Capital Partners says the operation is heavily in debt and has too uncertain a future.

Socialist backlash

On Wednesday, hundreds of staff protested outside the company’s 4,500m² Paris flagship store on the Champs Elysées – where the rent is seven million euros a year – demanding that the government or another buyer step in to save the store and their jobs.

The employees brandished placards reading “yes to culture, no to closure” and “don’t sell our jobs off on the cheap”, while others accused Butler Capital Partners of putting shareholders before its employees.

The potential demise of the Megastore has provoked an inevitable backlash from the Socialist government.

Earlier in the week, French Culture Minister Aurélie Filippetti blamed Virgin Megastore’s woes on “disloyal competition” from online retailer Amazon - which sells everything from books to garden sheds - complaining that the US giant was not paying sales taxes in France.

“A report will be presented to the government later this month on taxation in the digital age, with proposals to fight against this form of circumvention of the tax laws.”

“The most likely outcome is that Virgin Megastores France will go into receivership,” she added. “Then we will have to find a buyer, and the government will do everything possible to make sure that it happens.”

Renaissance?

Filippeti’s criticism of Amazon, which dominates the world’s online book market, does not match her government’s recent attitude to the company.

In July 2012 French Minister for Industrial Renewal Arnaud Montebourg welcomed the online retailer’s decision to set up a distribution plant in the Burgundy region of central France.

Citing the demise of a Kodak film factory that was replaced by the Amazon plant, Montebourg then called Amazon’s decision -- which has created up to 1,000 jobs -- a “renaissance”.
 

Date created : 2013-01-09

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