At the National Retail Federation Big Show 2017, Sir Richard Branson had a counterintuitive piece of advice for retailers: Every failure is an opportunity to move into the future.
During a keynote session on Jan. 16 at the annual New York City event, Branson shared an anecdote about a prank that foretold the demise of the Virgin Megastore, a once-ubiquitous retail giant specializing in CDs, DVDs, games, books, apparel and electronics. Branson told the standing-room-only NRF 2017 audience how on April Fool’s Day several years ago, he told everyone he’d invented a box that could hold enormous amounts of digital music.
“And of course, that backfired,” he said, with a laugh. “Because Steve Jobs heard that and two or three years later, Virgin Megastores became defunct.”
Did the idea for the iPod germinate thanks to the serial entrepreneur? Hard to say for certain, but one thing is for sure—what was once a High Street staple has been reduced to a few outlets in the Middle East. However, Branson was quick to point out that the closing of Virgin Megastores stores in the UK, France, Germany, Ireland, Spain, the US, Canada, Australia, and Japan spawned entirely new business models.
Branson and his team looked at which items in the stores had been selling well. Those two items turned out to be mobile phones and video games. Thus, two new lines of business were born: Virgin Games and Virgin Mobile.
“Failure can be your friend,” Branson pointed out.
With retailers seeing a decline in foot traffic, this attitude is more timely than ever. Recently, retail analyst Jan Kniffen predicted that one out of every three American malls are “doomed” to close. Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, told CNBC that the U.S. in particular is “over-stored.” There’s simply too many square feet of retail space, and not enough shoppers to support it. Instead, he added, commerce has definitively moved online.
That would seem to ring true for U.S. clothing retailer The Limited, which abruptly announced in early January that it was closing all 250 of its physical stores and moving to an entirely e-commerce model. As of this writing, the brand says it won’t liquidate but even that seems to be up in the air. However, following Branson’s advice, the retailer should look closely at whether or not a new business model is hiding in plain sight.
“Sometimes you can create a brand-new business that can help you survive,” he said. “I’m an optimist!”
For more digital transformation insight for the retail industry, see Top Digital Marketing Strategies For Retailers.