How Zavvi lost its Virginity

Anyone involved in retail IT will say it's a tough vertical to be a techie in, with the task of obtaining management buy-in often the hardest part of getting a project up and running. Tony Johnson has dealt with this in spades - and then he had a company rebrand to contend with. Not just from any brand either but possibly one of the best known in the world.

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Johnson is IT director of Zavvi, formerly known as Virgin Retail, which rebranded after the chain underwent a management buyout in September 2007.

Speaking to silicon.com at the Internet Retailing Show in London, Johnson revealed how moving out from House Virgin was as much a blessing as a curse.

Johnson started his retail career as the manager of a number of London Our Price stores in the 1990s, before the chain was acquired by Virgin in 1999.

He made the move into IT by first working as a trainer as Virgin integrated its systems with Our Price's systems, helping staff learn to use the new tech. He continued to manage bigger and bigger projects and was also seconded to logistics in 2002 to oversee the transition to a centralised distribution model. He reached IT director the following year.

Recently though, his time has been taken up by Virgin's switch in attitude to internet retailing. He admits that initially some of the great and good of the Virgin Group took a dim view of online shopping and were even considering withdrawing altogether. As a result, once the retailer was forced to acknowledge business realities and embrace retailing on the web, it found itself coming to the party a little later than its rivals.

For the last two years, Johnson has concentrated on rebuilding the site to make sure consumers are getting the kind of web shopping they expect.

Part of that project has been to build up solid, long term relationships with what he considers to be best of breed partners - system integrator Javelin, ecommerce platform supplier Hybris and search navigation and merchandising experts Mercado.

These tight relationships produced a new site that went live in July last year that has produced year-on-year triple digit sales growth and should bring ROI in its second year against a seven-figure investment budget.

The next stage is integrating the site with the 120-odd stores that now bear the Zavvi name. According to Johnson, it's as much a cultural shift as a technological one.

"The first task is the hearts and minds of the store staff. We have to engage with them and make them see the site as a flagship store," he said.

Johnson expects the site to be the best performing 'store' in the portfolio at some point in 2009. In the meantime, he has designed the site so that store staff actively participate in it by regularly posting product reviews. Each store has its own front page on the site, so that the online presence can be tailored to the specific geographical areas they represent.

Technologically, the focus will be on integrating store inventory systems with the online business, although it won't necessarily spell the introduction of a 'click and collect service' in the same vein as Argos and PC World.

It's not a model Johnson believes suits Zavvi's customer profile, with stores using click and collect typically selling higher ticket items.

"Click and collect is not technically challenging, but operationally, it's a difficult proposition to get right. Our stores are not geared up to be fulfilment points for our online business."

Undoubtedly, however, Johnson believes he's just beginning the multichannel retail journey: he believes that, although Zavvi has a higher proportion of online sales compared to retail as a whole, the retailer is probably behind the pack among entertainment retailers, mainly because there are some strong pure-play rivals including the heavyweight Amazon.

"The goal is to get 10 per cent of revenues from online sales within two years," he said.

Wherever Zavvi goes in terms of online retailing, Johnson is, on balance, glad the retailer is no longer under the Virgin Group wing.

One of the changes the retailer has seen is the change in which categories dominate sales, with music previously ruling the roost.

While the Virgin Brand was very much about selling music - a business model facing a serious threat from download sellers - Zavvi saw music drop from being the company's top selling category to second place in 2007, under DVDs. The chain's management expect the category to move down to third place, overtaken by video games, this year.

Johnson added: "Moving away from the Virgin brand means we can take a fresh approach. There may have been things, that for all the right reasons, the group might have stopped us doing to protect the brand. We are able to move much quicker now."