INTERVIEW & ANALYSIS: Grocers induce Virgin rebirth.

Ben Cardew talks to Sir Richard Branson, who offers his bold critique of the current supermarket-dominated music retail sector, and outlines his vision of how Virgin Retail plans to fight back

Had auditions been staged in Manchester last week for BBC2's Grumpy Old Men series, it is highly likely Sir Richard Branson would have been signed up immediately.

If it were not enough that Rupert Murdoch's BSkyB bought an 18% stake in ITV - so potentially scuppering any ITV takeover plans by the Branson-linked NTL - the business tycoon is clearly seething at the current state of music retailing.

On the surface at least, music matters could hardly have been better for Branson last week as he pressed the button on a new Virgin Megastore in Manchester, with four of the biggest albums of 2006 set to clock up hundreds of thousands of new sales between them within days. The arrival of new sets from The Beatles, Oasis, U2 and Westlife, in what represented the biggest release week of the year, followed hot on the heels of a series of other blockbuster albums over the previous few weeks from the likes of George Michael, Jamiroquai and Sugababes.

Good news, you might think, for traditional music retailers. But, if the events of last week showed that a decent chart battle can still excite the media, a closer look at the sales figures of those four big new albums tells another story - the incredible power that supermarkets now wield in the music industry. Mid-week sales figures showed that supermarkets accounted for 44.9% of Westlife's first-week sales, 39.5% of Oasis's, 45.8% of The Beatles' and 39.2% of U2's. A key reason for this dominance, which comes largely at the expense of the high street music specialists, was the familiar one of price: The Beatles' Love was for sale at #8.72 at Tesco, compared to #9.95 at HMV and #9.99 at Virgin.

It is in this context that Virgin Group chairman Sir Richard Branson has added his considerable weight to the debate over pricing, criticising record labels for not confronting the supermarkets over the issue. And, while Branson may not be the first music industry executive to speak up on the subject - Vital managing director Peter Thompson has already warned of the dangers in recent months, while several label insiders have privately expressed concern - he is without a doubt the most high profile.

Furthermore, Branson's comments - which came just a month after a high- profile dispute between Tesco and Warner, which led the supermarket giant to bar two key Warner releases from its shelves - perhaps go further than any to date, predicting the wide-scale loss of independent record stores as the supermarkets take the upper hand.