Yes I believe the folk section did transfer to Rays basement in Shaftesbury Ave ( now I think about, I'm sure that Ray's shop in Shaftesbury Ave started off as Colletts ).
It gradually evolved to concentrate more on blues and world music. Used to be some lethal spiral staircase down to the basement.
Speaking of basements, does anyone remember the damp, smelly basement at Dobells in Charing Cross Road? It was run as a second hand shop and run by ( I think ) a chap called John Kendall who always reminded me of Tubby Hayes.
I still have several Johnny Kendal used items, still harboring that authentic Dobell's basement damp pong, which has definitely matured over the years!