Blockbuster goes into administration

 
People walk past Blockbusters store (file photo 2010) Blockbusters has closed some branches in the past few years

Related Stories

DVD rental firm Blockbuster has become the latest UK High Street firm to go into administration after struggling against online competitors.

The chain has 528 stores and employs 4,190 staff.

Deloitte, the accountancy firm which will now take over running the firm, said Blockbuster UK would keep trading while it tries to find a buyer.

Music chain HMV and camera-seller Jessops both went into administration earlier this month.

"We are working closely with [Blockbuster UK's] suppliers and employees to ensure the business has the best possible platform to secure a sale, preserve jobs and generate as much value as possible for all creditors," said Lee Manning, from Deloitte's Restructuring Services practice.

"The core of the business is still profitable and we will continue to trade as normal in both retail and rental whilst we seek a buyer for all or parts of the business as a going concern.

"During this time gift cards and credit acquired through Blockbuster's trade-in scheme will be honoured towards the purchase of goods."

Many people were unhappy with the administrators' decision not to accept HMV gift vouchers, some of which had been given as Christmas presents.

It is not yet known what will happen to HMV's branches and 4,350 staff. Unusually, all of Jessops' 187 branches closed within days of administrators being appointed.

January retail administrations

Branches Staff

More High Street casualties

Man walks past HMV sign

HMV

239

4,350

Jessops sign

Jessops

187

1,500

Blockbusters sign

Blockbuster UK

528

4,190

In the run up to Christmas, electricals retailer Comet collapsed and shoe chain Stead and Simpson announced it was closing 90 stores.

The Local Data Company which monitors the number of empty shops, said the recent failures added up to the worst period for the High Street it has seen.

"The administration and potential closure of over 1,400 stores in less than a month far surpasses Woolworths' 807 in January 2009," said director Matthew Hopkinson.

"This has the potential to increase the national shop vacancy rate by nearly 5% to an all time high of over 19% if all the stores close and are not reoccupied.

"The big question is how many more retailers are struggling out there to the point of administration?" he said.

Store closures

Start Quote

It is shocking that the [Blockbuster] board and executive management failed to make bold choices”

End Quote Prof Ajay Bhalla Cass Business School

The first Blockbuster store in the UK opened in south London in 1989, and the firm has sought to expand its services in recent years, including with a trade-in facility for pre-owned titles.

The firm launched an online DVD rental operation in 2002, and the company's website, blockbuster.co.uk, claims to send out more discs per customer than other online DVD rental services in the UK.

However, this online rental market became increasingly crowded with rival services, and now the popularity of streaming films over the internet is growing fast.

Blockbuster UK has closed more than 100 outlets in the past few years.

Blockbuster went bankrupt in the US in 2011, but was rescued by US pay-TV provider Dish Network in a $320m (£200m) deal, which saved hundreds of US stores from closing. The UK arm is also owned by Dish Network and run separately.

Before Blockbuster was bought by Dish Network, there were media reports of ambitious expansion plans, including selling electrical goods such as televisions, mobile phones, and iPods.

But business experts said Blockbuster's problems were all too similar to those hitting other retailers - failure to adapt quickly enough to a changing business environment and consumer habits.

'Altered landscape'

Professor Ajay Bhalla, of Cass Business School, said: "The company, like HMV, failed to transform its business model early enough. When it did, it found a fundamentally altered competitive landscape where the platform model had destroyed the traditional retail one.

"Firms like Blockbuster failed to face up to the enormity of the change and altered their business model on the fringes (eg selling second-hand products), rather than coming up with an innovative offering. It is shocking that the board and executive management failed to make bold choices."

Dr Steve Musson, a lecturer at the University of Reading and an expert in the economics of UK cities, added: "The retail businesses that we have seen going into administration since Christmas have a lot in common - they have large numbers of stores and have struggled to adapt to changing retail habits.

"Rents for retail businesses are usually payable quarterly, with many landlords most recently asking for payment at the end of December, which is why we often see retail failures coming in clusters."

 

More on This Story

Related Stories

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    -28

    Comment number 169.

    There are to many people saying that these good companys did not move with the times. Tosh, what a load of rubbish. If every company on the planet went completely online tomorrow, service would be awful and profit margins would not even cover the electric bill to run those firsty PCs because of extreme competition. When you want to complain about service, Have fun calling that digital shop.

  • rate this
    -15

    Comment number 26.

    This my dear lefties has nothing to do with the "recession" it has more to do with bad management not by government but more by ordinary human beings

  • rate this
    -9

    Comment number 66.

    To all our left wingers desperate to foist blame on the government, it is a case of all in it together, even the directors and managers will end up jobless.
    It does beg the question why and how much longer the BBC will be able to justify taking £145 tax off us! They have tried today with the VALUE ADD Trick, ie suggesting that the good the licence fee does is doubled when THEY spend it!How daft!

  • rate this
    -8

    Comment number 48.

    Predictable.

    Flavour of the moment.

    And what else is flavour of the moment?

    Phones are currently flavour of the moment.
    How long will the moment last?
    Longer than a ring tone - that is for sure. And that is it.

    Once everyone has a tailored avatar then clothes shopping will be done online. Clothes shops will be so yesterday.

  • rate this
    -6

    Comment number 44.

    14.waofy
    Don't blame this on the government, the recession has had little to do with this firm going belly up, it is called change! Do you still see a market for Zeppelins? Of course not! Left wing ideology needs to go back in the box, unless you want to ban DVDs to let them sell of all the VHS tapes!
    30.Rotherham Lad
    Anyone with any sense can see it is nowt to do with the government!

 

Comments 5 of 343

 

More Business stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.