Blockbuster falls as Britain’s retailers prepare for grim 2013

Thousands may lose jobs as video-rental chain becomes latest high street failure

The collapse of Blockbuster today capped a bleak week for Britain’s high street retailers and raised the grim prospect of nearly 17,000 job losses in a fortnight.

The 528-store video-rental chain joined the entertainment retailer HMV and camera specialist Jessops by calling in administrators.

Like HMV, Blockbuster UK was flattened by the huge shift in consumers buying DVDs online, at the big supermarkets and on Amazon, which also owns rival DVD-rental firm Lovefilm.com.

Blockbuster UK opened its first store in 1989. The video rental chain has been owned since 2011 by the American pay-TV provided Dish Network, which acquired Blockbuster’s US parent out of bankruptcy protection two years ago.

Professor Ajay Bhalla, of the Cass Business School in London, said the company, like HMV, had failed to transform its business model “nearly enough”. He added: “When it did, it found a fundamentally altered competitive landscape where the platform model had destroyed the tradition retail one.”

The collapse of the three chains follows the disappearance of the 236-store electrical chain Comet just before Christmas and has led to renewed calls for the Government to help the UK’s battered retailers by abandoning plans for another punishing rise in business rates in April.

Adrian Bailey, the chairman of the Commons Business Select Committee, said last night that he expected to set up an inquiry into the crisis. He said: “The situation is getting very serious. Even in more affluent areas there is already an increasing takeover of high streets by betting shops, fast food outlets and charity shops which do not provide the basis of a viable retail offering.”

The shadow business secretary, Chuka Umunna, said a “proper industrial strategy” was needed to promote “multichannel retailing, combining online trade with vibrant high streets”. He added: “This has been a grim week for the high street, but those who write off our high streets are defeatist and mistaken.”

David Cameron’s spokesman acknowledged it was a “very difficult” time for the thousands of shop workers facing potential unemployment. He said: “When it comes to jobs, the best thing we can do is support conditions for a private sector-led recovery.”

While HMV and Blockbuster will continue to trade as white knights are sought, the rapid closure of Comet and Jessops alone has left about 8,600 people out of work. The collapse of HMV and Blockbuster could see another 8,500 left jobless.

Joseph Robinson, lead consultant at Conlumino, the retail consultancy, said: “It is inevitable that there will be further casualties in 2013 which will add to vacancy rates and hasten the decline of some high streets.”

The British Retail Consortium (BRC) called for the planned 2.6 per cent business rate rise in Aril to be axed. It said the hike would add £175m to retailer's costs, and in some areas business rates are now higher than rents.  The BRC said the seismic events of the last eight days on the high street was a stark illustration of “relentlessly weak consumer demand and rising costs”.

According to the Local Data Company, the number of high street retailers going into administration hit a record high in December and January. Its director Matthew Hopkinson said the slump could result in the number of empty shops rising from 14.3 per cent to an “all-time high” of 19 per cent.

Administrators Deloitte will seek a buyer for Blockbuster, but experts warned the number of its “physical presence” would be significantly reduced. Unlike with the administration of HMV this week, Deloitte has said gift cards and credit through Blockbuster’s trade-in scheme would be “honoured” towards the purchase of goods.

A tired-looking shop that couldn’t compete

James Thompson

My first visit to a Blockbuster in London for more than three years just before Christmas was revealing. With no HMV nearby,  I had wanted to buy – not rent – some DVDs for a week off work and found a tired-looking shop with few customers.

While the North Finchley store had a poor selection of DVDs, the big surprise was that it was charging £5 to £8 for second-hand films to buy, so I bought brand new ones at HMV instead.

Like the collapse of the latter this week, the demise of Blockbuster UK will surprise few in the retail sector. Most of the British public stopped renting DVDs from Blockbuster’s stores or its website years ago, largely as rampant price deflation has meant they could buy them for roughly the same price, or even cheaper, in a supermarket or on Amazon.

Even avid DVD-renters have found Amazon-owned Lovefilm a more compelling offer. Others use the same rental firm’s movie streaming service or that of Netflix, which has an introductory offer of just £5.99 a month. Perhaps remarkably, Deloitte, which is also handling the administration of HMV, says Blockbuster UK’s core business is still profitable.

But while the accountancy firm is likely to find strong demand for the Blockbuster UK brand, it could find the 528-store business a much harder sell than HMV.

Arts and Entertainment
books
Voices
Caustic she may be, but Joan Rivers is a feminist hero, whether she likes it or not
voicesShe's an inspiration, whether she likes it or not, says Ellen E Jones
Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Sport
Diego Costa
footballEverton 3 Chelsea 6: Diego Costa double has manager purring
PROMOTED VIDEO
News
Dr Alice Roberts in front of a
peopleAlice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Arts and Entertainment
The 'three chords and the truth gal' performing at the Cornbury Music Festival, Oxford, earlier this summer
music... so how did she become country music's hottest new star?
Life and Style
The spy mistress-general: A lecturer in nutritional therapy in her modern life, Heather Rosa favours a Byzantine look topped off with a squid and a schooner
fashionEurope's biggest steampunk convention heads to Lincoln
News
i100
Arts and Entertainment
Star turns: Montacute House
tv
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Arts and Entertainment
Unsettling perspective: Iraq gave Turner a subject and a voice (stock photo)
booksBrian Turner's new book goes back to the bloody battles he fought in Iraq
News
The Digicub app, for young fans
advertisingNSPCC 'extremely concerned'
News
i100
Arts and Entertainment
Some of the key words and phrases to remember
booksA user's guide to weasel words
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Law Costs

Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Day In a Page

The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor
She's dark, sarcastic, and bashes life in Nowheresville ... so how did Kacey Musgraves become country music's hottest new star?

Kacey Musgraves: Nashville's hottest new star

The singer has two Grammys for her first album under her belt and her celebrity fans include Willie Nelson, Ryan Adams and Katy Perry
American soldier-poet Brian Turner reveals the enduring turmoil that inspired his memoir

Soldier-poet Brian Turner on his new memoir

James Kidd meets the prize-winning writer, whose new memoir takes him back to the bloody battles he fought in Iraq
Aston Villa vs Hull match preview: Villa were not surprised that Ron Vlaar was a World Cup star

Villa were not surprised that Vlaar was a World Cup star

Andi Weimann reveals just how good his Dutch teammate really is
Bill Granger recipes: Our chef ekes out his holiday in Italy with divine, simple salads

Bill Granger's simple Italian salads

Our chef presents his own version of Italian dishes, taking in the flavours and produce that inspired him while he was in the country
The Last Word: Tumbleweed through deserted stands and suites at Wembley

The Last Word: Tumbleweed through deserted stands and suites at Wembley

If supporters begin to close bank accounts, switch broadband suppliers or shun satellite sales, their voices will be heard. It’s time for revolution