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.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
tech
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
life
News
i100
Life and Style
tech
Voices
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions