Blockbuster in administration: your rights?

Blockbuster store

Blockbuster, the DVD and games rental company, has announced that it has gone into administration. It's another sad day for the high street, as 528 more shops are under threat - along with 4,190 jobs. It's a worrying time for staff, and for high street traders nationwide suddenly faced with the prospect of trading in a ghost town.

But what does it mean for you?

Going under

The company has been put in the hands of Deloitte as administrators. It made an announcement, which offers some hope for staff.

Lee Manning from Deloitte said in the statement: "We are working closely with 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. 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."

Good news

Manning also had good news for consumers. He said: "During this time gift cards and credit acquired through Blockbuster's trade-in scheme will be honoured towards the purchase of goods." It means that as long as you don't delay, you should be able to use up any credit you have with the business.

Bad news

The long-term future is less certain for the stores. Manning explained the source of the company's woes, saying: "In recent years Blockbuster has faced increased competition from, internet based providers along with the shift to digital streaming of movies and games."

The problem is that this competition isn't going anywhere fast. If you can stream movies on demand at a lower cost - with no limit on the number available at any one time, then it begs the question of why anyone would bother popping down to the high street for an expensive rental.

The video rental market is shrinking in the UK. The British Film Industry figures show that the rental market was down to £246 million in 2011, from £253 million in 2010. Meanwhile the proportion of film downloaded on demand has grown to 5.5% of all films watched - which dwarfs the 3.4% seen at the cinema.


The change seems to come as no surprise for many, with Twitter dominated by those who were waiting for this particular shoe to drop. @mattsrc commented: "‪#Blockbuster‬ was still a thing? There's no place for that sort of store nowadays with digital outlets such as Netflix being so much better."

@elmoir added: "Wait, people still went to Blockbuster?! Amazed it lasted till now." And @JonHornbuckle pointed out:"Surprised Blockbuster lasted so long. Charging £4 for one night when Tesco sell some chart DVDs for only a little more and you own forever."

Who is next?

The demise of the firm, hard on the heels of the death of HMV, is a telling sign of how the internet is killing off high street stalwarts. The question on everyone's lips is how they failed to see the threat coming, and how - given their huge head-start in terms of brand recognition - they failed to position themselves at the forefront of developments.

If we can't answer this, then the future for the whole British high street would seem to be under threat, and Jessops, HMV and Blockbuster could just be the first of a raft of high profile corporate deaths in 2013.

But what do you think? Will the internet kill the high street, or can UK retailers offer something we can't get online? Let us know in the comments.

High Street casualties
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Blockbuster in administration: your rights?

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.


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