Bleak week as Blockbuster collapses
The devastating impact of the internet on Britain's high street has been laid bare in a bleak week for the retail sector after Blockbuster and HMV hit the rocks, putting more than 8,300 jobs at risk.
DVD and games rental firm Blockbuster collapsed, throwing its 4,190 staff into uncertainty, with administrators Deloitte blaming the firm's trading woes on competition from internet firms and digital streaming of movies and games.
Deloitte stressed Blockbuster's core business - which still has two million active members - was profitable and they would keep all 528 stores open while seeking a buyer. But it has struggled to adapt to the changing market and rivalry from internet retailers including Netflix, Amazon's LoveFilm and iTunes, which now offers a movie rental service.
Its administration comes just a day after 223-strong music and entertainment chain HMV went under following dismal Christmas sales.
The 92-year-old business, which employs more than 4,120 employees, was squeezed by internet retailers and supermarkets whose scale has enabled them to offer CDs and DVDs at cheaper prices. Deloitte is handling both administrations.
This week's casualties add to a recent run of retailers to collapse, following the demise of camera chain Jessops and electricals group Comet, which also cited competition from online players as a major reason for their downfall.
Professor Ajay Bhalla at Cass Business School said the administration of Blockbuster was "yet another harsh reminder of the fast changing retail environment". He added: "The company, like HMV, failed to transform its business model early enough."
Blockbuster will continue to accept gift cards and credit bought through its trade-in scheme for second-hand movies and games, as well as operating its loyalty scheme.
Lee Manning, joint administrator and partner in Deloitte's restructuring services practice, said: "In recent years Blockbuster has faced increased competition from internet-based providers along with the shift to digital streaming of movies and games.
"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."