Video rental store Blockbusters has called in the receivers after falling sales figures has forced it into administration. The DVD and video rental chain is the third major High Street store to close this year, following announcements from Jessops and more recently HMV.
It is thought that postal and online companies, such as LoveFilm, Netflix, and the rise of other businesses offering online streaming of films direct to your television or computer, is the main reason sales have plummented for the UK rental store.
The High Street has suffered several major blows in recent years, and in what is being dubbed as one of the worst retail periods in history, many strong contenders in the market place have failed to live up to expectations during the double dip recession. And with a gloomy future and the possibility of a triple dip ahead of us, Blockbusters will certainly not be the last business to suffer in these trying economic times.
The firm, which first opened in 1989, has appointed Deloitte to seek a buyer for all or parts of the business, and this comes just days after rival HMV hit the rocks. Other retailers lost from the High Street to the recession include La Senza, Woolworths, Comet, JJB Sports, Blacks, Clinton Cards and Game.
Deloitte, which took control of HMV on Tuesday, said Blockbuster’s 528 stores would continue to trade as normal in the meantime, but what will happen to the firms 4,190 staff is not yet known.
Lee Manning, Joint Administrator and Partner in Deloitte’s Restructuring Services practice, comments: ‘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.
‘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.’
The British Retail Consortium warned customers to use their High Street if they did not want other retailers to go the same way as Blockbusters. Many people, however, had to tighten their belts over Christmas and reports suggested that families actually spent less last year for the first time. The BRC suggested that if it had not been for a last minute rush to capitalise on sales goods, right before the end of Christmas, sales figures for this period would have been even worse.
Online stores, such as Amazon, have been partly to blame for the demise in people visiting their local high streets, as their UK warehouse in Fife is a million square-feet of storage space and contains almost anything from books to electronic goods. Amazon hit the headlines last year as it was one of several companies who paid little or no corporation tax, through legal loopholes.
Amazon were heavily criticised last year as it was revealed that despite having sales of over £3.35 billion in the UK last year, they only paid £1.8 million in taxes.