Blockbuster next on the chopping block

by , Conversation Editor Technology 16 January 2013
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In a story similar to HMV, Jessops and Comet – the film rental chain Blockbuster is going into administration. Online retailers really are ringing the bell on high street stores.

Blockbuster video store

It’s turning out to be the month that Britain’s high street waves goodbye to many of its biggest brands. Jessops, HMV, Blockbuster – who’s next?

It was today announced that the film and video game rental chain has appointed administrators. The accountancy firm Deloitte will now take over the day-to-day running of Blockbuster, which has 528 stores across the UK.

Got Blockbuster vouchers – what are your rights?

Blockbuster will continue to honour gift cards and credit acquired through its trade-in scheme. As for vouchers you’ve bought through the store yourself, that’s currently unclear. It would be wise to spend your Blockbuster vouchers, points and credit as soon as possible.

If you owe Blockbuster rental money, this debt won’t be wiped if the chain goes under – you’ll still need to pay your bill. Oh, and you’ll also need to return your rentals when due.

Credits roll for Blockbuster

So what went wrong? Deloitte squarely places it on increased competition from online retailers and a shift to film streaming. That’s the crux of it really – not only is it cheaper to buy DVDs, Blu-rays and video games from online retailers, it’s even cheaper to stream them.

I subscribe to the film-streaming service Lovefilm, paying a fiver a month to watch as many films as I like. Of course, I’m limited to their online choice and the streaming quality isn’t great, but it suits me. And if I fancy something with a bit more panache, I can get LoveFilm to post Blu-rays to me for another fiver per month. Blockbuster actually competes with this service, offering the very same unlimited postal rentals for £9.99 a month. This may be where the company may find a future, with Deloitte confident that the retailer will find a new buyer.

Whether Blockbuster’s new owner will help the chain muscle its way in-between LoveFilm and Netflix is another question. Of course, that’s if it gets a new buyer at all.

The end of entertainment on the high street?

Still, I can’t remember the last time I stepped into a Blockbuster store to rent a film. Why browse shelves to find something to rent, when you can browse the digital shelves online?

There’s something about that sentence that makes me sad. Is there really no more room for entertainment and electrical stores on the high street? Are we just going to sit at home moving our PC mouse pointers, our fingers on tablets, and our thumbs on video game controllers to pick the content and products we want to spend our cash on?

26 comments

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william

“Online retailers really are ringing the bell on high street stores.” I don’t think online retailers are fully to blame. I stopped using my local town centre many many years ago when the council decided to turn all local street parking into pay and display, thus turning the what’s was a free meaning the half mile walk into something I had to pay for. That’s what turned me into an online shopper.

Although online retailers aren’t without their own issues, play.com will stop selling their own stock in the coming months (See http://www.bbc.co.uk/news/world-europe-jersey-20953357) , they think their “marketplace” is a winner, well not for me. So my choice is even more limited going forward.

I’m just surprised that the play story hasn’t been covered more widely on the news.

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john d

Im just concerned that those who are less internet proficient will lose out here.
And also amazed that that many buyers are prepared to wait for delivery. A shop alows instant purchase after all.

You’ve got a good point there – the less internet savvy could be left out. But as for waiting for delivery, we do have streaming, which is more instant than even going to a shop (you don’t have to leave your sofa).

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wavechange

Patrick – I wonder if those who are less proficient with the Internet will have even heard of streaming. Maybe they just want a couple of VHS tapes.

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Ian B

High streets should not be regarded as ‘sacred cows’ If people wanted to keep them viable they would be shopping there and not using superstores,online and retail park facilities. In my view it’s a natural evolution and should be allowed to take it’s course.

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neil

hi there customer service was better it might stop people using online retailers like love film

I hadn’t really thought about customer service, but it is of course important. If they could really offer a service that online retailers couldn’t even touch, then maybe they’d create a loyal fanbase. Still, I wonder if they felt they didn’t have the money to spend on improving customer service training. Sad but true?

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wavechange

Ian is right about evolution, though high street shops are certainly not the only victims of changing consumer preferences.

Those who did use the retail outlets are obviously hit most badly but we could all suffer. For example, it can be more difficult to persuade an online trader will respect consumer rights.

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wavechange

Am I right in thinking that Comet, Jessops, HMV and Blockbuster all have Deloitte as administrators, at least for their UK operations?

I suppose it’s good that a UK company is getting plenty of business. :-(

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Sasha

Jessops is Price Waterhouse & Cooper

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william

MFI and comet were both owned by the supposed “turnaround specialist” OpCapita when they went into administration. OpCaita having paid something like £2 for the company + £50m. Wonder how that works.

OpCapita through its subsidiary Baker Acquisitions purchased Game Group in March 2012, so that’ll be another one I won’t be buying shares in or getting gift vouchers from.

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wavechange

Thanks Sasha. It’s another UK company.

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Vynor Hill

I bought my cooker after physically inspecting build quality, hinge fitting, oven size and the way the controls worked. Currys were helpful and got my business. I like to feel the cloth in trousers, examine the fit of underwear and actually see the colour of the garment I’m buying, thus clothes shops get my business. Sometimes a packet or box will reveal more than I can read about a product on line. There is no substitute for picking things up, and examining them, especially after reading internet reviews to narrow the search. Someone else’s best buy might not be mine. I like to own cd’s and not just have a file on my computer, however space saving that may be. Similarly with films that I actually want to watch more than once. So I have plenty of use for physical shops of all descriptions. Every one that goes to the wall is one less to visit when looking for the best price or specific product. On line shopping has its place too although delivery is always a pain. With the financial squeeze, it’s not surprising to find that the high street is suffering. Their overheads are so much more than their on line competitors but they do offer a valuable way of shopping. If everyone decided to shop on line it would be a disaster for the labour market and would turn shopping malls and out of town retail parks into desert wastelands. I still have to search for parking spaces, so it would seem that people are still shopping traditionally. Long may that last.

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Digiconvs

It is always sad to see businesses go down…Like of Blockbuster and HMV had their rosy days and enjoyed highly profitable businesses; hence they hired many and opened 100s of stores across the country. But it’s still sad to see them go and many jobs being cut; not a great to the national economy and lives of 1000s of families. Of course many economic circumstances were unpredictable but mostly preventable, simply via effective planning and some degree of flexibility. There’s a crucial lesson to learn from these unfortunate examples; and that is “brands got to be ahead their game” if they pursue success and sustainability.

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John Harvey

I popped into my local Blocbuster shortly after the news was announced to thank the staff for past service and wish them luck

Having worked in a cyclical industry I have been through redundancy three times and gained an overview of what happens. You must realise that personnel will see their job as helping the administrators or employers. They will try to make you feel so unwanted and ignored that you go off in a huff without waiting for your compensation. Let this flow over you but mug up on the rules and wait until they make the inevitable mistake. When this happens mutter that this is unfair . They will take fright at the thgought of an industrial tribunal and come to a sensible arrangement.

At least Dixons/Currys seems to be doing well: http://www.bbc.co.uk/news/business-21055640

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wavechange

Yes, but where do they feature in the customer satisfaction list? I have more respect for all the companies that have recently gone into administration, and I’ve never even used Blockbuster.

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Vynor Hill

Argos/Currys/Dixons/PC World seem to have an interesting business strategy. Argos cuts shop space (and staff??) with catalogue shopping. This allows customers to browse at home. They have a television channel and one can buy on the internet. The others offer internet and real shops. They seem to have most bases covered. Their position is likely to be strengthened as the competition from other stores dwindles and the puplic are left with less of a choice.

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wavechange

They are all part of one company, apart from Argos.

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Vynor Hill

I thought Argos was too??

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wavechange

I believe Argos is part of Home Retail Group. It might be swallowed up by the Dixons empire in future. :-(

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tpoots

Honestly, I’m surprised Blockbuster lasted this long.

The business itself was extremely popular and profitable some 20 years ago and I remember many a visit to pick a video off the shelf to watch. The ease of use through streaming and Lovefilm’s postal service will have pretty much flattened Blockbuster in recent years.

I guess most of the problem these days with a business like that is the expensive floorspace needed and the logistics of constantly making sure your shop is fresh with new rentals. Perhaps a new owner for the troubled brand could strike a deal for an in shop service (alike DHL have with WH Smiths) so they don’t need their own staff or shop units?

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Den

a lot of the problem with the high street is councils charging vast amounts of business rates and then trying to stop people going to shop at these stores by charging for parking. I stopped using the high street many years ago because of parking charges fed up of rushing against the parking clock not having enough time to shop and maybe have a meal at a cafe/restaurant. sorry to say but it is much easier and relaxing at a shopping mall (not run by greedy councils) with free parking.
Its not all the fault of the Internet councils have played a major role the the downfall.

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glenaim

i am gutted for all the job losses-if no one has a job,who is going to pay for things online with no money?these jobs are gone forever,like too many,and they are not beingreplaced by other jobs.also,if you have rubbish broadband speeds,like i do in rural suffolk,it is impossible to stream a film-i have tried to stream a lovefilm film on a kindle fire hd,two ipads,directly through my samsung smart tv,through a ps3,and it doesnt work on any of them.ironically,i would have rented from blockbuster stores,but the 2 closest to me are 20-25 miles away.i do use their postal rental service,though.

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Joe Danson

Considering how well Blockbuster virtually ran the indie video stores out of business I really don’t feel bad for them at all, what goes around comes around.

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jimbo

when someone showed me how to download a film from the internet i was amazed how easy it was i only download for my own personal use and once watched i delete them so is the internet to blame or the video/dvd stores to blame i dont know but i used to go ti the video store at least 3 times a week which now i cant afford so what is the answer???

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