300 jobs at risk in Scotland as Blockbuster enters administration

THOUSANDS of jobs are at risk after DVD rental firm Block-buster UK yesterday became the latest high street chain to go into administration.

The company, which employs 4,190 staff, including more than 300 in Scotland, follows music retailer HMV, which called in administrators earlier this week.

The Uxbridge-based business, which opened its first store in London in 1989 and now has 528 outlets across the UK, is the latest high-profile chain to succumb to the twin challenge of the internet and the faltering economy.

Retail experts said the rise of film-streaming websites such as Lovefilm and Netflix, combined with the continued rise of online retailers, had left Blockbuster “unfashionable and irrelevant”.

Deloitte, which is handling the administration, said the high street chain would continue to trade while a buyer is sought. Gift cards and credit acquired through Blockbuster’s trade-in scheme will continue to be honoured.

Lee Manning, a partner in Deloitte’s restructuring services practice, said: “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.”

Blockbuster’s collapse comes days after the music and entertainment retailer, HMV, hit the rocks, with more than 4,000 jobs under threat.

Other recent high-profile casualties include photography specialist Jessops and electrical retailer Comet.

Blockbuster’s United States parent company went bankrupt in 2011, but was rescued by US pay-TV provider Dish Network in a £200 million deal, which saved hundreds of stores from closing and prevented tens of thousands of job losses.

The UK company has sought to branch out in recent years in an attempt to revive the business. It has expanded its online rental service, while also launching a trade-in service for pre-owned titles, allowing members to swap second-hand games and films for cash or credit on their membership accounts.

But Joseph Robinson, a consultant at retail experts Conlumino, said the growth of online streaming sites had left Blockbuster increasingly outmoded.

“In many ways this was inevitable,” he said. “In terms of film rentals, there has been a steady flow of customers towards streaming websites such as Lovefilm and Netflix, and Sky and Virgin have also launched streaming services.

“In the physical sale of films and video games, there has been a transfer of spend to online retailers such as Amazon. The sad fact is that Blockbuster was becoming increasingly unfashionable and irrelevant.”

Julie Palmer, a partner at business recovery specialist Begbies Traynor, added: “Coming hot on the heels of Jessops and HMV, reports that Blockbuster has called in the administrators brings a total tally of almost 1,000 stores and just under 10,000 jobs at risk already this early on in the year.

“Unfortunately, Blockbuster is yet another brand with a legacy network of stores in secondary locations and an offering which its market has moved away from – the ease of downloading films and their storage, as well as online rental, enables consumers to rent films and games more conveniently, for longer periods and at cheaper rates.”

Ms Palmer said that 140 UK retailers were already on her company’s “critical watchlist”, and recent research highlighted more than 13,700 retailers experiencing significant distress in the 11 weeks to 17 December 2012, a 35 per cent increase from the third quarter.

She added: “News of the administration of the third major retailer in less than a week will create a serious new year hangover for landlords across the country and employment in the sector. It can also only serve to damage consumer confidence in the retail sector further.”