The demise of Blockbuster
The Blockbuster brand had traded for nearly 25 years in the UK when it was placed into administration for the first time in January 2013, at which time it had over 500 stores and 4,000 staff. The business was sold by the administrators to private equity group Gordon Brothers, but they were unable to turn the operation around and Blockbuster entered administration for the second time in October 2013. At this point the business operated from 264 sites and employed 2,000 staff.
Since October 2013 the administrators have closed further outlets but now the news has come that no buyer can be found for the remaining 91 stores resulting in their closure by 16 December 2013 and redundancy for the remaining 800 staff.
The news though sad may be unsurprising in view of the increasing competition which Blockbuster’s business has seen from DVD postal services such as LoveFilm, internet streaming from Netflix and on-demand options from Sky and Virgin Media. However a significant issue has also been the size of the business’ rates bill, a hefty £3.8 million pounds per annum on a turnover of only £40 million.
Whilst the wider economy may be showing signs of recovery, high street retail continues to face an uphill battle against increasing use by shoppers of online retail and the lure of multi function retail parks. Despite widespread concern over the diminishing high street the Chancellor’s autumn statement brought little comfort. The cap on increases at 2% will not assist those businesses which are struggling now with their existing rates bills, and the overall review of the system remains some years away.
The introduction of relief for retailers taking on vacant premises, whereby they will receive a 50% reduction on their business rates for the first 18 months, may be welcome news for some but could also place the existing retailers at a disadvantage.
If we are to avoid increasing numbers of vacant units on the high street drastic action will be needed to include a wholesale review of the rating system at the earliest opportunity to ensure a fair outcome and a level playing field for all.