More anguish for High Street as Zavvi enters administration

The agony continues on the British High Street today after it has been announced that the music and games retailer, Zavvi, has entered administration.

The struggling chain has been hit by the collapse of Woolworths, which forced it to cease taking new orders via its website. Woolworths’ unit Entertainment UK (EUK), was Zavvi’s main supplier.

Ernst & Young has been appointed as administrators. The group said since EUK went into administration, and perhaps prior to that, the impact of problems at EUK on the Zavvi group has been significant.

Zavvi is the UK’s biggest independent entertainment retailer with over 100 stores. It was created after a management buy out of the Virgin Megastore (division of the Virgin Group) in September last year.

Over 3,000 jobs are at risk as a result of its demise and is the third major retailer in as many days to hit problems.

On Monday, it was reported that tea and coffee chain Whittard of Chelsea had entered administration but has since been sold to EPIC private equity partners.

Furthermore, menswear retailer, The Officers Club, was taken into new ownership today.

With regard to Zavvi, all it stores should be open as normal on Boxing day, for its traditional post-Christmas sale.

Zavvi was founded by Simon Douglas and Steve Peckham who said that they had done everything possible to keep the business trading. However, the problems encountered with EUK has been too much for the business to handle.

Retailers have been anticipating their worst Christmas period for years and have been tempting shoppers with discount days and December sales.

Last week, a major icon of the British High Street, Woolworths announced it will close all its 800-plus stores over the next few weeks with the loss of 30,000 jobs.

Furniture giant, MFI, has also gone bust after it could not compete with the likes of Ikea.

Over the weekend, insolvency expert Begbies Traynor warned that more retail chains will go bust before the middle of January.

Begbies said it would not be surprised if between 10 and 15 well-known chains did not make it beyond the festive period.

Should its warning ring true, then more retail workers will face 2009 jobless.

Story link: More anguish for High Street as Zavvi enters administration