"Zavvi has continued to experience significant difficulty in obtaining stock on favourable credit terms. This has resulted in considerable working capital difficulties as a result of the failure of EUK, in addition to continuing operating losses."

Which translates in English as "We're feckin' skint !"

I was in a Zavvi 3 days ago...buying some good DVDs for practically nothing, and the queue was out the door. Its a shame that these shops are going bust especially at the high point of retail. Woolworth's prices on Music and Video were always criminal but Zavvi actually had some good deals going.

"Zavvi has continued to experience significant difficulty in obtaining stock on favourable credit terms"

Which is essentially what killed Woolworths. Great isn't it that as soon as the economy looks a bit sick, suppliers suddenly feel they can no longer extend credit to makor customers. What a great idea, stop selling stuff - thus cutting off your revenue stream. Presumably the next big wave of companies going tits up will be distributors who didn't understand how business is supposed to work.

"We have done all that is possible to keep the business trading, but the problems encountered with EUK, and particularly its recent failure, has been too much for the business to cope with."

Maybe if they had paid EUK that £100 million they owed them they wouldnt have these problems now

I'm all RIAA at home.

Ta.

I didn't even know Virgin's stores had gone. Never heard of this one. What a crappy name.

I think that the high street is going to look very different in a couple of months when ALL the companies that bought lots of stuff in October and November for Christmas start having to pay the accounts off...

As a shop owner myself I find it very sad that these are going and feel for the staff

It will mean that the 'best' will survive.....possibly

"Zavvi has continued to experience significant difficulty in obtaining stock on favourable credit terms."

How about actually BUYING stock?

You know, like shops used to work, they'd buy stuff wholsale, and sell it on to consumers at a markup, justified by selling in smaller lots and having a high-street presence.

Why is absolutely everything running on huge amounts of debt these days? I'm not surprised it doesn't take much to bring the whole house of cards tumbling down.

Ahh crap, I was looking at getting an XBOX360 from them too.

Seriously though, I do feel for the staff, all this happening just before Christmas. Hopefully they'll be able to at least keep trading over Christmas and into the new year.

Rob

I've been buying loads of DVD's there. This is a real shame.

The early Megastores were novel, and worth visiting. Recently the ones I've visted have been disorganized, scruffy, grungy and with painfully overloud music banging away. Maybe I'm not Zavvi/VM's target market,. but I certainly found shopping in HMV or Borders a far more pleasant experience.

I wondered why I went in last week to buy a giftcard in there that they were not offering them.

Maybe they knew this was on the cards for a while and didnt want thousands of customers annoyed with useless cards.

Oh well....its was a stupid name anyway.

It's not DSG instead.

I've prayed every night for the past 2 weeks to Thor, yet still he listens not.

I just got an XBOX 360 from there, in full knowledge of the RROD design flaw (kid pressure to get one instead of a PS3)... I hope Microsoft will honour any warranty...

Staff were great, obviously store staff did not know how bad things were, I feel really sorry for them, not the time to be in retailing.

It was a lousy name which actually put me off going in there. Zavvi? It's just gibberish.

Bit of a bummer that it reduces the options on the high street even further but they shouldn't have been relying on credit so much. It didn't take a genius to work out that the low interest rate environment and easy credit would last for ever.

...this recession is a good thing? Was it just me, or was everyone getting a bit bored of the High Street chains that you could guarantee had shops in any town you cared to visit. Examples included Woolworths and Zavvi. Now, fair enough, some of you might argue that Woolworths was a national institution, and that it deserved saving. But, the Government were far more well-advised to save the banking institutions that millions of it's own people had large sums of money in, than medium-sized outfits that only served a handful of the population.

With the advent of e-commerce, more and more people are now using the web to get great deals on products, and so is this the end of the traditional High Street, or will we just see the advent of brand new stores? Take Woolworths, for example: I remember in the late '90s, it seemed to go into a stage where it didn't really know what it was doing -- clothes, DVDs, CDs, Pick 'n' Mix. Doing too many things to a shoddy standard is obviously far worse than doing one thing to a great standard. If you want food, you go to Tesco/Asda/Sainsbury's/Waitrose. Although some of you might also argue that Tesco, Asda etc. now do far more than food, they have the financial prowess and are enough in the black to be able to afford £x million, and then say "well, we had a shot at it": they always have a key market - food. Everyone needs food, and it will still that way for a long, long time anyway, so the Tesco and Asda of this world will always be needed, and will almost certainly be in the black.

that Tower Records went from Picadilly Circus. I know that was a long time ago now but Tower was the best hi-end record store, it was like every indie on Berwick street in one spot with a stargreen downstairs.

Previous statements do ring true to me, stop giving people 90+ day invoices and stop sale or return, surely that would be far better right now than allowing people to sit on masses of stock.

The only people who will win out of that will be the administrators with their eBay shops.

Who gets a stock of zavvi gift cards for christmas.

TBH I never saw the point of gift cards. "Let us exchange your currency that you can use anywhere for this card that can only be used in this store"

... then JJB Sports, swiftly followed by Next and Millets.

But partly down to the shift to online retailers, take Zavvi. Why go into town and buy from them when you can get the samething cheaper from Play or CDWOW? Woolies well most things they sold could be purchased cheaper online.

So you drive to a town centre have the hassle of traffic and parking the car or god forbid public transport or you can go online and buy the same thing cheaper and someone will deliver it to your door? It's been coming for a few years but with the credit crunch people are being more astute and the high street dinosaurs are dying because of it.

RIP The high street.

The employees will go and find other jobs and move on with their lives, and I'm sure they will have no trouble pilfering any remaining stock to keep their christmas present buying costs down.

I do agree with an earlier post that all these businesses are effectively built on platforms on sand - and I must say I am finding watching the tide come in quite amusing.

Merry christmas to one and all.

/* Joke alert - as that is what I think of the business model */

... welcome Richard Branson as our lord & master.

He sussed that Virgin Megastore was dead years ago.!

Went in to buy Guitar Hero World Tour Band in a Box- They wanted €230. Bought it in another shop for €180.

Zavii were dependent on EUK because they'd annoyed the other distributors to the degree they couldn't get credit. Zavii's problems have been brewing for quite some time now and this really isn't a surprise.

I never really forgave my local branch for closing its separate classical section and using it as a store room. However, I've been in several times this week and have been pleasantly surprised by the DVD prices, especially the boxed sets.

@ Tony Hoyle,

They're just an interest free loan to the company involved... Give them your money now (so they can bank and earn interest), then reclaim it later. Hopefully before preferred creditors grab it!

Better deals available at any Bank / Building Society.

I think we will see a number of retailers failing for the same reason: They have been bought and sold repeatedly, each time with fewer assets and more debt. Woolworths had been left without any shops, forced to pay an ever escalating rent, and shed loads of debt. This only works while you are creating big operating profits: as soon as they dip, you are suddenly insolvent. So this year, a lot of retailers have been depending on the Christmas bulge just to stay solvent.

There will be total carnage in retail in 2009.

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Sorry for people working for Zavvi....

I wouldn't really blame the credit crunch for what's happening - the credit crunch is just exposing that these highstreet retailers were living on borrowed time.

Cheap credit (both in customers' pockets and corporate financing) has allowed the bricks & mortar guys to maintain their scale, or even grow in some cases, whereas really they should have been steadily contracting for the past five years, given the twin forces of e-commerce and Tesco's.

In the absence of five years of steady contraction, the bubble bursting is inevitable.

Every time i walked into a zavvi shop there were half a dozen members of staff wandering around the shop just looking at people. Kept putting me off buying things from them.

Maybe retailers will eventually listen to customers who want cheaper prices and better (trustworthy) service!

Another chain down the drain, unless you had shares in it why do you care?

The people employed in there would have been employed on minimum wage, they will probably have a better standard of living on the dole, when you take into account they have to travel there, and take a packed lunch.

The further down this economy goes, the better it is for the majority in the country, pound gets low enough we can start exporting, we ain't going to be getting immigrants now so there will be more land, the amount in taxes will drop so the government won't be able to waste tax money on a police state. More people will train in a vocational trade, we might get proper furniture and other industries back.

This country elected a bunch of dolts to run the country and there is no surprise that the sophisticated economy that we had, would fall apart in their oafish hands. So, we are going down quite a few grades, remember the UK is only as good as the twat in number 10, and you just need to look at Brown to see what the UK is now.

UK an epic fail, and it is hilarious :)

Last time I went into Zavvi, the DVD prices were just ridiculous. A couple of titles I wanted were 20 quid, when Play.com had them for under 7. With a price differential like that, it was only a matter of time.

So next time you go to buy something, and the other shop doesn't have Zavii to compete with and so they stick the price up €60 that's gonna make you happy is it?

Zavii was cheap for somethings not for others. That's why you shop around.

Dream student job job. Good times. Great colleagues. Though I always prefered HMV to shop in. Proved my worth as a valuable and diligent employee over the course of a couple of years. Asked for a rise (anything, something) or I'd bail. "Head Office" said no. So I went to Habitat for the remainder of my student job days, got a 25% raise, and ever looked back.

Moral of the story 1 (for staff): retail is a cruel mistress.

Moral of the story 2 (for shops): retail is a cruel mistress.

<icon: for the good times and the memories>

"10:1 Debenhams are next then JJB Sports, swiftly followed by Next and Millets."

Were you in my living room last night?

The little inependant rcord shops have been gien a hard time by the big stores who appear to have undercut them by not actually paying for ther stock. I hope we see a revival of smaller music stores as a result, like small bookshops.

I reckon that by following the bookshop model - stock 2nd hand & local aswell as mainstream, overnight order-in, selling associated accessories, selling coffee, arranging personal visits by performers, taking the stock to festivals, even arranging local festivals, diversifying into minority genre, offering services, opening late - they could be just as succesful as independants were 30 years ago.

Branson sold Megastore because he could see it wasn't the business to be in. The only surprise was he found some sucker to buy it. It was only a matter of time before Zavvi went under. The name didn't help, of course - I could never bring myself to take them seriously.

"I hope we see a revival of smaller music stores as a result, like small bookshops."

Yeah, me too - I really do hope this is an outcome.

I also hope that the thousands of people laid off from the collapse of Woolies et al are going to be able to find themselves back in work soon. However much we sneer at the business credit/debt model, there's real, live people there getting screwed through no fault of their own.

They have been going under for a year or so.

Debenhams, is their a problem with them, their stuff is reasonably priced - I think they will ride this out,

I remember when I first started buying records (before those new fangled CD thingies) and books I'd always go to the smaller independant retailers for their specialised stock and great knowledgable service.

As the chains started to drive them out of business (and as mentioned above the "proper" furniture stores and the engineering skills to build stuff rather than importing it) it felt like the beginning of the end.

Now ironically those specialist stores are thriving on the web (I can get rare Northern Soul vinyl from an etailer in, ironically, Memphis TN and recently ordered a custom made desk from a guy in Canada) - and even with shipping and import duties can still undercut the chains who are so tied up in unweidly (and dodgy) business models they've forgotten who the customer is!

At the end of the day as long as FedEx and the Post Office don't get greedy apart from food what do you actually need to go to a physical store for? Okay, so I like to try clothes and shoes on first but with places like Zappos that experience is getting better (and the company I bought a couple of suits from recently take you measurements and keep 'em on file so you should get a perfect fit every time - unless youe at too much Turkey)

Zavvi? Always sounded like a toilet cleaner to me, supposed to be one of those silly Web 2.0 names is it? I always despised Virgin they always seem to charge 15-20% more than anyone else of practically everything they sold, the biggest kick in the teeth and the reason I started buying online only, was when Virgin bought out Tower Records. TR was great and with resonable high-street prices. My sympathies for the staff, never nice to have to work in closing down sales, but good riddance to "Toilet Duck" and Mr Beardy!

"So next time you go to buy something, and the other shop doesn't have Zavii to compete with and so they stick the price up €60 that's gonna make you happy is it?"

Err...no....I'd just buy it online instead, and it'd probably be even cheaper.

What is almost certainly true is that these won't be the last companies going under, where they have been surviving by borrowing larger and larger sums of money, relying on the false "booming economy" (supported by ridiculous house prices) to keep them afloat. I have no sympathy for the companies who were too short sighted to realise that going hundreds of millions of pounds into debt based on an assumption (of the "boom" continuing) was a bad idea.

Of course, I have every sympathy for the staff who have lost or will lose their jobs because of something almost totally beyond their control.

There are some retailers in much stronger positions, where they have either kept their debts manageable or even actually have cash in the bank on balance. Of course, even they will be tightening their belts and perhaps cutting a few jobs, just to reduce expenditure.

Unfortunately the massive upsurge in consumer spending was always unsustainable. It was based on a housing market with rising values sustained by banks lending people more money than they could possibly afford to pay back. Once the market drops to a certain level, where first-time buyers can afford to buy a house on their salaries, it should stabilise again. All we can do is to hope that these people who control our economy have learnt a lesson to control it in the future.

I don't hold my breath.

Can't see that happening myself. Why would consumers want to start shopping somewhere that has limited choice at higher prices than online? Unfortunately independents cannot compete with online sales. Thankfully there are independent distributors out there who have an online presence.

It is incredibly difficult to compete with a retail proposition against a web based one, but that is not the real reason Zavvi collapsed. Zavvi should have invested in their Internet portal and utilised other Channel Island distribution systems along side EUK before they went belly up. When Home Entertainment Corp collapsed in 2006 it should have been a warning to Zavvi (then Virgin MS) to look at more radical cost savings, to make the tough decisions earlier by closing unprofitable stores and rationalising its distribution network.

Instead they applied for more credit with EUK, a business which was already showing signs of difficulty, and reducing its profitable impulse range in favour of low cost DVD.

Shame about all those peoples jobs though. I always find the staff very helpful.

<icon = becuase Paris knows it's easy to have 20:20 hindsight.

Seriously, the only reason why chains like this exist and have driven out the smaller guys is because of the customer's demand for cheaper and cheaper things. We really on the whole don't care about quality so long as it is dirt cheap and in fact we often don't care that much about price and are happy to buy expensive rubbish from say Tesco instead of buying good quality for less at say Lidl's (obviously only the food). Its all about marketing (ie, people _think_ tesco is cheap) and profit (screwing the supply chain). and its all driven my us, the guilible uninformed consumer. All the companies were doing were trying to give the customer what he wanted: cheapness. If they didn't build their business on dodgy financial borrowing to enable this, they'd have long disappeared. For this very reason the end of the high street happened long ago when all the little stores were driven out by the large companies and their out of town retail parks (obviously this wasn't helped by retarded city planners refusing to solve congestion and charge reasonable prices for parking). Its going to be really interesting to see what takes their place as the usual 'build some flats' option is available either. I wonder if more online firms are going to branch out into delivery, seen it a bit with local farms etc, don't spose there is any money in it though. But interesting exciting times ahead! More micro breweries please!

that i like buying in shop instead of online at a guess 85% of my purchases are spur of the moment generally books and dvds or games. i go into hmv or waterstones look round read a few backs of covers then buy on impulse. (personally i want waterstones to survive i like the fact that they incourage staff to read the backs and write reviews and recommmendations i spend so much time in my local one i now know the staff and let them pick stuff for me.)

point is when i buy something i buy it cause i want it now play it now read it now watch it now. for that i need a shop yeah internet shoppings cool for christmas/ birthday presents or if you need something unique or hard to get hold of but me i like seeing what i'm buying before it arrives.

plus i like some one to yell at when i buy a dvd boxset for my mum and one of the dvds has the wrong show on it instead of being told there was nothing the company could do this actually happened the dvd had been printed on as some detective show (for get what now but had raw hide burned to it) they told us we must be mistaken and wouldn't take it back.

I've always been a classical music lover, and over the years of gradually accumulating a large library of classical CD's, I've many times bought something I chanced across while just browsing the stock in our local A&B Sound (now, alas! a thing of the past).

Had I been shopping online, I would have remained blissfully unaware of many of these gems. Yes, sometimes I bought complete turkeys: the string quartets of Ernst Krenek come to mind. But nonetheless, online isn't the same as bricks and mortar stores where you can scan huge numbers of titles far more easily than you can on a monitor.