Price Waterhouse Cooper have decided to treat people with Zavvi gift vouchers as creditors. As all creditors are equal in the eyes of the law, the gift vouchers must join the long queue of people trying to get their money back. If gift vouchers were bought after the 27th of November, there is more chance of getting a refund. Before this date, reimbursement is less likely.

To make a claim, you have to write to the joint administrators quoting their Gift Card / Gift Voucher number (s), enclosing original Gift Card / Gift Voucher (s) and quoting their full name and address for return correspondence. Please find the joint administrators address below:

zavvi Vouchers
c/o The Joint Administrators
Ernst & Young LLP
100 Barbirolli Square
Manchester
M2 3EY

Full details can be found on the Zavvi site.

Why Price Waterhouse Coopers has chosen to treat gift vouchers holders as creditors is a mystery. The administrators of Woolworths let customers with gift cards use them within the stores right up until the shelves were stripped.

Woolworths is the major reason for the problems at Zavvi. Entertainment UK was part of the Woolworths group and responsible for providing stock for Zavvi. When Woolworths got into problems Entertainment UK (EUK) were unable to provide new stock for Zavvi in the crucial run up to Christmas.

Zavvi was already in some financial difficulty but being unable to get the latest DVDs, CDs and games in the run up to Christmas meant they lost out on a large proportion of their yearly profits. Also, the problems at EUK forced Zavvi into a stock clearance sale. This is because the stock in the Zavvi stores was owned by EUK. When EUK as part of Woolworths went into administration Zavvi had to unload all the EUK stock, to pay EUK’s creditors.

Check out Zavvi on Oxford Street today. Not only is there a massive clearout
t sale they are offering a whopping 10% off all the marked prices. Grab Primal Scream’s Screamadelica for two quid and many other popular albums for incredibly discounted prices. There’s a whole hosr of the latest DVD releases for less than a tenner.

Woolworths still limps on but its days are numbered. The Woolworths in Camden Town is still open but the shelves have been stripped bare. It looks like a Russian supermarket in the late 80’s. You can still grab some sweets from the Pick n’ Mix section which is fitting as for many the only point of Woolworths was its sweet isle. When the last Pick n’ Mix is sold then, Woolworths will truly be no more.

This is what happens when companies go into administration during a recession. There was neither the inclination or the money to save a shop as symbolic as Woolworths so it is bad news for Adams, Whittards and Zavvi which have all gone into administration in the last two weeks.

It is easy to understand why a company like Whittards and Adams are having problems. Whittards is a luxury tea retailer while Adams purely sells children’s clothes. Their core business is provided by other retailers. It is possible to buy luxury teas and coffees from super markets and department stores. There is little reason to make a separate visit to a specialist tea retailer when you can buy similar products when you do your weekly shop. The same applies for children’s clothes which can be bought in super markets or in cheap clothes retailers like TK Max or Primark. Most importantly during a recession people spend less on luxuries like luxury teas and children’s clothes.

Whereas Adams and Whittards are too specialised, Woolworths did have enough of a defined identity to keep people coming back. Woolworths sold products that any other high street shop did, but without the range of specialised retailers. Woolworths also could match its competitors on prices. A company like Argos is able to sell every product under the sun while at the same time offering its customers a huge number of items within each range. It is also really cheap. How could Woolworths possibly compete?

Zavvi is an interesting case. Theoretically a shop selling CDs, DVDs, game consoles, games and other home entertainment items should be doing really well. These are reasonably expensive must have items. Everyone, from every age and walk of life likes music, films and games.  Even during a recession, people still buy these items because they are more likely to stay at home to save money and so invest in their home entertainment. However the music and movie market has taken a hit in recent years because more and more people are getting such items online from companies such as Amazon and Play.com. These sites do not have the overheads of a high street retailer and so are able to pass on the costs to their customers. Plus they can sell items high street shops with limited space cannot afford to stock. Buying online is becoming more and more popular as the populace become more web-savvy. Many online retailers offer free delivery and are often able to deliver an item within 24 hours of its being ordered. Illegal downloads mean that many people have stopped buying music and films altogether. Both scenarios are serious threats to off-line home entertainment retailers like Zavvi.

The coming year will be a difficult time for many retailers. It seems as only those with the most robust business models will be able to weather the economic down turn. Companies in precarious situations like Adams, Whittards, Zavvi may follow the same undignified fate of Woolworths.