Game over for another high-street retail giant?

LONDON BRIEFING:IF YOU'VE not spent that Game gift voucher you got for Christmas, it's too late now. As the computer games group collapsed into administration on Monday – the largest failure of a quoted retailer since the demise of Woolworths in 2008 – administrators PricewaterhouseCoopers moved swiftly to close almost half of Game's 610 stores in Britain and Ireland, and to suspend its websites, giftcard and loyalty schemes.

Unlike Woolies, however, there is a chance the Game name will live on in the high street, although in much reduced form. The administrators are attempting to find a buyer for all or some of the remaining 333 stores, which will continue trading in the meantime.

That’s a lifeline for the 2,800 or so staff at the stores which, so far, have survived, but is little consolation to the 2,100 other employees who have been made redundant.

Game management, led by chief executive Ian Shepherd, had tried desperately to save the business, but warned investors a week ago that their shares were worthless.

At least one potential buyer was in the wings – OpCapita, the turnaround specialist which bought the ailing Comet electricals chain last November for a nominal £2 – but agreement could not be reached with Game’s bankers, owed £60 million and led by the state-controlled Royal Bank of Scotland.

Despite the failure of those talks, the administrators appear confident they will be able to secure some sort of rescue for the group, which also includes Gamestation, and say they believe there is still room for a specialist game retailer in the UK.

Shepherd has now stepped down because, as he told shell-shocked staff, with PwC now in charge, having two people trying to run things would be “confusing and a waste of money”.

Game has been in trouble for some time but its fate looked inevitable last month when it emerged that suppliers, to whom it owes around £40 million, were refusing to deliver stocks of some new blockbuster games, Mass Effect 3 and Mario Party 9.

It was forced to refund precious cash to customers who had pre-ordered, as well as £5 worth of reward card points, and watch as they took their custom elsewhere.

The story of this latest high street casualty is a familiar one of failure to respond swiftly enough to the changing retail market: when Game should have been pouring resources into its internet operations, it was spending large amounts of cash on bricks rather than clicks, opening too many new stores and expanding into overseas territories.

As for the high street, where one in seven shops now lies vacant, who’ll step in to take the space so abruptly vacated by Game? The best guess is a hotch-potch of rent-reduced charity shops and pound stores.

Some see VAT move as half-baked

If you thought people were angry over the reduction in top rate tax in last week’s budget, that’s nothing compared to the storm stirred up by the chancellor’s “pasty tax”.

George Osborne’s decision to slap VAT on takeaway snacks such as sausage rolls and pasties has sparked a chorus of protests, led by Greggs, Britain’s biggest bakery chain.

It’s an important issue for Greggs – its shares fell 5 per cent the day after the budget, wiping £30 million from the company’s stock market value, as analysts estimated the impact of the move.

Other VAT changes have also gone down badly, with higher prices on the cards for consumers on an eclectic mix of products and services as the tax is levied on hairdressers who rent a chair in a salon, in line with salon owners; on static caravans; on sports nutrition drinks and on self-storage facilities.

Greggs is now planning legal action against the VAT change, which the government said was intended to close loopholes in the current rules under which freshly baked pies and pasties are classified as VAT-exempt cold food. They are now to be reclassified as hot food, in line with other takeaways, and thus subject to VAT.

Freshly baked bread will remain VAT free, however.

Greggs, which sells two million sausage rolls a week, has warned that dozens of smaller bakers could go under as a result. In Cornwall, home of the Cornish pasty, there’s been an angry reaction and MPs from the area have raised the issue in the House of Commons.

The Sun newspaper is particularly aggrieved and has launched a “Who VAT all the pies?” campaign to demand that the tax, which it sees as another assault on the less well-off, is dumped.

As the newspaper pointed out, while pasties and pies will now be liable to the 20 per cent tax, caviar is zero-rated.

Fiona Walsh writes for the Guardian newspaper in London