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Retail threatened by credit 'crisis'

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Retail threatened by credit 'crisis'

Publishers’ nerves on edge as credit insurers drastically reduce cover against Blockbuster, DSGi and more

The UK High Street is battling to prevent a nationwide games stock shortage – as credit insurers cut cover against the industry’s biggest retailers.

MCV understands that credit insurers including Atradius, Coface and Euler Hermes have slashed cover on stock sold in to some retailers – including Toys R Us, Blockbuster, Comet and outlets owned by DSGi, such as PC World, Dixons and Currys – following a New Year review.

That leaves publishers and platform holders – still reeling from credit insurance being swept away from Woolworths and EUK last year – in the tricky position of dealing with hugely reduced credit limits or on cash terms with the chains.

At least two publishers have reduced or cut off stock supply from some of the troubled retailers, MCV understands – with others warning of “alarm bells” for their sales teams.

The UK boss of one top ten publisher told us: “After the Christmas boom, everybody worries. We’re not planning at the minute for a disaster – these retailers all have an offering you can’t get elsewhere on the High Street. But the bolts have tightened on the credit limit we give them.”

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The sales chief of another publisher added: “It’s getting ridiculous – who’s left to sell to if you can’t get credit on this lot? GAME and the supermarkets. Alarm bells are starting to ring. It couldn’t come at a worse time after Woolworths, EUK and Zavvi’s collapse.”

However, the founder of a key trade business called for calm when contacted by MCV.

He said: “The Woolworths situation has given publishers the jitters. But this doesn’t necessarily mean others are about to go pop. It’s blatant that the credit insurance guys want to get out of our industry and focus on dog food and shoes."

Comet and DSGi both told MCV that the reduction in credit insurance hadn’t affected trading with suppliers. Toys R Us and Blockbuster could not comment when contacted.

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posted by stevo- Jan 23, 2009 at 12:22 am
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stevo-

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its not suprising to be honest ,although i believe blockbuster and toys r us had good years last year. retail is just seen as a risk at the moment its only because game is so massive that they dont have any problems.to be honest i know the retailers i work for cut the order amounts anyway so the fact credit has been reduced has not affected us anyway.

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Re: credit

posted by holdmykidney Jan 23, 2009 at 11:13 am
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holdmykidney

it may be bad news for less popular titles. Surely retailers are more likely to up the ratio of guaranteed sellers and make less order for more niche titles?

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MCV is the leading trade news and community site for all professionals working within the UK and international video games market. It reaches everyone from store manager to CEO, covering the entire industry. MCV is published by Intent Media, which specialises in entertainment, leisure and technology markets

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