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Zavvi
Type of site	Online shopping
Founded	September 2007; 17 years ago
Predecessor(s)	Virgin Megastores UK
Headquarters	United Kingdom
Products	Blu-rays, collectables and homeware
URL	zavvi.com

Zavvi is an online retailer of entertainment products, including Blu-ray discs, collectables, homeware and toys. Originally a physical retailer, the brand has been online only since it was bought from administration by The Hut Group (THG) in 2009.^[1] In July 2023 THG confirmed the sale of its OnDemand division, including Zavvi, to its existing leadership team, with financial backing from investment firm Gordon Brothers.^[2]

History

Virgin Megastores UK

Richard Branson started his first Virgin store on London's Oxford Street in 1971 and the first Megastore in 1979. The chain grew throughout the 1980s and 1990s and became an international franchise. During the early to mid-2000s, the Virgin Group sold most of its Megastores to various companies, including the French stores to the Lagardere Group and the American stores to The Related Companies.^[3]

Zavvi rebranding

In September 2007, it was announced that the UK arm of the Virgin Megastores brand was to break away from the Virgin Group.^[4] A management buyout offer was led by managing director, Simon Douglas, and finance director, Steve Peckham, reportedly for just £1.^[5]^[6] Zavvi became the largest independent entertainment retailer in the UK.^[7] All 125 stores traded under the Zavvi brand, although some stores retained an individual Virgin Media concession that operated independently from the Zavvi store. In October 2007, the company updated its logo to feature a Z in the dot of the i.^[8]

Zavvi Ireland had made a loss of €3.4 million in the year ending March 2007.^[9] In September 2007, Douglas announced that Zavvi would focus on the sale of games to compete with Game and Gamestation.^[10] Plans were revealed for Zavvi to differentiate itself from its competitors with limited editions and exclusive products in addition to increasing the stores online market share during the next year.^[11] Following a trial period, it was announced on 28 March 2008 that all Zavvi stores would feature a book department.^[12]

Prior to entering administration, Zavvi was in the process of creating an online download service, Zavvi Downloads, intended to compete with services including Napster and the iTunes Store.^[13] It was planned the service would offer music which would not carry any digital rights management, meaning that it could be transferred to any portable music player without restrictions.^[14] It would also have a catalogue of films and TV shows, games and mobile content. On 15 January 2009, Ernst & Young announced that Zavvo Downloads was scrapped as the company entered administration.^[15]

Administration

In December 2008, The Daily Telegraph reported that Zavvi was seeking help from the Virgin Group to guarantee millions of pounds worth of its stock payments to Woolworths' Entertainment UK (EUK) as EUK had entered into administration.^[16] The Times reported that Ernst & Young might step in if Zavvi could not pay EUK the value of the stock which amounted to a £106 million debt.^[17] Zavvi was forced to shut down its online operations as it entered into talks with EUK and Deloitte & Touche, EUK's administrators.^[18] A spokesman for Virgin said that a deal had been done with the administrator of Woolworths, which accepted £40 million to settle the debt.^[6] On 8 December 2008, Zavvi suspended its sale of gift cards citing the problems with its supplier, EUK, as the cause.^[19]

On 24 December 2008, the Zavvi UK group went into administration owing to the loss of its supplier as the company was unable to source stock.^[20]^[21] Zavvi had attempted to buy supplies from alternative suppliers but experienced difficulties in obtaining favourable credit terms or acceptable prices. This placed pressure on the company's working capital and when quarterly rents of approximately £13 million were due on 25 December 2008, the directors were unable to meet their creditor liabilities.^[22]

Ernst & Young LLP was appointed administrator, and Zavvi continued to trade while a buyer was sought. Zavvi Guernsey was liquidated, but Zavvi Ireland was not at the time subject to any formal insolvency proceedings. At the time of administration, Zavvi had 114 stores in the UK and 11 in Ireland, employing 2,363 permanent staff and 1,052 temporary staff.^[23] All stores opened as normal on Boxing Day / St Stephen's Day, 26 December, for the normal post-Christmas sale.^[24] Zavvi Ireland entered liquidation in January 2009.^[25] On 13 January, Zavvi Entertainment Group Limited entered administration.

In January 2009, HMV revealed that it had acquired five stores in Ireland and nine in the United Kingdom, saving 269 jobs.^[26] The purchase price for the nine UK stores was approximately £630,000.^[27]

Head Entertainment, a company created by former managing director Simon Douglas and his business partner Les Whitfield, purchased five stores.^[28] A total of 222 employees together with the remaining Zavvi stock were transferred to Head, and the total purchase cost was £111,000.^[29] All other stores were closed. Head itself was a short-lived venture, having closed all of its stores by early 2010.^[30]

Sale

The Zavvi brand and domain name were sold following an online auction in February 2009. It was relaunched by new owner, The Hut Group (THG), on 2 March 2009. The website was renamed Zavvi.com in October 2009.

In July 2023, THG confirmed the sale of its OnDemand division, including Zavvi, to its existing leadership team as ZavviGroup Ltd, with financial backing from investment firm Gordon Brothers.^[2]

References

^ "The Hut swoops for Zavvi.com". MCV. 2 March 2009. Retrieved 2 March 2009.
^ ^a ^b "THG sells OnDemand division to management". Retail Gazette. 21 July 2023. Retrieved 21 July 2023.
^ "Lagardère Media acquires Virgin Stores in France" (Press release). Lagardère Group. 26 July 2001. Retrieved 11 April 2008.
^ "Branson sells Virgin music stores". BBC News. 17 September 2007. Retrieved 5 April 2008.
^ "Branson lets go of record store chain". Financial Times. 16 September 2007. Retrieved 5 April 2008.
^ ^a ^b "Why did Zavvi go under?". BBC News. 24 December 2008. Retrieved 24 December 2008.
^ "Virgin strikes exclusive EUK deal". MCV. 30 January 2007. Retrieved 24 December 2008.
^ "Zavvi outlines new identity". MCV. 8 October 2007. Retrieved 5 April 2008.
^ "€3.4m Virgin loss hits new owners". The Independent. 26 January 2008. Retrieved 5 April 2008.
^ "Zavvi targets games". MCV. 21 January 2007. Archived from the original on 5 September 2012. Retrieved 5 April 2008.
^ "Zavvi rules out crazy discounting". MCV. 23 January 2008. Retrieved 5 April 2008.
^ "Zavvi to roll out books in 125 stores". thebookseller.com. 28 March 2008. Archived from the original on 1 April 2008. Retrieved 29 March 2008.
^ "Zavvi set to expand download store to films and games". mad.co.uk. 20 March 2008. Retrieved 23 November 2008.
^ "Zavvi downloads". Zavvi. Retrieved 23 November 2008.
^ "Zavvi Digital Download Plan Bites The Dust". paidContent. 15 January 2009. Archived from the original on 14 February 2009. Retrieved 16 February 2016.
^ Hall, James (5 December 2008). "Woolworths' collapse hits Virgin Group". The Telegraph. Telegraph Media Group. Retrieved 6 December 2008.
^ Power, Helen (12 December 2008). "Zavvi creditors call in Ernst & Young as Woolworths fallout spreads wider". Times Online. Times Newspapers. Archived from the original on 12 June 2011. Retrieved 12 December 2008.
^ "EUK: Zavvi clarifies its position". MCV. 5 December 2008. Retrieved 6 December 2008.
^ "Zavvi suspends gift card sales". GamesIndustry.biz. 8 December 2008. Retrieved 30 December 2008.
^ "Notice to Customers 24.12.2008 - What has happened?". Zavvi. 24 December 2008. Archived from the original on 17 December 2008. Retrieved 24 December 2008.
^ "Zavvi music store goes into administration". Metro.co.uk. Associated Newspapers. 24 December 2008. Retrieved 24 December 2008.
^ "Ernst & Young Zavvi Proposals" (PDF). Ernst & Young. Archived from the original (PDF) on 25 February 2009. Retrieved 16 February 2016.
^ Davey, James (24 December 2008). "UK's Zavvi goes into administration". Reuters. Retrieved 24 December 2008.
^ "Zavvi Group (in relation to Administration)". Ernst & Young. 24 December 2008. Archived from the original on 10 February 2009. Retrieved 16 February 2016.
^ "Zavvi's Irish Stores In Provisional Liquidation". Billboard. 30 December 2008. Archived from the original on 22 March 2009. Retrieved 16 February 2016.
^ "Placing announcement". HMV. 14 January 2009. Archived from the original on 4 June 2009. Retrieved 16 February 2016.
^ "Notice of creditors meeting" (PDF). Zavvi/Ernst & Young. 13 February 2009. Archived from the original (PDF) on 25 February 2009. Retrieved 17 February 2009.
^ "Zavvi to shut but 41 Liverpool One jobs are saved". LDP Business. 18 February 2009. Archived from the original on 22 February 2009. Retrieved 18 February 2009.
^ "Zavvi progress report to 23 June 2009" (PDF). Ernst and Young. 23 June 2009. Archived from the original (PDF) on 6 October 2011. Retrieved 10 November 2009.
^ "'Son of Zavvi' Head Entertainment starts closing down Sales". Retail Week. 9 December 2009. Retrieved 27 February 2022.