Music and film retailer HMV is preparing to call in the administrators as it becomes the highest profile chain to collapse during the current economic malaise.

Around 4,500 jobs are at risk at the 90-year-old retailer after its board called in Deloitte as administrators following poor results over the crucial Christmas trading period – when it traditionally makes most of its sales.

Best known for its Nipper the dog trademark, HMV has failed to find a way through difficult economic conditions and fierce competition from supermarkets.

It has been struggling with debts for just over two years, and while banks have revised the terms of their loans it was thought to been handed a lifeline after its suppliers, including Universal Music, EMI, Warner Brothers and Disney, were handed shares in exchange for improved commercial terms.

But those firms were said last night to have refused to agree to provide additional financing to the retailer, leaving it with few options to find the extra resources needed to keep trading. HMV's website was still advertising its 25% off sale for thousands of products on Monday.

The chain, which opened its first store in 1921 on London's Oxford Street and still owns the world's biggest record shop there, had been attempting to shift out of films and music and into accessories such as headphones. But it had not been enough to counter the decline in conventional sales. Simon Fox, then chief executive, jumped ship to Trinity Mirror last year to be replaced by Trevor Moore, the former boss of Jessops, the camera retailer which itself collapsed last week.

Jessops closed its 187 shops for the last time on Friday and made 1,370 staff redundant. It is one of several high street names to go to the wall over the past year, including the electrical retailer Comet, clothing chain Peacocks and JJB sports.

HMV is arguably the highest profile name to collapse during the prolonged economic downturn and altering shopping habits that also forced Woolworths out of business five years ago, at the start of the banking crisis.

Ironically the collapse of Woolworths had initially helped HMV, which enjoyed a peak in sales shortly afterwards, before the competition escalated from supermarkets and online retailers.

A weak economy in the run-up to Christmas has exacerbated the woes of retailers struggling with business models overwhelmed by technological changes such as the explosion in camera phones, which destabilised Jessops, and the explosion in internet downloading which undermined demand for CDs and DVDs at HMV. With consumers less keen to spend over the key festive period, which is a make-or-break time for struggling retailers, Jessops and HMV have been unable to prove to their financiers that they have a viable business model.

Last month in the midst of the Christmas trading period HMV had warned that the tough trading conditions meant it was already struggling despite having installed a new management team in Moore and new finance director Ian Kenyon.

It remains to seen what the impact will be on the film companies and record labels which rely on its 247 stores for their sales. Despite its troubled position, the retailer still sells 27% of all DVDs and Blu-Ray discs and 38% of the physical music market.