HMV boss warns UK High Street faces tax hits as retailer presses for relief

LONDON — HMV’s managing director Phil Halliday warned that the UK High Street faces continued strain from government policy, saying last year’s fiscal moves and a looming Budget could pile pressure on brick‑and‑mortar retailers. Halliday, whose chain operates about 100 stores in Britain, argued that retail bears a higher tax burden than online rivals and that the policy environment could worsen in the run-up to the November 26 Budget. He also noted a political controversy around the chancellor, Rachel Reeves, saying Reeves had accepted free tickets to a Sabrina Carpenter concert without declaring them, a claim he framed as part of the broader scrutiny of government policy toward retail. Halliday stressed that while the economy is shifting, there is still room for a prudent, pro‑retail approach that supports physical stores as community hubs. He warned that the November Budget could bring further measures that would add to the cost of operating on Britain’s high streets. "Retail should pay a bit like everyone else – but it pays more than any other sector," Halliday said, arguing that the current tax mix has been skewed against brick‑and‑mortar businesses.

HMV’s flagship store on Oxford Street has become a symbol of the retailer’s revival, a beacon for fans of physical media and pop culture alike. The four‑story shop, which reopened in 2023 after a four‑year hiatus, stocks CDs, DVDs, Blu‑ray discs, vinyl records, T‑shirts, socks, books, trading cards and a wide range of collectibles. It also sells figurines tied to recording artists, Japanese anime and Marvel characters, underscoring the retailer’s strategy of turning stores into experiences as much as merchandise hubs. The Oxford Street site, once the company’s lifeblood, remains central to HMV’s identity as a destination for fans visiting London for gigs and related pop‑culture experiences.

The store’s revival appears to be contributing to a broader sales uptick for HMV. Last year, the Oxford Street flagship helped lift group turnover to about £190 million, up about 7% from the prior year, while profits declined modestly to just under £5 million. Halliday pointed to the broader appeal of limited‑edition merchandise and box‑set exclusives as a competitive advantage in a market increasingly dominated by streaming, arguing that the tangible, collectible nature of physical media remains compelling for certain segments of music and entertainment fans. The retailer has benefited in part from a resurgence in demand for physical formats, reversing the long‑standing trend toward digital consumption and reinforcing the value of experiential retail in London and other tourist hubs. Halliday noted that many fans travel to the capital for concerts and then spend days exploring record shops, pubs and other cultural venues, creating an ecosystem that supports multiple retailers beyond music alone.

Meanwhile, Halliday expressed concern about the impact of Labour’s proposed reforms to business rates, which aim to narrow the advantage online retailers enjoy from warehousing and distribution by increasing taxes on large premises. Retailers argue the changes risk forcing anchors on high streets to close floors, shutter stores or reduce headcount as they attempt to rebalance costs. Halliday warned that up to 4,000 shops could face higher rates, claiming the reforms may inadvertently damage the overall vitality of high streets by shrinking the anchor tenants who draw footfall to nearby shops. He said: "It feels like there’s some finessing needed in order for it to achieve its objective, which is to support bricks and mortar retail." The policy objection reflects a long‑standing debate about how to level the playing field between physical stores and online platforms that operate with different cost structures.

Beyond the economics, Halliday highlighted the social and cultural roles of high‑street stores, describing footfall as a fragile metric and lamenting the erosion of what he calls the ‘ecosystems’ that used to make town and city centres thriving hubs. He argued that the decline of footfall threatens not only retailers but also the broader urban fabric, where small businesses rely on the spillover from crowds drawn to larger anchors and events. While retailing remains challenging, Halliday contends that stores such as HMV can contribute to a sustainable urban experience by offering a curated mix of music, entertainment, books and collectibles that appeals to diverse age groups and tastes.

In addition to music and film merchandise, HMV has broadened its storefront appeal by leveraging post‑pandemic reading enthusiasm. The group began selling books in November of last year, hoping to capture a new generation of readers who emerged during the pandemic and who often discover titles via social media. Best‑selling and cult titles—ranging from George Orwell’s Nineteen Eighty‑Four to contemporary graphic novels and behind‑the‑scenes looks at popular TV series—have become part of the store’s draw. Halliday said the strategy aims to provide a continuum of offers as customers move through different phases of their interests, from music to books to collectibles, thereby strengthening customer loyalty and driving repeat visits.

The collectibles boom has not been without its challenges. The demand for items such as Pokémon cards has surged to levels that have strained supply chains and logistics, leading HMV to restrict sales and keep popular packs behind counters. Halliday explained that staff can’t keep certain items easily accessible and that limits must be placed on per‑customer purchases to reduce theft and inventory losses. He noted that the company must balance the demand from collectors with the realities of shoplifting in some high‑street locations, where staff safety has become an ongoing concern. He added that shoplifting and a perceived lack of police response have dented morale, with some employees feeling demotivated when crime goes unaddressed by authorities.

In acknowledging security risks beyond the shop floor, Halliday pointed to a rising tide of cyber threats that keep corporate leaders up at night. He cited high‑profile cyberattacks on major retailers and manufacturers, including Marks & Spencer and Harrods, as vivid reminders that the risk of digital disruption can rival the dangers of in‑person crime. Halliday warned that a successful cyberattack could compromise a retailer’s website or online store, disrupting sales and eroding consumer trust. He argued that, for retailers that maintain a mix of physical stores and e commerce, investing in cyber resilience is essential to protecting both revenue streams and customer relationships.

The broader market backdrop remains mixed. Last year, the UK attracted a record‑setting 23.5 million music fans who traveled to the country and spent around £10 billion on artists such as Taylor Swift, Charli XCX and others, underscoring the enduring pull of live music and the associated footfall it generates for record shops and related businesses. Halliday described the London market as a convergence point for fans traveling from across Britain and overseas, noting that gigs and festivals create a temporal concentration of demand that benefits retailers with strong, local connections and a broad catalog.

The HMV story is also tied to ownership changes and strategic pivots. The Oxford Street flagship’s revival followed its acquisition by Canadian billionaire Doug Putman in 2019, the same investor who later acquired Toys R Us. Putman’s involvement has helped stabilize HMV and enable investment in store environments, inventory and experiential retail. The Oxford Street store’s reopening in 2023 is often cited as a turning point for the company, signaling a broader revival of physical music and entertainment retail in a competitive, digitally driven market.

As Halliday looks ahead, he emphasizes that the health of the High Street depends on policy choices that balance taxation with the need to preserve physical spaces that offer community value and tangible experiences. He remains optimistic about the potential for continued growth in areas where consumer appetite for physical media, collectibles and books remains resilient, even as digital substitutes proliferate. He argues that a thoughtful, targeted approach—one that recognizes the strengths of brick‑and‑mortar retail and protects its role in urban life—can help sustain a diverse and vibrant retail sector in Britain.

In the meantime, HMV continues to navigate the balancing act between capitalizing on fan demand for limited‑edition items and managing the operational realities of running 100 shops across the country. The retailer’s performance, shaped by evolving consumer preferences, the policy environment and the broader economy, will be watched closely by investors and by other High Street players who seek lessons on how to adapt to a changing retail landscape.