HMV chief warns UK High Street faces tax hits as policy debate hots up

HMV’s managing director Phil Halliday warned that the UK High Street remains exposed to government tax measures even as demand for physical music and related merchandise shows resilience. The retailer, which operates about 100 stores in Britain, has benefited from renewed interest in physical formats and high-profile live events, including concerts by Blackpink at Wembley, which Halliday described as boosting demand for music and fan merchandise and helping foster a sense of community among fans.

Halliday criticized the Chancellor’s Employer National Insurance tax raid in last year’s Budget, saying it forced HMV to pause plans to open new shops. He warned that more tax moves could come in the Budget scheduled for November 26, arguing that retail bears a heavier tax burden than other sectors. He noted that bricks-and-mortar retailers pay a larger share of revenue in tax than online rivals such as Amazon and Apple, and called for a broader rebalancing of the tax system. Halliday argued that Labour’s proposed business-rate reforms could undermine high-street vitality by pushing large shops to close floors, shut stores, or reduce purchasing; he estimated as many as 4,000 shops could face higher rates and that the reforms risk undercutting anchor stores that draw shoppers to nearby businesses.

HMV’s flagship store on London’s Oxford Street, which reopened in 2023 after a four-year gap, stands as a symbol of the chain’s revival. The store, whose roots extend back to 1921, now stocks CDs, DVDs, Blu-ray discs, vinyl records, T‑shirts, socks, books, trading cards and an array of collectibles ranging from figurines of recording stars to Japanese anime and Marvel characters. The revival has coincided with a broader return to physical formats, helping lift HMV’s sales; the company reported a 7% rise to about £190 million in the last year, though profits fell roughly 6% to just under £5 million. Beyond music, HMV has expanded into books to capitalise on a post-pandemic reading boom among younger readers and now stocks titles such as George Orwell’s 1984, as well as guides to pop culture phenomena and graphic novels like The Mandrake Project.

The collectibles craze has also presented logistical challenges, with demand for Pokémon cards prompting stock protection measures and limits on purchases. Halliday noted that the most significant security risk comes from shoplifting and the occasional assault, with staff concerns about crime often exacerbated by slow police response. The company also faces broader risk from cyberattacks that have hit other retailers and brands, a reminder that threats to both physical and online operations are increasingly interconnected.

Halliday stressed that London’s live-music scene helps sustain footfall around record shops and related venues, with fans often turning a gig into a broader shopping day. He highlighted the broader market backdrop: last year, the UK hosted about 23.5 million music fans who spent roughly £10 billion on artists such as Taylor Swift and Charli XCX, underscoring the enduring appetite for music and live events that supports retailers with a physical footprint.

HMV has diversified beyond music into books and other collectibles as part of a strategy to anchor its role on Britain’s high streets. The company began selling books in November last year, aiming to guide customers from music into other interests as they age, and to keep the brand relevant in a shifting retail environment. Halliday said the approach is designed to keep customers engaged at different life stages and to attract visitors who might otherwise shop primarily online. The broader policy backdrop, including tax and rate reform discussions, remains central to the outlook for bricks-and-mortar retailers as they navigate a complex and evolving retail landscape.