Another stalwart of the British high street is set to close stores, citing Rachel Reeves October budget as a driving factor behind the decision. HMV, who until recently was expanding stores across the UK, but will close its Whitefriars store in Canterbury on Monday, March 24, citing a change to its retail strategy. Following October’s budget, the firm had paused expansion plans citing wage rise costs that will come into effect from April as the reason behind the rethink.
Earlier this year, Managing Director Phil Halliday said that the company hoped to open 10 stores as it attempted to battle back from the difficulties experienced in parallel with the rise of digital music. But Reeves decision to raise the national living raise as well as significant increases to employer national insurance contributions, has forced the former retail giant to reconsider.
Halliday told the Guardian: “Growth is great but we are just about covering cost increases, it is quite frustrating at times.”
The retailer’s boss believes that the government should imminently introduce planned business rate relief, which is due to benefit stores with a rateable value under £500,000 from 2026.
HMV has enjoyed an increase in sales recently, with growth of 6.5% last year and a turnover of £189.6 million.
But despite this, he admitted that the company was “peddling pretty hard” to convert sales growth into profit.
HMV’s accounts showed that the company’s pre-tax profits fell by more than 6% to £4.9 million last year.
The company looks set to expand across Europe, with plans to open stores in Ireland and Belgium this year.
The impact of Reeves’s budget is not exclusive to HMV, with the boss of M&S writing an open letter to the Chancellor earlier this year urging her to make significant changes to prevent the retail industry suffering.
Stuart Machin wrote in the Sunday Times that Reeves should make four changes to her plans to drive economic growth. Firstly, he urged the rise in national insurance contributions to be phased over two years to allow business the chance to adjust to and plan for the changes.
He further urged Reeves to delay an increase in Extended producer responsibility (EPR) fees which will leave retailers with a significantly increased tax increase as well as suggesting that her approach to business rates should be rethought.
His final request was for the Chancellor to rethink her controversial inheritance tax plans which have seen the government and farmers lock horns over measures which many believe could decimate the rural community.