HMV reopened the doors to its flagship at 363 Oxford Street in late November after a four-year absence.
The central London location is where the retailer opened its first store back in 1921 and has hosted some of the world’s biggest artists including The Spice Girls, Kylie Minogue, The Weeknd and Blur for autograph signings and exclusive performances.
The return to its original home has been dubbed as the final stage of HMV’s “dramatic turnaround” under new owner Doug Putman, who snapped up the business at the start of 2019 following its second collapse into administration.
“It’s a big moment for the business and a big moment for everyone,” says the retailer’s managing director Phil Halliday.
The flagship represents the brand’s new direction and kick starts “the next phase of the business” following its return to profit last year, Halliday says.
So, what exactly does the next chapter of HMV look like?
Returning home
The reopening of 363 Oxford Street is a welcome return for many shoppers, with some queuing in the early hours of the morning to be the first to step foot inside the famous store.
The biggest difference between the new 10,500 sq ft flagship and the one that stood before it is the increased focus on pop culture merchandise. This has been at the heart of Putman’s turnaround of the business.
The ground floor of Oxford Street is mostly dedicated to South Asian pop culture products, such as Funko Pop figurines and Kenji plushies and accessories, with a range of posters and clothing towards the back.
Despite the focus on pop culture, the retailer is keen to retain its musical roots.
The retailer’s collection of CDs and vinyl are on the lower ground floor, which also features a performance space, while the second floor houses a music venue.
Elsewhere, there is an extensive library of DVDs and a collection of fiction books on the first floor.
“There’s certainly no one on the high street that does what we do. The products that we sell are all about community and that interaction,” Halliday says, adding that “people want to experience that in a bricks and mortar setting”.
“We can buy physical products online and it’s very convenient but convenience isn’t everything all the time, you don’t get the same experience.”
Halliday admits that the retailer’s biggest competitor is the internet thanks to the rise of streaming services.
However, he believes the market is reaching “a bit of an equilibrium” with more people looking to enjoy the experience of music in physical formats alongside listening online.
Turning the business around
The revival of physical music in recent years, particularly a rocketing demand for vinyl, has helped to reverse the retailer’s fortunes.
HMV revealed it was back in the black after posting a pre-tax profit of £1.97m for the year to 30 May 2022, up from a loss of £231,000.
“Vinyl is a core part of our business and it’s very close to the identity of the business but it’s not responsible for the entire progress that the business has made [post-administration],” says Halliday.
The business’ turnaround strategy was “born out of Covid, which happened straight after the administration”, explains Halliday.
“The demand for a lot of the music product declined, but our stores stayed the same size, and the rent didn’t go down so you have to do something slightly different in order to make it work.
“The business would close for a bit, and then would reopen, close for a bit and then we’d reopen again.
“Every time it was closed, we did a big project to expand a lot of the adjacent products so a lot of the band merch, plushies and a lot of the Asian culture products.
“We identified a lot of space in the business that was not being utilized, added a lot of extra products that was curated to appeal to certain demographics and groups of people who were affiliated to areas of culture to our core products.”
The move has helped to attract a younger demographic, points out Halliday.
“We pulled all that together into a new shop concept that had an aesthetic that represented some of the changes.”
The HMV shop concept – which contains different branding, aesthetic and product mix – has been rolled out to more than 40 stores so far and will extend across the rest of its estate in the near future, he shares.
A launchpad for growth
Halliday explains the opening of 363 Oxford Street serves as a “launchpad for the next phase of the business”.
At the top of his list of priorities is rapidly expanding the retailer’s store estate – both in the UK and abroad.
“We’re taking what we’ve learned and been able to apply [so far] to Oxford Street and the intention is to expand across Europe and replicate, with some localization, what we do here.”
The new business model – and the HMV shop format – has given the team the confidence it would work in flagships across Europe.
“We’re giving it a good whack”, Halliday exclaims.
Despite the enthusiasm to grow HMV’s presence internationally, Halliday is cautious about not expanding too fast and ensuring stores are profitable.
He says the business’ speed of expansion is “dictated by factors out of our control so we would go as quickly as is prudent and economically viable”.
One challenge HMV faces is business rates, which are set to rise in January after Chancellor Jeremy Hunt ignored calls for a reform in his Autumn Statement.
“It’s the third biggest cost we have in the business,” Halliday says.
“It’s the thing that will sway you on a property,” he explains. “We will get to a point with the landlord where it works but the rates are often the barrier.”
However, Halliday doesn’t seem too fazed about the rise as he sets out his ambitious growth plans.
“We wouldn’t want to stretch ourselves but…I think 20 [new stores] a year would be pretty good going if we could do that.”
“Once we’ve really got into a groove, we do hope to be moving at a quicker pace.”
HMV is a business that seems to have gotten its groove back.
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