Businesses in central London lost an entire year’s worth of sales in the first 18 months of the coronavirus pandemic, a Center for Cities report released on Monday found.
He also suggested that the much-heralded increase in online shopping was not necessarily the result of an abandonment of the high street and offline spending has returned to pre-pandemic levels.
The heavy economic blow to the British capital was reflected in other major metropolises, Birmingham and Edinburgh being the next worst hit.
Their traditionally stronger high streets both lost more than 40 weeks of sales between March 2020 and September 2021. The national average over this period was 28 weeks. Conversely, smaller metropolises such as the northern towns of Burnley and Warrington lost five times fewer weeks of sales.
The report, which was published the week Boris Johnson’s government is expected to announce the next stage of its ‘leveling up’ scheme for the UK’s poorest parts, attributes the trend to the pandemic transforming conventional strengths into Covid-19 weaknesses.
Before the emergence of the coronavirus, stronger city centers exerted a strong gravitational pull on workers, shoppers and tourists from further afield. Customers from outside their borders accounted for 54% of the companies’ sales, according to the report. The equivalent figure for towns and cities with weaker shopping streets was 37%.
These weaker main streets have fewer retail stores, office buildings, and non-essential outlets than their stronger counterparts. They are also surrounded by less rich areas.
So when Covid-19 hit and restrictions were imposed that closed all but stores deemed essential and mandated working from home, these smaller centers were less at risk than their stronger counterparts because, for to put it bluntly, they had less to lose.
Data from the Center for Cities confirms this, with the strongest city centers seeing the largest drop in spending in April 2021.
Its data also showed that the hospitality industry – intrinsic to the economic well-being of the strongest centers – was the sector most affected by the pandemic.
The proportionally larger drop in sales in stronger downtowns had a knock-on effect on store vacancy rates.
Business closures in these places increased by 3.5 percentage points during the pandemic, compared to 1.4 percentage points in the previous two years. In contrast, in economically weaker centers, the number of closures has fallen from 3.6 to 2.5 percentage points since 2020.
The Center for Cities suggested the UK government’s Covid-10 support measures had been more effective in limiting damage to weaker high streets, but warned they may have only served to postpone the struggles with less prosperous places in the North and Midlands facing a wave of further business closures later this year.
“To help [these places] To avoid a wave of high street closures this year, the government needs to define how it plans to upskill people and pay them to give them the income needed to maintain a thriving high street,” said the chief executive of the Center for Cities, Andrew Carter.
“Many of these places are in the so-called red wall [of former Labour Party seats] there is therefore a political imperative for the government to act quickly, as well as an economic imperative.
Mr Carter is less concerned about the long-term prosperity of stronger “leveled” city centres, which he said were “well positioned to recover quickly from the past two years”.
The City for Centers report says this recovery could be accelerated by campaigns encouraging leisure customers in cities and the introduction of flexible train tickets to make the prospect of working in offices less financially onerous for potential commuters.
Online sales hypothesis questioned
Another cause for optimism can be found in online and offline sales monitoring data throughout the pandemic.
The increase in online spending has been well documented, but the report challenges the widely held belief that this increase is at the expense of high street sales.
It found that in September 2021, spending in physical stores had rebounded in most cities (52 out of 62), including those where internet shopping had increased the most, such as Exeter and Cardiff.
However, he found no evidence that online spending replaced purchases that would otherwise have been made in city centres. In other words, rather than nibbling away at the existing sales pie, digital retail seems to have expanded it.
During the monitored period, the most significant change occurred in grocery stores, where online spending was between 200 and 250% higher than the 2019 benchmark.
Despite an increase in the amount of food and drink purchased over the internet when the restrictions were introduced, offline spending in restaurants, pubs and cafes had rebounded well above baseline by September 2021.
Even in the fashion retail sector, which has been heavily impacted by the pandemic, brick-and-mortar spending was, on average, close to a full recovery.
The report acknowledges that this latest data set somewhat masks a key variation: offline spending on apparel was at or above the baseline in just seven cities.
He thus posits that Covid-19 may have hastened the disappearance of fashion retailers from certain shopping streets, particularly weaker ones where this sector absorbs a higher share of spending.
Updated: January 24, 2022, 00:01