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12 April 2021

Beyond “Zoomshock”: The death and life of the British high street

Covid-19 has accelerated the decline of traditional high street commerce – but there is hope for the future.

By Anoosh Chakelian

In Aberdeen city centre, Elena Ionascu is preparing to post the keys to her Italian restaurant to Scotland’s First Minister, Nicola Sturgeon.

“She can manage it,” Ionascu tells the New Statesman. “Let’s see if she can keep a restaurant going while closed for four months and only opening with restrictions. It’s OK for politicians – they can carry on earning and working. For us, it’s a struggle.”

Her restaurant, DaVinci, has been closed since Christmas Eve. This is on top of months of closure during last year’s original lockdown, and a local lockdown in Aberdeen last August.

Having laid off five staff since the pandemic hit, Ionascu is on the brink of closure. Although she receives £2,000 a month from the council, her rent and other bills mean she is losing £1,600 a month.

It would be more expensive for her to open for takeaways than to stay closed. Pubs and restaurants in Scotland are set to reopen on 26 April, but after so many rule changes – including last year’s last-minute local lockdown – Ionascu is weary.

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“The rules keep changing and it’s such a mess. If they don’t allow us to open on 26 April then I’m done, I’m calling the landlord, I can’t keep it closed any more.”

Her pessimism comes despite a predicted short-term bounce in spending over summer. “We expect Brits will spend £3.9m on the high street in the first week of reopening,” says Simon Quirk, business unit director at the market research company Kantar. “While the pandemic has brought economic uncertainty for many British households, others have actually saved money in the past 12 months and we are predicting that spending will surpass last year’s levels.”

Yet shop and restaurant owners are concerned about the long-term impact of recession. Despite government schemes to help keep businesses afloat and employees earning, the pandemic will leave deep scars, which will be exposed after the furlough scheme ends at the beginning of October.

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“Small businesses are under no illusion that even when the immediate pandemic feels like it has ended, we will not be back to normal,” says Mike Cherry, national chair of the Federation of Small Businesses.

“The high street will reopen gradually, and safe operations will rely not only on the vaccine roll-out but also on test and trace being easy, fast and comprehensive across every community… Above all, we know the economy will likely take some time to bounce back, even after restrictions lift.”

Shaf Islam, who has owned and run the Chutney Ivy Indian restaurant in Leicester city centre for over a decade, warns all the restrictions and lockdowns “may be a total waste of time” if the Treasury ends its support too soon.

“We’ll have that honeymoon period when everybody’s going to come out but we are in a huge recession and if unemployment increases because there’s no city-centre business any more, and the furlough scheme ends, that’s what the real test will be. Will people want to go out and have a party at Christmas or go out for a meal at a fancy restaurant long term?” he asks.

This uncertainty affects shops across the country as they prepare to reopen. “It will take so much time to recover, you can’t even plan anything – if I hire someone, the next month I might have to drop them if there are restrictions again,” says Ionascu.

Which high street shops are closing?

Shuttered shops in town and city centres, redundancies and intense uncertainty plague high streets throughout pandemic Britain.

On average, 48 chain stores have closed every day, compared with only 21 daily openings, according to PwC data for January-December 2020.

Large city centres and urban hubs have been hollowed out, to the benefit of smaller villages and seaside towns, whose economies have better weathered the pandemic. This “polo effect” has hit London particularly hard – with the capital suffering a record 5.8 per cent spike in net closures on the previous year, as it relies more on commuting than other places.

 

Working remotely and staying close to home has fostered an appetite for shopping locally, boosting corner shops and convenience stores. Independent retail and leisure businesses have had better survival rates than chains, with the multiples market (which have five or more units) shrinking by 4.5 per cent last year, compared to independents, which shrank by just 0.4 per cent, according to Local Data Company analysis.

There have been some high street winners from the pandemic – including supermarkets and zeitgeisty brands such as the electric-bike retailer Pure Electric, which grew 367 per cent in a year.

Yet the British high street has mainly been experiencing an accelerated decline.

The Arcadia Group (which included Topshop, Topman, Burton and Dorothy Perkins) and Debenhams were bought in February by online retailers in deals that did not include their store portfolios, meaning huge job losses and store closures.

Thousands of job cuts and tens of store closures have also been announced by Boots, John Lewis, Burger King and Pret A Manger. The Casual Dining Group, owner of Café Rouge and Bella Italia, announced 1,900 job cuts. TM Lewin is going online only. SSP (which runs Upper Crust, Caffè Ritazza and Camden Food Co) announced up to 5,000 job cuts. The shopping centre giant Intu went into administration last June.

Hospitality, retail and leisure are some of the sectors hardest hit by Covid-19 and government restrictions.

“A quarter of a million small firms are now facing the possibility of closure by the end of the year as a result of the restrictions and lockdowns,” says Cherry.

A long decline

High streets were declining long before coronavirus existed – even though the pandemic may have accelerated the trend. PwC figures show the net loss in chain stores has increased every year since at least 2015. 

 

This has happened for a number of reasons. Rents and business rates have been rising. And the most obvious factor is that in recent years, online shopping has grown.

In January 2010, online shopping made up 7.1 per cent of total retail sales. By January 2020 this had more than doubled to 20.2 per cent. During Covid-19, this has almost doubled again, reaching 36.3 per cent this January.

 

As people’s shopping habits have moved online, the high street has become more reliant on other selling points in order to attract people – including libraries, Sure Start groups, leisure centres, swimming pools, museums, community spaces and youth clubs. But these more civic functions of our town centres have also been eroded in the past decade, as swingeing local government cuts have forced councils to tighten their belts.

Austerity has reduced incidental footfall – and a feeling of local attachment. (You can read more about this trend in the New Statesman’s ongoing reported series “Crumbling Britain” and “Britain’s Lost Spaces”.)

“Places to meet” are the top resource that people in 225 “left behind” neighbourhoods say they lack, according to polling by Survation of areas identified by the Local Trust organisation.

 

The pandemic has exaggerated the funding crisis for these community assets. The District Councils Network has warned that leisure centres will not survive the reopening unless they receive further government funding, forecasting a £411m loss during 2020-21 for centres run by district councils alone.

 

Closures of other attractions to urban centres, such as clubs and theatres, have further damaged footfall during the pandemic.

Shaf Islam, whose restaurant is in Leicester’s cultural quarter, fears social distancing at the local Curve Theatre once it reopens will damage custom.

“Thirty per cent of my business was the Curve Theatre. But with the lower audience capacity, that will affect how many pre or post-theatre diners we get in future,” he says.

When will offices reopen?

During the pandemic, high streets have also lost another major selling point: the office. With 32 per cent of working adults still working exclusively from home, according to the ONS, office spaces in town and city centres continue to sit empty.

Pubs, cafés and restaurants surrounding offices that rely on the lunchtime and after-work trade are in limbo as employers deliberate whether to make home-working permanent.

The Chutney Ivy restaurant in Leicester, for example, used to receive a lot of bookings from a major architecture practice of 300 staff nearby. Yet the costs saved by remote working are tempting for the firm, which saved £40,000 on coffee alone for its workers in six months of the first lockdown.

“The city centre is going to be immensely impacted by a lot of big companies in the city centre who may not invite their staff back,” says Islam. “That is a huge chunk of lost business for us in particular.”

Gianni De Fraja, Professor of Economics at the University of Nottingham, and his colleagues have modelled the shifting commuter patterns – dubbing the phenomenon “Zoomshock” after the popular video calling platform.

They found that boroughs in city centres have likely suffered an exodus of workers, while suburbia has seen the inverse. Their paper found that central London (the City, Westminster and Camden) had seen the largest negative effects, while outer boroughs such as Redbridge, Lewisham and Harrow had seen the largest positive effects, with local businesses suddenly finding they had a much larger customer base – at least while restrictions were eased.

Other data supports their model. For example, the business district of Canary Wharf in east London fell from the eighth best retail centre in 2019 to 531st in 2021, and Clifton – a wealthy area of Bristol – plummeted from 27th best retail area in 2019 to 548th, according to the latest ranking by retail property adviser Harper Dennis Hobbs, which has been ranking high streets every two years since 2015.

“Our rankings show that local high streets have retained their retail health to a greater degree than larger city centres,” says Andy Metherell, head of retail consultancy at Harper Dennis Hobbs.

Affluent towns such as Harpenden, Altrincham, Thame and Heswall are among the “biggest risers” in the ranking, benefiting from residents staying in the local area rather than commuting into major cities. Other towns, like Stourbridge, Long Eaton and Market Harborough, have also “maintained their prosperity” because of their “especially high proportions of essential retail” – with locals relying on them for food shopping, according to Metherell.

Towns with previously struggling high streets, such as Birkenhead, Blackpool and Wigan, however, made stronger recoveries when the economy reopened last summer, according to Centre for Cities’ director of policy and research, Paul Swinney.

“Most places that went into the pandemic in the weakest position were the ones that saw the strongest recovery,” he says.

“They didn’t have many people walking past the shop fronts in the first place, but actually what was a weakness pre-pandemic was a strength last summer because they came from a fairly low catchment, it was actually easier for them to pull those people back in when the shops reopened.”

In contrast, places such as Manchester and Birmingham city centre lost their pre-pandemic strength of tourists and office-based workers. “That customer base evaporated,” says Swinney, as home workers frequented their local areas instead.

The future of city centres therefore depends on how far working practices change. Will most companies follow Nationwide’s “work anywhere” flexible future, or the Goldman Sachs CEO’s view of remote working as an “aberration” that must be quickly corrected?

The accountancy firm KPMG expects that a significant chunk of those able to work from home will keep doing so for at least part of the week.

The most affected places according to their projection will be commuter towns such as Hemel Hempstead and Bracknell – which will continue to see more than a quarter of office jobs being done from home. London is expected to see around a fifth of office jobs remaining at home.

They combined what they think the effects of commuter change will be with the strength of local cultural offering, and the predicted effects of online shopping to create a post-Covid vulnerability score. You can hover over your town on the map below to see how it may be affected.

How vulnerable will my high street be post-Covid?
KPMG Post-COVID vulnerability score (higher = more vulnerable)

Source: KPMG

What are high streets for?

Yet any recovery will need to overcome the long-term decline of high streets. For years, people have needed more to attract them to commercial centres than simply commerce.

High streets are also likely never to reclaim the ground they lost to online shopping during the pandemic, as people’s habits have shifted – even when lockdown was loosened last summer. 

The IFS found that cash use remained below half of normal levels even in August and September, while spending at online merchants for items usually bought in shops was a quarter higher. In September, when shops were open, ONS figures show online sales still made up 26.3 per cent of all retail, far higher than any month in 2019. 

Indeed, before the government’s “stay at home” orders led to a relative bounce in local trade, sometimes the only reason people had to physically visit a high street was to return unwanted online purchases, sources in the convenience store sector tell the New Statesman.

Surveyors and property developers are considering how empty offices could be converted into homes, in a process known as “residentialisation” of urban centres. There are also opportunities to think “imaginatively” about making high streets into spaces for “experiences” – like socialising and leisure activities – according to Hew Edgar, head of UK government relations at the Royal Institute of Chartered Surveyors.

A £95m government-funded programme for Historic England to “transform” 68 high streets focuses on restoring “disused and dilapidated buildings” for new purposes – including homes and community spaces.

Architects have also long been considering the purpose of the high street, with the “Future High Street” report – headed by the architect Ken Shuttleworth – concluding back in 2014 that high streets had to look beyond retail to survive.

It imagines revitalised roles for local assets, such as museums and libraries, to provide spaces where residents can interact, work and socialise. With prescience, a “futurologist” called James Bellini is quoted in the report published seven years ago:

“As time goes by we will work more locally, or at places of our choosing, and we will have to have the infrastructure for that. We will not go to an office but we will go somewhere… [People] need to go to a place but they will not go a long way. Church halls are another one, as are pubs. They [high streets] should be selling space. They should be selling the experience of that place.”

Until that transformation is complete, high street businesses must continue to adapt in a hostile environment. As Leicester restaurateur Shaf Islam puts it: “I feel like a fried egg on a Teflon pan – I’m just clinging on.”