City centres face a “bumpy” road in adapting to hybrid working, as retail spend remains a quarter below 2019 levels in large urban areas, according to Centre for Cities.
Homeworking is significantly hindering the recovery of the high street, the think tank said, urging policymakers to find ways to make cities more attractive.
Creating more jobs and investing in skills in these areas would boost total footfall even if some work is done remotely. Better transport links and pedestrianising areas “where appropriate” could also drive activity back to cities.
However, recognising that hybrid working is here to stay, the report called for policies designed to help cities adapt to a new normal.
Space will need to be repurposed or provide greater flexibility, while businesses will have to adjust how and when they operate.
In London, weekday footfall is still down close to 40% on pre-pandemic levels. Other major UK cities like Leeds and Birmingham are down about 15%.
Prior to the pandemic, cities with a higher share of highly skilled workers benefitted from an affluent customer base willing to spend more on weekdays.
Shops, cafes and restaurants were able to reinvest that revenue and strengthen the amenities they offered – making them even more attractive.
However, these cities now face a shortfall of customers due to remote work. Cities less reliant on highly skilled jobs have bounced back to pre-pandemic levels.
While cities struggle to fill the gap left by people working from home, weekend spend has bounced back in many places. In London, weekend food and drink spend is at 95% the pre-pandemic level. In Bristol, it’s 20% above the baseline.
“The fact that weekend spending is doing better than weekdays, and in some cases is back to its 2019 level, suggests that city centres are quickly reclaiming their role as a leisure destination,” the report said.
But weekend recovery has not been enough to balance out weekday declines. In ‘strong’ city centres – ones with many highly skilled workers – sales in March 2022 were still down 16%.
In the short- to medium-term, the success of local businesses in cities will be “tied to the return of office workers”, Centre for Cities argued. In the long-term, however, high streets can adjust their business models to focus on weekend trade.
That transition will be “bumpy” in the short-term, and businesses will have to adapt to lower customer numbers and potential job losses.
Andrew Carter, CEO of Centre for Cities, said: “The pandemic undoubtedly shook city centres to their core as lockdowns kept people at home and businesses closed. Now as we recover from the last two years, the future of some of our high streets looks uncertain.
“Our data shows homeworking has been significantly impacting hospitality sales, especially in cities with high numbers of offices. Now, as we grapple with a cost of living crisis, recovery for these businesses will be even more difficult.
“Helping city centres grow and adapt to a reconfigured demand will be vital to keeping our high streets prosperous and vibrant. To do this, policymakers will need to attract more high-skilled workers to city centres, while also thinking creatively about how vacant units could be repurposed – whether that be for office, commercial or residential uses.”