Covid's 'David and Goliath' effect on UK cities revealed - in charts

Businesses in central London lost the equivalent of an entire year of sales in the first 18 months of the coronavirus pandemic, a Centre for Cities report released on Monday has found.

It also suggested that the much trumpeted rise in online shopping was not necessarily the result of a shift away from the high street and that offline spending has returned to pre-pandemic levels.

The hefty economic hit to the UK capital was reflected in other major metropolises with Birmingham and Edinburgh the next worst affected.

Their traditionally stronger high streets both lost more than 40 weeks of sales between March 2020 and September 2021. The national average during 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 released in the week Boris Johnson's government is expected to announce the next stage of its 'levelling up' agenda for the UK's poorest regions, ascribes this trend to the pandemic turning conventional strengths into Covid-19 weaknesses.

Before the emergence of the coronavirus, stronger town and city centres exerted a firm gravitational pull on workers, shoppers and tourists from farther afield. Customers from outside their boundaries accounted for 54 per cent of business sales, according to the report. The equivalent figure for towns and cities with weaker high streets was 37 per cent.

These weaker high streets have fewer non-essential retail shops, office blocks and hospitality outlets than their stronger counterparts. They are also surrounded by more less-affluent areas.

As such, when Covid-19 struck and restrictions were imposed which closed all but shops deemed essential and mandated home-working, these smaller centres were less exposed than their stronger counterparts as, put bluntly, they had less to lose.

Centre for Cities data bore this out, with stronger city centres experiencing the largest drop in spending in April 2021.

Its data also showed that hospitality — intrinsic to the economic well-being of stronger centres — was the sector most affected by the pandemic.

The proportionally greater drop in sales in stronger city centres had a knock-on effect on store vacancy rates.

Business closures in these locations have increased by 3.5 percentage points during the pandemic, up from 1.4 percentage points in the two years before. On the other hand, in economically weaker centres the number of closures has fallen from 3.6 to 2.5 percentage points since 2020.

Centre for Cities suggested the UK government's Covid-10 support measures had been more effective in limiting damage in weaker high streets, but warned that they may only have served to defer the hardship with less-prosperous places in the North and Midlands facing a wave of new business closures later this year.

“To help [these places] avoid a wave of high street closures this year, the government must set out how it plans to increase peoples’ skills and pay to give them the income needed to sustain a thriving high street,” said Centre for Cities chief executive Andrew Carter.

“Many of these places are in the so-called Red Wall [of former Labour Party seats] so there is a political imperative for the government to act fast, as well as an economic one.”

Mr Carter is less concerned about the long-term prosperity of the “levelled down” stronger city centres, which he said were “well placed to recover quickly from the past two years".

The City for Centres report said that this recovery could be expedited by campaigns encouraging leisure customers into cities, and the introduction of flexible rail tickets to make the prospect of working from offices less financially onerous to prospective commuters.

Online sales assumption queried

Further cause for optimism can be found in data monitoring online and offline sales throughout the pandemic.

The rise in online spending has been well documented, but the report questions the widely held belief that this rise comes at the expense of sales on the high street.

It found that by September 2021, spending in bricks and mortar stores had bounced back in most cities (52 out of 62), including those where internet shopping increased the most, such as Exeter and Cardiff.

It did not find evidence, however, that online spending replaced shopping that would otherwise have been done in city and town centres. In other words, rather than eating into the existing sales pie, digital retail appears to have expanded it.

During the period monitored, the biggest shift was in groceries where online spending was between 200 and 250 per cent higher than the 2019 baseline.

Despite a rise in the amount of food and drink bought on the internet when restrictions were introduced, offline spending in restaurants, pubs and cafes had bounced back well above the baseline by September 2021.

Even in the fashion retail sector, which was heavily affected by the pandemic, bricks and mortar spend was, on average, close to full recovery.

The report does acknowledge that this latter data set somewhat obscures a key variation: offline spending on clothing was at or above the baseline level in just seven cities.

It thus postulates Covid-19 may have accelerated the demise of fashion retailers in some high streets, especially weaker ones where this sector takes up a higher share of spend.