Guest blog by Steve Hughes, Associate at WPI Economics
COVID-19 has hit retail and hospitality businesses in central London particularly hard. Bars, pubs, restaurants, shops and attractions were forced to close their doors during the national lockdown. When they reopened there was only a muted recovery in footfall and spending (and a much weaker recovery than in smaller cities). The imposition of a curfew and the impending tighter local restrictions under a move from Tier 1 to Tier 2 have snuffed out hopes of a return to normality in the near future.
Why have the retail and hospitality sectors in central London fared so badly during the pandemic?
One reason is the types of workplaces in central London – they are dominated by occupations that can be more readily done from home. Hundreds of thousands of former commuters are no longer picking up that morning latte, buying that lunchtime sandwich or having that post-work drink.
Another reason is the collapse of the visitor economy. Millions of people a year used to come to the capital as tourists, on business or to see family and friends. They collectively spent tens of billions of pounds, the majority of which was in inner London boroughs (see Figure One, below).
The above all said, throughout this challenging period there are some businesses which have benefited simply from being located in places that are more residential. Many of those aforementioned commuters will now eat out, drink and shop closer to their home.
Figure Two, below, demonstrates where this benefit may occur across the CLF geography. The lighter shaded parts of the map are the places with more residents for every retail and hospitality business and are likely to see the largest potential gains. The darker shaded areas – particularly the very centre of London – have fewer residents for every retail and hospitality business and are likely to see the largest potential losses.
Despite there being some positives for some retail and hospitality businesses, there can be no escape from the fact that the sectors as a whole will face extremely challenging conditions for the foreseeable future.
Action is needed to help alleviate the worst consequences of these challenging conditions. The cost of not acting – or of poorly targeted intervention on insufficient scale – is stark. If central London’s retail and hospitality businesses cannot survive and rebuild:
The following three-point plan is an outline for what form action to help retail and hospitality businesses in central London could take:
This plan will not save every retail and hospitality business. But it will help to save some. These businesses are the foundation of London’s reputation as a world-beating place to live, work and visit. Without them, the recovery from COVID-19 will likely be longer and harder than it otherwise would be.
The full report can be found here.