A new report has revealed how the future of London’s retail sector will be in its local centres, with the pandemic reversing the fortunes of previously ailing high streets.
The latent economic power within these neighbourhoods makes them prime for development and investment, creating a significant opportunity for businesses and communities in these places to flourish.
The research, which was led by regeneration specialist U+I and data specialist CACI, analysed 49 of London’s local retail centres to establish their post-Covid economic resilience and determine how the shift towards working from home would impact consumer spending patterns.
These centres were compared with other retail locations across London and the rest of the UK to assess their relative potential to rebound now that Covid restrictions have been lifted.
The findings show that long-suffering local high streets are set not only to recover to pre-pandemic levels, but to thrive more than ever in the longer term because they have:
- High local spending power – 2.5 times higher than that of the average UK retail destination
- 92% of total spending coming from local people – versus 71% for all London retail locations and 84% UK-wide
- Consumers expecting to carry on shopping locally once the pandemic recedes as flexible working arrangements remain – providing a longer-term boost to local businesses
- Populations nearly 2.5 times larger than the average UK location – offering a significant captive market for businesses
- Populations that are more likely to work from home and use local amenities than anywhere else in the UK – bolstering local economies and communities.
However, without investment and support from developers and local authorities, the potential of these local centres won’t be realised and demand won’t be met.
These findings correspond with those in a recent Institute for Fiscal Studies report, which outlined how outer London boroughs saw only a 10-20% decline in footfall across retail and leisure venues from pre-pandemic levels, compared to 40% in inner London.
The economic impact of the pandemic has been less severe on London’s local retail centres, where high streets and surrounding neighbourhoods have benefitted from a local population that has been largely required to stay local over the past 18 months.
With the ‘stay local’ trend and flexible working arrangements likely to remain in the longer term, businesses in these places will continue to see a boost in footfall thanks to their large captive local populations with the inclination and resources to spend close to home.
This is supported by the research showing that households in London’s local centres are more likely to be from affluent groups; conscious about shopping locally and supporting independent retailers, and in employment that allows them to work from home.
Case study (more information and further case studies are available in the report):
Bromley was rated as one of the most resilient London local retail centres in CACI’s analysis. 96% of local residents spend money in the local area and there is the capacity for businesses to attain nearly £600m in annual spend – the largest of any local centre. Over the last ten years, U+I has created a new leisure-led destination in the town centre to serve this large and affluent local community, which in turn has boosted the local economy by bringing new businesses into the area, including VUE, Pizza Express and Prezzo.
The findings uncover the investment and development potential of London’s local commercial centres, from retailers looking to capitalise on increased footfall, to corporate office occupiers looking for premises closer to their workforces. As many businesses consider their future post-pandemic, London’s local centres offer a significant growth opportunity.
For those living in and around London’s local retail centres, having places to shop, eat, drink and work on the doorstep is likely to reduce the need to travel elsewhere for business or pleasure, in turn promoting more sustainable lifestyles and strengthening communities.
Mike Hood, MD at U+I, said:
“This research has confirmed what we have always believed about the value of London’s local centres. Added to the boost provided by the pandemic, with the right investment, commitment and management these neighbourhoods will flourish and thrive for the benefit of everyone. However, we need investors, developers, planners, retailers and operators to work together if we are to deliver a future for these great community focussed places.
“It’s not immeasurable to imagine that similar patterns could also be seen in other large cities across the UK – places such as Manchester, Liverpool and Glasgow have suburbs bursting with potential for many of the same reasons as those in the capital – creating similar opportunities for development and investment in line with the Government’s levelling up agenda.”
