Despite the reopening of the economy, office workers are yet to return in the numbers we saw pre-pandemic, raising questions over what’s next for our high streets.
Using spend and footfall data, this briefing looks at the impact that homeworking is having on local businesses, how important it is for the high street that office workers return, and what prospects it faces if they don’t.
💥 NEW RESEARCH 💥
HOMEWORKING AND THE HIGH STREET
A slower bounce back in weekday spending is hampering high street recovery, especially for the food & drinks sector, as hybrid working ensues & many workers continue to stay away from the office.
— Centre for Cities (@CentreforCities) June 16, 2022
Not all high streets were struggling before Covid. The high streets that performed well did so because their significant presence of office workers fueled demand for local services, tying the performance of the high street to the strength of the local economy.
The food and drinks sector, in particular, benefitted from daily inflows of workers who boosted high street spending, with cash to splash in cafes, corner shops and pubs.
Covid hit high streets in stronger city centres hard, as shown in Centre for Cities’ flagship annual report, Cities Outlook 2022.
Office workers (whose jobs could more feasibly be done from home) were more exposed to shifts towards homeworking and as a result, stronger city centres lost 33 weeks of sales, compared to 22 weeks in weaker places.
Many have returned to the office, but working practices are clearly different from what they were pre-pandemic, with many more people adopting hybrid working patterns. This is affecting stronger city centres – those that had lots of office workers pre-Covid – the most, and echoes pre-Covid trends in the sense that the food and drinks sector continues to bear the brunt.
Nearly 70 per cent of the remaining gap to pre-Covid spending levels is the result of missing weekday spend, meaning getting workers back to their desks remains a big challenge for the high street.
The “new normal” of hybrid working doesn’t necessarily need to pose a problem in the long term. Many places, especially those with strong economic fundamentals, can and will adjust to changes in the nature of demand.
However, in the short to medium term, the fortune of many local businesses will be tied to the return of office workers and some businesses will have to evolve and adapt to this new nature of demand.