When returning to the Marble Arch area of London recently after some years, it was noticeably subdued until I turned a corner onto Seymour Place and saw a throng of people enjoying post-work drinks outside The Carpenters Arms. This felt more like the atmosphere I was looking for, and I pointed out to the landlord that he had by far the busiest place in the area. He was nonplussed and suggested it was nothing like the numbers he used to enjoy consistently.
This is a feeling that has been conveyed to me by other pub operators in central London, who have acknowledged they are doing good trade compared with the dark days of lockdowns and stop-start reopenings, but it remains way short of those pre-covid levels and it is very inconsistent. From a consumer perspective, it seems we’ve almost forgotten how rammed many places were at peak times in the centre of the capital city.
The fact is, London remains stubbornly slow to recover to its pre-pandemic levels and found itself in tenth place in the recent Top Cities report from CGA (by NeilsenIQ and Wireless Social) that seeks to create a vibrancy ranking league table. The likes of Glasgow, Bristol, Manchester and even Leicester featured above the capital.
To address this situation, the Mayor of London, Sadiq Khan, has launched the latest phase of his Let’s Do London campaign, which he hopes will encourage visitors back to the capital through a £2m advertising spend. He is looking to make some headway on the fact that footfall is currently 24% down on the levels enjoyed back in 2019. While his efforts might get the tourists back, it won’t do much for those people whose offices are based in central London, but who are resolutely sticking to working from home for a decent part of the week.
Google data shows that trips to workplaces in the capital were down by 30% in mid-May compared with pre-pandemic, and in the City of London, traffic through stations was recorded at levels 42% down on pre-covid on certain days. On Fridays, the situation can be pretty dire, with sales at Pret A Manger dipping by up to 80% in the financial district, according to the Bloomberg Pret Index.
The UK is certainly an outlier in commuting activity within Europe as Germany is only 7% below pre-pandemic levels, while Italy is just 6% down. This has contributed to office occupancy across the UK sitting at around the 30% level, which is half that recorded in 2019, according to Freespace.
The problem for London in particular compared with other cities, both in the UK and overseas, is that it is largely a services-based economy, with a high level of professionals employed in these sectors who can easily work remotely. Another issue involves the fact that time and money needed to commute to the capital is generally higher than elsewhere, and therefore a serious deterrent to people returning to their offices in the City.
This situation could be short-lived, and we could fully return to the pre-pandemic scenario. But it looks increasingly likely that we are immersed in the new normal, and that businesses could be well advised to assess their operations and adapt their models.
Pret A Manger is an example of an operator now benefiting from swiftly moderating its exposure to central London and spreading it chips more broadly. It has made great strides to build a regional stores business, whereby its non-London portfolio now accounts for 36% of its UK store base, and the performance of these units has outstripped those in London on both a like-for-like basis and total revenue.
The differential in the performances of those operators wholly wedded to London versus those that have a wider trading base has certainly been apparent over the past year, but the expectation had been that the capital would eventually roar back and equilibrium would be enjoyed again. The way things are going, it might be prudent to analyse that forecast a little more closely.
Glynn Davis, editor of Retail Insider
This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.