• High streets could lose 20-40% of their retail offerings as a result of the accelerated shift to online commerce.
• Covid will change the levelling up map, with some of the more prosperous towns in the South East among the more vulnerable

It’s unlikely a return to old commuting habits will be seen post-Covid, with a significant proportion of those able to work from home doing so for at least part of the week. The loss of commuter flow in England could range from over a tenth to under a third of commuter footfall seen pre-Covid with Hemel Hempstead and Bracknell, for example, set to see up to 27.4% of office work performed from home, according to a new KPMG report, The future of towns and cities post COVID-19.

The report that looks at 109 cities and towns across England, finds that alongside the reduction in commuter footfall, the accelerated shift to online shopping is exacerbating the vacuum in city and town centres, with less people calling in to shop. According to KPMG analysis, high streets could lose between 20-40% of their retail offerings as a result and affect between 1-5% of the local workforce. This could see over 400,000 job losses on the high street.

Looking at existing offerings across sports facilities, culture and recreation assets and hospitality venues*, the report also shows larger cities enjoy a clear advantage in their ability to provide a large and varied cultural offering to visitors. In comparison, smaller towns score less strongly and tend to focus on fewer types of attractions.

Yael Selfin, Chief Economist at KPMG UK, commented on the report: “As people travel less for work or to shop, town and city centres will need alternative offerings to fill vacant space and to attract people to the area as we hopefully leave the pandemic behind sometime this year.

“High streets will need to be reimagined as cultural and recreational hubs that will act as magnets for businesses and jobs able to transform less prosperous areas.”

Post-Covid vulnerability of city and town centres in England

Vulnerability Index, higher values indicate greater resilience

Top 10

1	London	1.32
2	Liverpool	0.97
3	Burnley	0.88
4	Birmingham	0.88
5	Leicester	0.87
6	Manchester	0.85
7	Huddersfield	0.78
8	Rotherham	0.77
9	Bradford	0.76
10	Nottingham	0.71

Bottom 10

100	Basildon	-0.65
101	Stockport	-0.67
102	Slough	-0.76
103	Watford	-0.81
104	Swindon	-0.86
105	Guildford	-0.88
106	Warrington	-1.32
107	Basingstoke	-1.70
108	Hemel Hempstead	-1.80
109	Bracknell	-2.55

_{Source: KPMG analysis}

Combining the impact of home working and loss of retail outlets with the strength of current cultural assets, the report calculated an index of vulnerability for towns and cities in England as the changes coming from the pandemic pull them in different directions.

Cities like London, Liverpool, Birmingham and Manchester benefit from a strong cultural offering that partially compensates for the loss in commuter footfall and retail outlets on the high street. On the other end of the scale, places like Warrington and Basingstoke are hit relatively hard by the loss of commuter footfall and retail offering, while have more limited cultural offering to attract people to their centres.

The size of London makes it a relative outlier as it does not have a single contiguous city centre in a traditional sense. The score for London combines the relatively diverse character of areas such as Canary Wharf focussing on office space and the West End of London with a large endowment of cultural amenities. In this light it is unlikely that the strength of cultural amenities on offer in one part of the city can compensate for the loss of commuter footfall in a different part, which could test the resilience of some parts of London.

Yael Selfin, Chief Economist at KPMG UK, added:

“The challenge for government, as it turns its focus to the levelling-up agenda, is to incorporate the changes brought about by the pandemic into its strategy.

“The pandemic has added a new dimension to the levelling up agenda. While some of the more deprived areas may be less impacted by the pandemic directly, as they had a smaller proportion of office workers and retail space to start with in their centres, they will still need to rethink their path for growth in light of the changes brought about by it. Our findings offer only a glimpse of locations’ starting point. It highlights some of those that may need to go further in developing new ways to attract people to their centres compared to others where the offering is already relatively rich.   

“Covid-19 has made it essential for places to galvanise their centres for the new way of living.”.   

Chris Hearld, Head of Regions at KPMG UK commented: “As we leave the pandemic behind, towns and cities across the UK will need help and space to rethink the purpose of their centres.  Fostering collaboration between businesses and local policymakers can help rethink the journey to work with a focus on lower carbon, more customer-orientated and better-connected transport networks, and it will be important to prioritise investment in high-speed broadband and 5G connectivity.”

-Ends-

 

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KPMG Press Office: +44 (0)207 694 8773

Email: gill.carson@kpmg.co.uk

 

Notes to Editors

*KPMG analysis looked at existing offering across three categories: sports facilities; culture and recreation assets (ranging from amusement parks to museums and performing arts venues); and hospitality venues (including restaurants, cafe, pubs and bars).

 

Future of cities methodology

The index is constructed as an average of three main pillars, consisting of the impacts of remote working, the strength of the cultural offering and the vulnerability of retail sector. Across all three categories we used the data from the Business Register and Employment Survey on the number of employees in each sector and how these compare with other cities.

The index score was constructed as a simple average of the z-scores obtained for each category. The z-scores were computed as the difference between the observation for each city and the average across all cities, with this difference divided by the standard deviation of all observations in the sample. The score for the impacts of remote working and of the vulnerability of the high street were inverted, so that higher values indicate a lesser expected impact from the pandemic on each city.

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 17,600 partners and staff.  The UK firm recorded a revenue of £2.40 billion in the year ended 30 September 2019. KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services. It operates in 147 countries and territories and has more than 219,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.