Talking shop

This Monday, the Government’s roadmap permits the reopening of all non-essential retail. But will the shops have any customers? Paul Barnes, DRD Partner and CEO of the Association of International Retail (AIR), looks at the myriad challenges ahead…

What’s the one thing that all businesses need to be successful? Customers. Which is why, ahead of Monday’s reopening, the excitement of many non-essential retailers in England is tinged with some fear about how quickly their customer numbers and spending will get back to normal levels.

It’s really shops in city centres that are most worried. For many towns and high streets, reopening last June was a pleasant surprise as stay-at-home workers spent more time and more money locally. Some even recorded footfall above the level of 2019. But major towns and city centres also faced problems. While, nationally, footfall after the end of the first lockdown quickly got back to around 75% of 2019, in London’s West End it struggled to reach the mid-40s. And even those tended to be men in their 20s-30s, not the biggest spenders.

On the buses

So, what can Government do to help get those customers back into the centres of our cities and big towns? Actually, quiet a lot.

Top of the list is getting office workers back. These are the core visitors who come in every weekday, spend in shops, eat in restaurants and drink in pubs.

But one of the key issues here is public transport. Commuters and other visitors need confidence that their previously crowded buses, trams and tubes are safe. Maybe they need some incentives to get back onto public transport after all this time – good deals, free first trips, more flexible ticketing.

Barriers to entry

Then we need to open-up all the ecosystem. People don’t just come into city centres to shop. More and more are doing that at home. They come for the wider experience. But with indoor hospitality closed along with theatres, cinemas and galleries, city centres are far less attractive.

Although the Prime Minister talks about 21st June as the day we all get back to normal, worrying talk within Government, about retaining social distancing and needing vaccine passports for non-essential shopping, raises fears of new barriers which make it less likely that customers can and will return to city centres. Social distancing makes it difficult for public transport, theatres, bars and restaurants to operate profitably. Vaccine passports for shopping make the internet far more attractive.

Durham is the new Venice

And then there are other visitors – domestic and international tourists. With restricted flying, we need to promote UK city breaks. London is the major world city that British people should be visiting. Manchester, Birmingham, Liverpool and Durham should be this year’s Venice, Milan and Barcelona.

But it’s the high spending international visitors that make the real difference in many city centres. In the West End they account for 25% of visitors but over 50% of all spending. It’s unlikely that they are going to start returning until 2022. So, Government needs to be planning now to get them back and spending. Yes, it’s important to open air corridors to let Brits go on holiday but we also need to prioritise those routes that bring in high-spending visitors to the UK, such as those from the Middle and Far East.

Government needs to streamline its visitor visa application process in these regions, building on some earlier successes. It needs to provide the Border Force resources to stop the six-hour entry queues that we witnessed at Heathrow earlier this year.

International shopping should not be taxing

The Government should also back the call from New West End Company, the Business Improvement district for London’s West End, to exclude Britain’s two official International Centres (London’s West End and Knightsbridge) from uncompetitive Sunday trading regulations which make them less appealing than their rivals in New York, Dubai and Tokyo.

And finally, the Government should give serious consideration to the call by the Chairman of the Treasury Select Committee for an independent assessment into the impact of its decision to end tax-free shopping, making Britain the only European country not to offer this incentive to non-EU visitors.

The end of the beginning

The Association of International Retail will continue to work with politicians, trade bodies and businesses to ensure the strongest possible return of international customers when travel restrictions are finally lifted.

But while they are awaiting the return of customers, many high street businesses are going to be faced with a perfect storm of costs. The winding down of furlough and the business rates holiday will re-introduce two major areas of expenditure. And more importantly, the ending of the moratorium on landlords seeking their rent will leave thousands of businesses exposed to large debts, as more than a year’s rent will need to be paid. For many high street businesses, despite the re-opening optimism, the worst may be yet to come.

So, while shops will be opening next week, there’s no guarantee that all customers will be returning soon. Reopening is not the end of this crisis in our major towns and cities, its just the beginning of the next stage.

PHOTO Credit: Panasonic

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