How retail and business could look in Peterborough's future
But it might not be easy, according to data from a new report from accountancy firm KPMG
The report - entitled The Future of Towns and Cities post Covid-19 - estimates that as many as 3,700 jobs could be lost in Peterborough's high street and retail, and a loss of 30% of the overall retail offering simply because so many more people will shift towards online purchases.
This job loss equates to about 3.4% of the total labour workforce for Peterborough and was calculated using 2019 employment data from ONS for each area and each retail category to arrive at the proportion of jobs that may be lost.
Of course, our city is not the only one to be affected, as the whole of England was paralysed by the imposition of lockdown 2, the tiers system, lockdown 3, and the rise of online shopping which was accelerated by the pandemic.
It's not all bad - there are many vibrant plans for the city, and in our earlier story today it was revealed that more than 2,500 new businesses registered in 2020.
The report says: "If in many places Tier 3 restrictions made little difference, the introduction of Tier 4 on December 20 in London and most of the Greater South East is clearly visible in the numbers.
"In London, spending fell 35 percentage points in the final week. In Milton Keynes, Portsmouth and Peterborough, this drop was close to 90 percentage points. There was no final week rush in these city centres.
"Christmas is the most important time of the year for the high street, and in recent years poor Christmas trading has led to the closure of high profile retailers in January. We now wait to see if the support measures put in place by the Chancellor are enough to stop a wave of closures in the coming months."
According to data from the Centre for Cities, Peterborough is in the bottom ten for 'city centre recovery' for spending, measured using a combination of spending and footfall within the city, compared to others across the country from last February to now.
For this year, by the start of January only 6% of city centre workers had returned - not a surprise during a lockdown - but even in the summer it was only around the 25% mark, compared to March. Before the lockdown, 45% of workers were coming from outside the city, and this has now halved, to 22%.
The KPMG report states: "As new vaccines are gradually deployed across the UK this year, a post-COVID future is in sight, one where people can go back to their normal lives. That ‘normal’ will be different to what we were used to, however.
"The pandemic has accelerated the adoption of online shopping, with consumers more likely to purchase household goods online than in a store.
"It has also made working from home acceptable and online gatherings rather than meeting in person the new norm, freeing endless hours of business travel and expense for better use. People are unlikely to return to the old ways of doing things.
"With fewer people coming in to big cities and towns to work and shop, that leaves a big space in areas that were once characterised by bustling shops and offices. Those places that are most at risk are those that have little else to attract locals and visitors from further afield."
It's estimated that at least 20.8% of jobs in Peterborough will continue to be done from home, post-Covid, which would put the city ninth in the country.
The figure was calculated using data from the 2019 Business Register and Employment Survey.
The report says: "Towns and cities across the UK will need help and space to rethink the purpose of their centres. The high streets of the future will need to become multi-purpose locations, combining retail and hospitality amenities with residential, education, healthcare, cultural, technology, community and more.
"Office space will need to be transformed for three main purposes: collaboration, creativity and culture, with less space devoted to tasks that could be done remotely. Transport links will need to be reconsidered, as well as additional infrastructure needs. The pandemic has made it essential for places to galvanise their centres for the new way of living."
Sport, leisure, fitness, theatre and hospitality were, and continue to be, damaged at best, and destroyed at worst, by lockdowns.The changes are likely to be profound, long lasting- and bring a new way of thinking to the relationship between business, consumer and landlord
It therefore predicts that some of the bases used for retail or leisure will need to change the arrangement around themselves, to cater for more uncertain times.
Andy Pyle, Head of Real Estate, KPMG in the UK, said: "We are going to see a transformation in how occupiers pay for retail/hospitality space, moving away from long-term institutional leases, with upwards only rent reviews, towards turnover-based arrangements that see the operational risk shared between retailer and asset owner.
"Retailers are pushing for new leases tend to have features such as a percentage of turnover cap on total cost of occupation (including service charge); and a COVID-clause, where rents automatically abate in a lockdown situation. In some cases landlords are agreeing to this."
Another by-product of the pandemic is that those with 'less developed' online offerings are more likely to feel the effects - Primark is an obvious potential victim, having already lost £1bn during the lockdowns. The store insists that an online process would drive up prices, and is intending to stick to its guns.
The rise in an online offer also applies to UK food sales where 6.5% of purchases were made online pre-Covid, but this has now shot up to 15% with a high likelihood of rising further. This may lead to locations being "downsized, re-purposed into micro-fulfilment hubs or completely different usages."
Peterborough is also already scheduled to host new retail spaces at Westgate, Bridge Street, and possibly within and around the new Posh Ground. There is a chance that the market will be moved from Northminster. There are also spaces available at Serpentine Green and elsewhere.
In our piece with council leader John Holdich today, Cllr Holdich said that there are already enquiries into empty units owned by the council and Queensgate, which he describes as promising.
The sentiment was echoed by Tom Hennessy, chief executive of Opportunity Peterborough, who said: "High streets and the retail market have seen huge changes due to the pandemic, and as the KPMG report forecasts, it's expected to have a significant knock-on effect on the jobs market across the country.
"It's easy to be pessimistic but some areas of the economy have seen growth. The report points to the rise in property value of warehouses, essential retail, and healthcare assets, and Peterborough has seen significant investment over the last year in food production, manufacturing, and logistics and distribution which will create thousands of jobs.
"In 2020 Opportunity Peterborough worked with the likes of AM Fresh, Coloplast, URBN, and McCormick's, amongst others, to secure their investment and ensure a smooth arrival in the city.
"Within the report, Peterborough also ranked among the top 10 cities for the proportion of jobs that can still be done from home - a testament to the many professional services we have and the versatility of local businesses.
"With landlords adapting to share the financial risks with their tenants and a likely dip in prices, we'd hope to see more businesses, especially independents coming onto the high street. The trend of turning commercial units into residential properties is likely to continue but this should increase footfall and spend in the centre.
"COVID19 is forcing a quicker evolution for the high street and, as the report states, a multipurpose offer is more likely to pull in visitors. Culture will be crucial and there are big plans to enhance this in Peterborough in the long and short term. The cafe culture being developed by Peterborough City Council with local businesses, residents and visitors, aims to increase capacity safely, support the growth of independent retailers and small and startup businesses, while delivering what visitors really want to see on offer.
"Work continues on the new £60 million cinema at Queensgate which is due to open this year; at the same time, the centre is also experiencing high levels of interest in its retail units. We're also a year and a half away from the University opening - a growing student population will be a big pull for investors. In 2022 we should also see the government hub at Fletton Quays completed, adding up to 1,000 civil servants to city centre footfall.
"In the longer term, the City Council's regeneration plans include extending the museum, creating a new library and cultural hub at The Vine - the former TK Maxx building - and enhancing the riverfront, as part of the £22.9 million Town's Fund investment from government."