Our city centres are changing profoundly. Beauclair’s latest data shows just how much the covid lockdown has accelerated this transformation.
Beauclair provides its Business Improvement District (BID) and other clients with detailed retail data on cities that account for around 20% of the UK’s population. Our data not only breaks down sales by value and retail sector. It also includes customer numbers, revenues per customer, transaction values, where customers are coming from and their affluence.
There are clear trends emerging from our data for February 2022:
City centre sales are not keeping up with inflation
Just to keep up with inflation, retail sales should have been over 8% higher than February 2019 (we use 2019 as a baseline since it was the last full retail year before covid). Fewer than 10% of our city centres meet this minimal hurdle and over 60% show an absolute decline in sales, with an average decline of -3%.
Average Revenue Per Customer is declining
The main driver for the decline in sales is not the decline in customers. Looking across all the cities, customer numbers are up by 2%. This means that the decline in sales is being driven by reduced revenue per customer. Revenue per customer has increased in only 25% of our cities and has kept pace with inflation in only 6% of our cities. For 70% of our cities, the change in revenue per customer has been weaker than the change in customer numbers.
Food & Drink is the biggest beneficiary of covid
Looking at the six largest city centre retail sectors, only two sectors are showing sales growth. Grocery has kept in line with inflation with average sales growth of 8%. Food & Drink sales by contrast have grown a massive 34%, dramatically increasing the sector’s share of overall sales from 26% in February 2019 to 35%.
Other traditional city centre retail sectors are suffering
Health & Beauty is down by -6%, Fashion sales have declined by -12% and General Retail, which includes department stores, is down a massive -25%. Despite customer numbers returning back to pre-covid levels, city centre Travel & Accommodation sales are still down by -31%.
These trends did not just emerge in February. They have been strengthening since July and August 2021, when city centre sales began to recover to a level close to the same month in 2019. While it is too early to draw any firm conclusions, it’s worth sharing some hypotheses:
- The nature of city centre spend is changing. While traditional sectors such as Fashion and General Retail are weakening, perhaps due to competition from online or retail parks, people are still coming into city centres to eat and drink.
- This change in spending patterns accounts for the decline in average revenue per customer as people do their “big ticket” spending elsewhere.
- The decline in average revenue per customer need not be bad news for city centres. After all, it’s not clear whether 90p spent in a restaurant is worth less to the local economy than £1 spent in a department store. It may be that national fashion and general retail chains are being replaced by independent eateries.
In the coming months retail is due to be hit by more strong headwinds from inflation and the emerging cost of living crisis. It remains to be seen what impact this will have on the burgeoning Food & Drink centre that is powering the recovery of city centres from covid.
The Beauclair team is committed to refining our analysis so that we can help our clients to understand in real time the huge transformations reshaping our city centres.