Figures from the Royal Mail, Springboard, and the Centre for Cities point to rising demand for online shopping – and delivery – at the same time as the number of people visiting city high streets falls.
Shift online
Royal Mail says it’s confident that the Covid-19 pandemic has brought lasting change to the way people take delivery of goods as it said its revenue from domestic parcels was now 44% higher than before the pandemic.
The delivery company says appetites for parcel deliveries have not waned post-pandemic lockdowns, even though shops are now open as normal. However it now plans to cut about 700 management jobs as part of a transformation plan to “adapt quickly to the changing market and ensure more customer-centric ways of working”. And while UK parcel volumes in the third quarter of its financial year were 15% up on 2019, international parcel volumes were 51% down on 2019, and 41% down on last year – suggesting a decline that set in after the UK EU Trading and Cooperation Agreement was signed on Christmas Eve 2020.
Today Royal Mail reported parcel numbers of 439,000 in the third quarter to the end of December 2021. That’s 11% down on last year – when online shopping rose strongly during Covid-19 related trading restrictions – but 15% ahead of the same time in 2019. Revenue fell by 4.9% on last year, but rose 43.9% on the previous year. The rise came despite 15,000 employees being absent in early January as infection levels from the Omicron Covid-19 variant rose.
“We delivered a solid performance over the Christmas period in particularly challenging circumstances operationally,” says Keith Williams, chair of the Royal Mail. “I’d like to thank all our people for their dedication over the period.
“We expected some decline in parcel volumes given most retail stores were open during the period, unlike last year. However the trend towards customers wanting more parcels remains and responding to that change efficiently is key. Our domestic parcels business in the UK has seen demand increase by around a third over two years.”
The update comes a day after fast delivery company Getir said it would add an extra 6,000 roles to its UK workforce this year, to take its total to 10,000 people.
While footfall declines
The number of people visiting shops in 2021 was 31.1% lower than it was in 2019, according to business intelligence specialist Springboard. That marks something of a recovery, however, since footfall in 2020 was 39.% lower than it had been the previous year.
Retail parks were the most resilient locations, with the fall from 2019 held to a decline of 11.8% – well ahead of high streets (-36.7%) and shopping centres (-37.9%). Its Springboard – The Year That Was 2021 report cites ONS figures showing online sales peaked, as a percentage of retail sales, in early 2021, before rising briefly in November and declining to 27.7% in December. Store vacancy rates stayed high during 2021, at an average of 11.7% up from 9.8% in January 2020.
Looking ahead, however, the Springboard report says the cost of returns may prove a brake on online expansion – but, on the other hand, retailers will be reviewing store networks in order to make sure they are the right size. As more shoppers work from home, says the report, they are more likely to visit shops at the weekends and in evenings. Regional cities and market towns, it says, have benefited as people visited more often. This year, suggests the report, will be “typified by the transition of retail to succeed in a Covid world. Retailers can expect a continuation of the migration of spend online to continue throughout 2022, although, as consumers feel more confident with regard to the risks associated with Covid, a proportion of this will shift back to stores.”
Stronger cities hit hardest by Covid-19
Government support has sheltered weaker cities and towns from the full force of Covid-19 – but stronger cities have lost more of their sales, a new Centre for Cities report suggests.
Collectively, businesses in cities and large town centres have lost 35% of their potential takings with thousands closing for good as a result of the pandemic, the Cities Outlook 2022 report suggests. Central London was hit hardest, losing 47 weeks of sales between the first lockdown and the arrival of Omicron, while Birmingham, Edinburgh and Cardiff businesses lost nearly a year’s worth of potential sales.
The research, says the report, “suggests that the Government’s Covid-19 support successfully stalled the decline of many struggling high streets but was less effectively in economically stronger places due to higher rents and a lack of custom from office workers.
“That said, while stronger cities have borne the economic brunt of the pandemic, their higher levels of affluence mean that, if restrictions end and office workers return, they will likely recover quickly. Meanwhile, while government support has sheltered weaker places, it may simply have stored up pain for the future.” There are warnings of a new wave of business closures in the North and Midlands this year.
