- Applied Institute for Research in Economics
Retail, hospitality, entertainment, and leisure (RHEL) businesses are the lifeblood of every town and city, and the customers they attract are the oxygen that enables towns and cities to exist, grow and thrive.
The impact of Covid-19 on customer behaviour was immediate and widespread across all industries and regions in the UK. The RHEL are key sectors that have, and continue to be, affected by the pandemic. Although the pandemic may be over as a public health crisis and central government has been quick to signal ‘time to move on’, this does not absolve local government from the need to be aware of the pandemic’s continued effect.
This research examines the impact of Covid-19 on the spatial distribution – i.e., the physical arrangement across space – of business closures in West Yorkshire. Using unique store-level data, we created a comprehensive review of the RHEL changes in trends in West Yorkshire's major metropolitan districts (Bradford, Leeds, Kirklees, Wakefield, and Calderdale) and its core cities.
RHEL is a significant component in the West Yorkshire economy. Averaged across the five metropolitan districts, RHEL accounts for about 18% of total employment by industry in the region. Understanding the spatial distribution of RHEL business closures and openings in West Yorkshire allows policy-led decisions to be made on how best to structure the future of the region, which has become increasingly important in light of the current cost of living crisis.
Essential and non-essential businesses
Covid-19-related closures of, and restrictions on, businesses required legal powers. The ‘Health Protection (Coronavirus restrictions) Regulations 2020’ provided those powers, accompanied by guidance (reinforced through press releases and briefings) on whether a business fell in the category ‘essential’ or was deemed ‘non-essential’.
‘Essential’ was restricted to supermarkets, food shops, medical (including veterinary) services and pharmacies, hardware and repair shops, petrol stations, and other activities vital to health, well-being, and a minimally functioning society. ‘Non-essential’ was a residual category of everything else, including great swathes of RHEL. The list was modified several times after the initial announcement.
In the final week of March 2020, when the first lockdown began, 73% of the vast majority of West Yorkshire RHEL was categorised as ‘non-essential’, a category which required them to close immediately and without clarity on when they would be able to reopen.
Beyond the death of the high street
The greater part of both ‘essential’ and ‘non-essential’ RHEL in West Yorkshire was not located on the high street, in retail parks or in shopping centres. Instead, they were in ‘standalone’ locations (i.e., locations outside high street boundaries). The predominance of standalone locations (73% of essential and 60% of non-essential RHEL in West Yorkshire) complicates our understanding of the spatial distribution of RHEL closures because it adds at least two other levels of complexity. First, the heterogeneity regarding the type of businesses operating in those areas. Second, it complicates the identification of common root causes for their failure.
There has been a lot of talk about the ‘death of the high street’ since the Portas Review of 2011 but, as the above shows, it is important not to be too literal regarding “the high street”. The high proportion of standalone locations shows that the focus should be wider than this, but it is important to make sure other locations that have a smaller proportion, such as retail parks (which account for 3% of both essential and non-essential RHEL), aren’t disregarded.
Our spatial analysis suggests that there are many businesses outside the boundaries of the high street, and that these are likely important to the local economy and community servicing or provisioning.
Whilst 73% of RHEL businesses were initially categorised as non-essential and thus subject to lockdowns and periods of restriction from March 2020 to July 2021, some businesses had a creative response to the lockdown rules. Many restaurants and pubs, for example, became community hubs providing takeaway and delivery meals for health service workers and the vulnerable. When looking at data from July 2021, only 66% of RHEL in West Yorkshire ended up having to close under lockdown guidance, thanks to inventive ways of staying open in some kind of capacity.
Of those RHEL businesses that did have to close due to the lockdown restrictions, 21% did not survive. There were some significant differences of spatial distribution across the five metropolitan districts.
While the averages for standalone and high street are 55% and 36% respectively, the relative balance between these two varies markedly across the districts. For example, 61% in standalone locations and 29% on high streets in Bradford, compared to 49% and 47% respectively in Calderdale. Our visual mapping of “where” the businesses that survived are located reinforces the initial point that many RHEL businesses that survived the initial lockdown period were not located on the high street and so there is value in understanding their experience.
The vast majority (74%) of RHEL businesses that survived the lockdown period were independent (those trading at fewer than five locations; ‘multiple’ businesses are those with five or more). These are mainly located within major town and city boundaries i.e., ‘where the people are’.
The fact that independents are the majority of survivors simply reflects the prevalence of micro-businesses, and the figures do not in and of themselves indicate whether independents were more or less likely to survive. (The UK has far more small and medium-sized enterprises (SMEs) than it does larger enterprises, and SMEs are dominated by ‘micro-businesses’ with fewer than 10 employees and typically trading from one registered location.)
Whilst we may be aware of the so-called ‘anchor institutions’, i.e., retail giants whose activity plays a key role in the constitution and reproduction of local economy (procurement, employment etc.), it is independents whose local-based action sustains everyday community connections.
RHEL independents are integral to the present and future character of communities. RHEL are sites of everyday interaction. They are home to casual conversation, meeting places for friends, and hubs for every kind of social exchange. As such, they foster important social and commercial relations. As micro hubs, what they look like – how they are designed, the state of their upkeep – conveys something about an area.
Spatial distribution of non-survivors
As stated earlier, 21% of the RHEL businesses in West Yorkshire that were subject to lockdown and severe restrictions during March 2020 to July 2021 did not survive. They either chose not to reopen or succumbed to any one of the several causes of failure – inability to retain staff, loss of custom, cashflow, crippling debt or just lockdown fatigue.
In all five districts, the percentage of standalones that did not survive is higher than its level for those that did survive, which suggests that standalone RHEL were less resilient than their counterparts in other locations.
Of the RHEL businesses that did not survive the lockdown period, 76% of them were independents. This means that both a large majority of those businesses that survived and a large majority of those that didn’t were both independents. This is not unsurprising insofar as it reflects the prevalence of micro-businesses.
Most RHEL businesses that did not survive are within major town and city boundaries, although it is also the case that there are relatively more non-survivors outside of these boundaries in parts of Wakefield and Kirklees. These findings reinforce the need for policies that look beyond the death of the high street. Calderdale has a higher proportion of non-survivors on the high street and relatively few non-survivors outside major town boundaries. More non-survivors fall into the standalone category for both multiple and independent RHEL than any other, and these patterns show consistency across the five metropolitan districts.
There is significant variation across the five districts when looking at business location and ownership, which shows that a “one size fits all” policy approach will not work. For example, 30% of standalone businesses in Wakefield and Calderdale failed, compared with just 17% in Bradford.
How does this fit in the bigger policy picture?
Data on business location can only tell us so much. RHEL is diverse and it is important to have a sense of how different sectors fared and also what else is happening within the communities. Pairing our spatial distancing RHEL data with the Ministry of Housing, Communities and Local Government’s Index of Multiple Deprivation (IMD), for example, shows that the majority of those businesses that did not survive were located within the boundaries of areas with high levels of deprivation.
Overlaying RHEL data on the IMD is a stark reminder that businesses come from and serve communities. To understand the impact of those businesses and the scope for business creation requires an understanding of communities and this is widely recognised, albeit there is no clear consensus on policy.
RHEL is an important part of the West Yorkshire economy. Our research is one part of a much bigger picture that looks to identify important spatial differences and commonalities. This approach is much needed in order to establish a clear understanding of the state-of-the-art and potential challenges.
Uncertain times call for clearsighted evidence-informed decision-making, supporting Local Government, and that can only benefit from appropriately focused research on key problems and challenges. The scope for this seems likely to grow as West Yorkshire devolution develops and the levelling-up agenda becomes clearer.
For further information, including a more detailed breakdown of RHEL businesses in West Yorkshire by district, read the full report.
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