Blog: As businesses look for certainty, pockets of insight from 2020 give hope for 2021

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I last wrote at the beginning of December 2020, when there was hope that York could go into Tier 1 status.  A lot has changed since then!  As I write now during the middle of February, it does feel that despite the positive news on the vaccine, the country is at its lowest ebb and is desperate for some positive news.

 

First and foremost, we all want infections to drop and the death toll to dissipate.  For business, the government’s roadmap to recovery and budget will be crucial for injecting some hope and optimism.  Business feedback has been limited since the new year, something echoed by colleagues at the Chambers and FSB.  I suspect this is because many are taking stock and preparing for a trading environment in 2021 that will have parallels with 2020. 

 

For those businesses we have spoken to, rent and rates are key ongoing concerns, with many desperate to see some concessions on business rates from the upcoming budget.  Concerns on rents work both ways; for tenants it is cashflow and for landlords it is the ability to pay commercial mortgages.  Businesses may be exempt from eviction, but that has not stopped difficult discussions/ disputes behind the scenes.  

 

Carolyn Frank from the FSB has also been very vocal about the huge impact on supply chain, with many micro businesses ineligible for grant support and devoid of income streams.  The cultural sector and evening economy is also looking at 2021 with growing unease. With social distancing likely for the foreseeable future, any business model that relies on crowded indoor venues will either need bespoke financial support or some means to diversify. 

 

On a more positive note, York’s professional, digital and creative services have reported positive trading figures for the end of 2020, as demand for services, and their ability to easily transit to home working allowed for business continuity.  For retail and certain hospitality, the fact that York was in Tier 2 during December at least gave some sort of trading platform.  Footfall in the city was -29% down on those normally expected in December, but the national average was -51% down.  Pubs and bars naturally suffered. Those with food-led offerings were able capitalise on this limited window, with one restaurant with an all-day food offering telling me they had a better December in 2020 than 2019!

 

Visa data shows us that the spend for Q4 (Oct-Dec 2020) was down -39% on the same time period in 2019.  As anticipated, a lot of that lost spend stemmed from travel restrictions in the UK.  The data insight we have from 02 shows that some people ignored restrictions, however the main users of the city centre (approx. 75%) were from York or surrounding Tier 2 areas, and they did spend to support our city.   However, local people do not stay in hotels, or visit tourist attractions and that visitor spend was never going to replaced.

 

What the Visa data also shows is the remarkable rise in online spending - something we hear about on the news, but is quite eye watering when you look at it on a local level. Visa online spending by residents in the city centre in Q1 2020 (Jan-Mar) was £9m.  By Q4 2020, this figure was £62m – a rise of 590% from the start of the year. This will have a lasting legacy and raise growing concerns for our high streets, but I have been comforted talking to independents who have seen good online trade and realising this diversification will be an integral part of their business models in the future.

 

What does this insight mean for York in 2021?  Whilst no-one is high-fiving, York performed better than other cities.  The latest restrictions around international travel hints that the government want to fight the covid war on home soil, so the staycation market this year will be strong, and York will benefit.  Outdoor seating will be crucial, and the city did this well last year, with the extension of footstreets and pop-up outdoor seating. Businesses in York should also be credited with their Covid-secure procedures and we’ll need to promote this message of health and hygiene in 2021.

 

We know our UK high streets face issues with the loss of Topshop etc, but we have known this for a while.  An article in the FT talked about how ‘experiential leisure’ will be crucial to rebuilding high streets.  York already has this in droves and with this solid base, we can look at recent planning decisions on York Central, Castle Gateway and the Station Frontage with enthusiasm and be grateful that we have the regeneration projects that can bring optimism and investment.

 

I think we all know that 2021 is going to be another difficult trading year, but if we take the learning from 2020 and focus on the future, with a fair wind there are reasons for optimism.

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