What’s the difference between Kirkwall and Central London? No, not population size (London is nearly 1.6M greater) — the rate at which business has increased post-lockdown.
Nestled in a bay on the Scottish isle of Orkney, Kirkwall is experiencing a solid bounce back year-on-year while London trails behind. In fact, according to our latest data on card payments, the top 3 locations for year-on-year growth are all based north of the border.
That’s not to say that our capital city isn’t making a slow but steady recovery. While more office workers may be working from home part-time or full-time than before the pandemic, offices are back in a big way. And with tourist season in full swing, restaurants, pubs, and shops are benefiting from the increased footfall.
It's impossible to avoid the cost-of-living crisis which dominates the news. Soaring bills, stagnant wages, and increased prices in supermarkets are all impacting the average British consumer. House prices are at an all-time high, and strike action has risen across certain industries as workers campaign for wages to increase in line with inflation. It would be remiss to think that a current financial situation hasn’t directly influenced spending habits.
Meanwhile, as the holiday season gets underway, we’re seeing spending diverted from consumers’ usual locales, moving to tourist destinations like Inverness and Guernsey. As some holidaymakers choose to go abroad over a British staycation, the Travel industry is enjoying a rise, especially in the aftermath of Covid when restrictions limited the opportunity to soak up the sun. This seasonal shift may mean British high streets are left in the dark during the summer months, but pre-holiday shopping for clothes, luggage and essentials should offset the temporary dip.
While some areas are experiencing an uptick in transactions compared to last year’s periods (e.g., The Wester Isles), Luton and Huddersfield continue to struggle.
Major cities are titans of the economy, but stats show that the areas with the most robust year-on-year performance are unexpected outliers. For instance, Kirkwall has seen the most significant rise in spending with a 22% increase year-on-year, although it has dipped by 3% over the past few months.
Inverness takes 2nd position with a 10% increase in high street spending, but like Kirkwall, the past six months have been challenging.
The Channel Islands is an interesting example, where Guernsey experienced a year-on-year increase of 7%. However, in the past six months, they have enjoyed a 16% increase in transactions. This is likely due to more people visiting the island during the tourist season.
While things are looking up in the Highlands and Islands, the Western Isles have seen a significant drop in spending across the UK. A reported decrease of -33% year-on-year has been observed, but the past six months have seen a slightly more promising result with -16%.
Like many of the UK’s high streets that are competing with the allure of online shopping, Luton, Huddersfield and Isle of Man have also struggled to boost their high street economies.
When we look at the big picture, the trend indicates that spending is still down across the UK compared to the previous year. This is hardly surprising given the country’s economic climate. Soaring inflation, the lingering impact of the pandemic, increased taxes, and stagnant wages all contribute to a decline in spending habits. In a cost-of-living crisis, people are working hard to make ends meet, budgeting their income, and reducing high street purchases.
Much of the population are keen to expand their horizons now that most covid restrictions are lifted, which has meant a big increase in transactions throughout the travel sector. While many are choosing to be frugal, others prioritise experiences to make up for a lack of opportunity to soak up the sun or explore new places over the past few years.
Perhaps because of a changing commercial landscape, significant investment is also being made in marketing. Many businesses are using social media strategies to compete in the growing online marketplace, diverting their spending to help achieve goals.
Water and Utilities take 3rd place with an increase of 18% both year-on-year and in the past six months. As more people seek to be more sustainable, sales of solar panels are through the roof. Less glamorous services like wastewater treatment and drain cleaning are also experiencing a flood of interest compared to last year.
And despite having a solid year-on-year increase, it’s not all good news for some industries. Real estate has seen a -7% decrease in the past six months, likely due to rising interest rates and property prices.
Recruitment seems to be suffering the most with a drop in transactions of 30% year-on-year. In the past six months, it has had a promising 2% increase in transactions as it recovers from the stagnation caused by covid. This growth may be slow, but with many businesses looking to fill gaps in their workforce, this figure could continue to rise steadily.
Lockdown pets made excellent working from home companions and caused a huge surge for Veterinary Services in 2021. Even with that 59% increase in pet ownership, the industry is experiencing a slight but natural decrease as people return to the office and have less time to devote to a pet.
Interestingly, subscriptions, which had previously seen a year-on-year dip of -5%, have now risen by 29%. While we might be a nation of tea drinkers, it seems that coffee is in high demand. With hundreds of shops on high streets across the country, the business models like The Pret Coffee Subscription allows users to pay monthly and enjoy up to 5 coffees per day. Once again, the return to city offices seems to have driven the upswing in spending.
Overall, the results are fairly predictable. Industries that had previously thrived in the changing landscape brought by lockdown no longer benefit to the same extent now that daily life has more-or-less returned to normal. Conversely, industries that struggled to cope with the challenges presented by Covid are slowly regaining their strength.
Compare year-on-year figures, take a look at our High Street Index.
Recovery will be an ongoing process for many, and the long-term impact will become clearer as we collect data in the coming years. The effect of the cost-of-living crisis will likely be felt for years to come. The extent to which it will affect our high streets and industries remains to be seen.
What challenges will small businesses face in 2022? Find out here.
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