Work in progress

New ‘hybrid’ working models - with employees splitting their time between home and the office - have important implications for the retail sector.

Working practices for office staff are likely to change significantly post-lockdown with many employees spending a greater proportion of the week working remotely. Last week, for instance, Nationwide announced a `work anywhere' plan for their 13,000 office staff.

As employees spend fewer days in the office, city centre locations will be deprived of an important source of footfall, and increased home working will have a profound impact on people’s spending.

We explore the potential impact of hybrid working models on the retail and F&B sector:

Staying local

With people forced to spend more time at home and in their local area in the last year, their spending patterns have changed. Barclaycard payments data from the past year indicates that two-thirds of Britons chose to shop closer to home. This trend is expected to continue and in a recently published Post Pandemic Places report, L&G found that 36% of respondents said they would spend more locally in the future.

Small and independent businesses have benefited from these spend patterns, offering hope to struggling high streets in regional and suburban locations. The Barclaycard data also revealed that spend in food and drink specialist retailers, such as greengrocers and butchers, has risen 63% between Q1 2020 and 2021. 

This will in turn, continue to impact retailers with stores in city centre locations relying on office workers. These stores may either need to close or be re-purposed to deal with the decline of an important customer segment.

New formats

Changing patterns of work are also likely to impact F&B in city centres. Functional grab and go units, which have expanded rapidly over the past decade to cater for high visit frequency office workers seeking convenient lunchtime options, will become less relevant in the future.

This is already forcing a change in approach. Pret A Manger announced last year that they will be moving from a `follow the skyscraper' strategy to a `follow the consumer' model. They set out a plan to close 30 city centre stores and introduce a subscription service for its beverages.

When workers are in the office, the nature of their work is likely to be more collaborative in the future. There is therefore an opportunity for F&B operators to create vibrant spaces where colleagues can interact, network and collaborate outside of the office.

Out of town

Home working has led to a rebalancing of spend away from big cities towards regional and provincial towns. As we have shown in recent Pragmatists, retail parks could benefit from this. Often found in out-of-town locations, retail parks can function as leisure destinations – with cinemas and gyms – or offer large format homeware, DIY and gardening units.

Lockdown has made people attach a greater premium to high quality open spaces and public realm where they can interact with colleagues, family and friends. This is an opportunity for mixed-use developments to offer the local community an engaging commercial space with a mixture of retail, F&B and leisure provision, as well as outdoor space. 

In sum ...

Hybrid working models will have a significant impact on how we live, work and spend in the future. There are clear winners with people spending much more time at home, especially operators in out-of-town locations and online retailers.

Operators in city centre locations are challenged by flexible working and they will have to adapt to the changing needs of lower visit frequency workers. This presents a huge opportunity to be creative and reimagine space for a more collaborative office workforce.

Jamie Parker