Will UK’s Oxford Street survive Covid?

“In a West End town, a dead end world,” sang the Pet Shop Boys in the mid-1980s.
Fast forward 35 years and the electronic-pop duo would be just about right. Covid restrictions and a lack of global tourism have turned the West End, London’s premier shopping and dining district, into a shadow of its former self.
Sales from retail, hospitality and leisure are on course to bring in just 2 billion pounds ($2.7 billion) in the year to March 2021, down from 10 billion pounds in the year earlier, according to the New West End Company, which represents businesses around London’s Bond Street, Oxford Street and Regent Street.
The damage was laid bare when landlord Shaftesbury, which owns about 600 properties, including many shops, restaurants and offices in the area, wrote down the value of its estate by 700 million pounds. It was a wise move.
Starting from Wednesday, London was expected to move into the toughest tier of the UK’s coronavirus restrictions. Even when rules are eventually softened as more people get vaccinated, city centre locations in the UK and across Europe will take time to
recover. That is going to require some imaginative thinking from landlords, retailers and restaurant
operators.
About half of London’s West End retail and hospitality sales come from international tourists. With the vaccine rolling out around the world, some travel is expected to resume. But it’s possible that things won’t start to improve until at least the end of next year.
In the meantime, the UK government plans to scrap tax-free shopping for international travellers from January 1, which could cost billions of pounds in sales. Burberry Group Plc, Britain’s biggest luxury brand, warned last month that it would be hit particularly hard, as it would lose its “home market advantage” against Paris- or Milan-based rivals.
This all comes against the backdrop of continued competition from online retailers led by Amazon.com Inc, and digital fast-fashion companies such as Boohoo Group Plc. That’s one reason for the struggles of Philip Green’s Topshop, which occupies a prime position on Oxford Circus.
It’s not just tourists who will need to return either. City-center economies rely on office workers. Although there might be a gradual return to the workplace throughout 2021, some form of remote working is likely here to stay. Not only does this threaten hundreds of local shops and eateries, it also makes it harder to repurpose empty stores into offices.
One option for vacant retail and office units is to convert them into residential properties, where demand remains steady for now. Not all Londoners want to flee to the suburbs. If more space becomes available in desirable post codes, the 25,000 people who live in and around the West End could see their numbers grow.
—Bloomberg