Shift in work culture could 'cripple' small businesses

Thursday, 4 June 2020

Many central Christchurch businesses are very quiet during Covid Alert level 2.

Small business owners fear a long-term shift in work culture could gut city centres and jeopardise their futures as large firms increasingly allow working from home.

The coronavirus lockdown triggered widespread changes in the working environment, with thousands of office staff now working remotely.

Some worry the trend could continue into alert level 1 – when restrictions on businesses will be lifted – and beyond, leaving smaller enterprises on a knife-edge as customers disappear.

“Our business solely relies on the people working within the city,” said Scott Vining, owner of Fulla Beanz coffee shop on Christchurch’s Cashel St. “With them not here we essentially don’t have a business.”

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Custom has plummeted for Fulla Beanz coffee shop, leaving owner Scott Vining desperate for a return of business staff.

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While many employers have reported increased productivity from having staff at home, it has upset the balance of city centre ecosystems.

Workers nipping out for a drink or to a gift shop are the lifeblood of small businesses, and the fall in custom has hit them hard.

Central City Business Association chair Annabel Turley fears remote working could spell trouble for city centre traders.

In Christchurch some have seen footfall plummet to less than half of that pre-coronavirus – even under more relaxed level 2 restrictions.

One shop in the city recently reported just two customers in an entire day. With big firms now re-evaluating working arrangements, smaller traders fear it could spell a grim future.

“For the city to thrive we need people working, shopping and enjoying it,” said Christchurch's Central City Business Association chair Annabel Turley.

“This could gut the city centre. It is not just going to affect businesses but people who have invested so much money building the buildings we have – they’re not going to be able to get the rental returns their businesses are based on.

“If a larger proportion of people are spending time working from home, cities will see a doughnut effect – suburbs will thrive and city centres will not.”

The coronavirus lockdown has left many businesses scratching around for custom, forcing them to cut costs.

Kris Inglis, co-owner of Riverside Market, which houses dozens of food outlets, said people working from home was hindering Christchurch’s recovery.

“Foot traffic and retail and hospitality turnover is currently at 30 per cent of pre-Covid levels.

“Businesses can’t survive like this – we need everyone back at the office, working, shopping, eating out and enjoying the city.”

Inglis warned a shift to remote working could trigger office vacancies, causing rents to drop, business property values to follow and rates paid to the city council to fall, with the revenue loss passed to residential property owners.

“This really isn’t a good outcome for anyone.”

Councillor James Gough, who chairs a group driving momentum in central Christchurch, said it highlighted the need for a strong residential component and for the city centre to have enough strings to its bow to bring people in, despite evolving working practices.

While thousands of staff at Christchurch City Council, Environment Canterbury, the Justice and Emergency Precinct and Christchurch’s hospitals have returned, other big employers are re-evaluating working practices.

Vodafone, where up to 70 per cent of employees are at home under level 2, expects 30 to 40 per cent of its hundreds of Christchurch office staff to work remotely in the future, up from 20 per cent pre-coronavirus.

Small businesses are now scratching their heads over the future, many dependent on wage subsidies.

Outdoor store Kathmandu, which has headquarters on Madras St, has half its staff at home under level 2 and is offering options for remote working under level 1.

Westpac, where staff numbers at its office on The Terrace fell to 90 under level 2, including 60 from another office, expects workers to want greater flexibility following the pandemic. ANZ has had around 60 in its ANZ Centre office each day, down from 200.

Accounting firm PwC has most of its 100-plus Christchurch staff working from home but expects many will return in coming weeks, as does KPMG where managing partner Peter Taylor saying they are “keen to ensure we play our part in supporting local businesses in the CBD and the wider region”.

While there is a gradual return of workers, the lockdown has left central Christchurch quiet. Hourly footcounts in some parts of the city plummeted from over 400 in March before lockdown to 39 at the end of the month.

While a change in counting methods means figures before and after lockdown are not directly comparable, that rose to 178 pedestrians an hour between in May under level 2.

Beehive Collective gift shop co-owner Maureen Crowley is positive that customers will return.

Small businesses are now desperate for workers at big companies to return.

Vining had to let one staff member go after custom more than halved because of fewer workers at nearby Westpac and KPMG.

He is now holding out for them to return, and warned that if they do not he could go under.

“The wage subsidy right now, that’s great. But in a couple of months when that runs out, that’s going to be the big concern. If we’re not back to 90 per cent then, that’s when things get scary.”

At Riverside Lane gift shop Beehive Collective, co-owner Maureen Crowley is upbeat despite the lack of customers – she had four or five people in one day recently, and just two purchases.

The 50 or 60 people on a normal day have evaporated with the disappearance of tourism and workers.

“We miss them terribly … it’s been pretty bad but we’re very positive.

“The wage subsidy and discounted rent has helped a lot … We’re hoping that if we can hang in there for when they do come back we’ll be seeing the register ringing again with lots of sales.”

Turley too has seen custom fall about a third at her Unichem pharmacy in the BNZ Centre.

The absence of workers, particularly those in nearby government offices, has left many feeling the pinch, she said.

“If this keeps going on, what impact is this going to have on businesses? We’re not going to be able to pay our bills, we’re going to end up laying off people, we won’t be able to pay our rent.

“Christchurch is already really struggling – this could potentially tip us over the edge.”