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Dr. Christian Wulff
Retail & Consumer Leader, PwC Germany and Europe
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City life has changed – forever
Millions of people live in urban spaces and vibrant city centres, and they play a major role in shaping and accelerating consumer trends that then spread to rural areas. However, the outbreak of the COVID-19 pandemic has hit crowded cities hard, and inhabitants are being forced to rapidly adapt to safety measures and social distancing requirements. City life will never be the same again – even after the pandemic. With an increasing number of people working from home, there is a tangible shift away from city centres and into traditional residential areas. This trend is relevant for high-street retailers, who are experiencing less footfall, and is also having a significant impact on canteens, restaurants, cafes and convenience shops that rely on office workers in city centres. PwC UK recently estimated that the UK’s GDP could drop by £15.3bn per year if office-based workers continue to be advised to work from home.
“In Germany, we expect annual sales worth approximately €5bn to shift from the hospitality sector into the food retail sector, even beyond the COVID-19 pandemic.”
In this article, we shed light on the “new normal” for city life across Europe by providing a deep understanding of how preferences of urban dwellers are changing and then defining the resulting implications for businesses and other institutions.
Health and safety are top of mind for urban citizens. Before the outbreak of the COVID-19 pandemic, we asked European urban citizens to choose their top three reasons for living in their city, and they named employment prospects (30%), social networks (29%) and housing quality (27%) – healthcare (20%) ranged among the last three. When we asked them the same question after the outbreak, safety and security (48%) and healthcare (45%) had become just as important as employment prospects (45%). In other words, two of the three top choices were related to well-being. Quality of healthcare was a particularly important factor in Sweden and Spain, where 56 percent and 53 percent of respondents named it as one of the most important features of their city.
While health and safety have become increasingly important during the pandemic, the large majority of European urban dwellers state that their city is badly prepared to deal with COVID-19. The only exception was in Germany, where two thirds of urban dwellers were satisfied with their city’s preparations and crisis management approach.
With the second wave of the pandemic now gathering force, cities must make sure that their health infrastructure is strong enough to protect and care for their inhabitants. However, the COVID-19 pandemic has also shown that cities must be prepared to manage crises and must have effective contingency plans in place.
Financial security remains important in times of crisis. Before the pandemic, the large majority of European urban citizens welcomed incentives to attract large businesses to their city. Cities must continue to make sure that they remain attractive to successful businesses and should increase their efforts to attract businesses and promote innovation.
Capital cities in Europe offer a well-educated workforce for businesses, as well as numerous institutes for higher education. For example, London and Paris are listed as hosting 17 and 10 universities respectively in the Times Higher Education World University Rankings. This may lead to the fact that 53 percent of urban citizens in London and 47 percent in Paris have received higher education. As a result, a large proportion of the gross value added in European capital cities is generated by professional services.
Today's cities need to find the right balance between attracting businesses (e.g. by offering advantageous tax rates) and addressing the major concerns of their inhabitants (e.g. by providing affordable housing and protecting local businesses). The COVID-19 outbreak is increasing the attractiveness of areas of the city outskirts that did not previously offer optimal connections to the city centre. Cities now have opportunities to create affordable housing for urban dwellers who do some of their work from home. At the same time, the city outskirts are also suitable as locations for new companies because their attractiveness is becoming less and less dependent on good transport connections to the city centre, especially for the digital workforce.
Since the outbreak of the pandemic, remote working has become standard practice for many Europeans. This development challenged many businesses as they needed to offer remote working solutions and explore new ways of working and collaborating. Even before the outbreak of the COVID-19 pandemic, a large majority of Dutch (78%) and German (70%) urban citizens worked from home at least occasionally, which is more than French urban citizens (63%). Businesses that have equipped their employees with the necessary technology for remote working have a clear competitive advantage and have been able to save time and tap into opportunities in these uncertain times.
Alongside technical equipment, remote working also requires fast and stable internet connections. In our survey, we asked inhabitants of European cities if they were satisfied with their broadband connection at home. Although data networks are facing very high levels of demand, 68 percent of inhabitants stated that they are generally satisfied with the broadband speed at home. Consumers in Germany (26%), Sweden (26%) and France (21%) are extremely satisfied. In terms of connectivity, inhabitants of large metropolitan areas are clearly privileged compared to people living in smaller cities or rural areas where working from home often remains a challenge. However, a nationwide future-proof digital infrastructure still needs to be created. In Germany, for example, only 4.6 percent of all broadband connections are connected with fibre optic cable.
Digital infrastructure is being expanded and improved across Europe. This will support increasing demand for fast and reliable internet connections to support remote working, as well as rising expectations related to online shopping or in-home entertainment (e.g. video streaming, gaming). High-end digital infrastructure will give cities and regions a competitive advantage when it comes to attracting talented people and encouraging investment by companies.
When it comes to mobility and transportation, urban citizens have preferred to travel using their own individual car for many decades. Before the outbreak of the COVID-19 pandemic, more than one third of urban dwellers in France, Spain and Germany used a car as their primary mode of transportation. The pandemic has reinforced the preference for individual transportation, as many people are concerned about infection when travelling via public transport.
A closer look at this trend, however, shows that the preferred mode of transportation depends on the shopping destination. In Germany, for example, 60 percent of consumers travel to do their daily shopping on foot (34%) or by bike (26%), while journeys to malls or outlets that are located outside the city centre are mainly taken by car (43%). COVID-19 has accelerated the trend away from using a car to go shopping for fast moving consumer goods, and a quarter of European consumers have started buying more at local stores, as life shifts away from the city centres and out to residential neighbourhoods.
In crowded cities, owning a car can be costly and stressful. In line with this, European urban dwellers are getting increasingly comfortable with using car sharing services. On average, 13 percent of respondents stated that they have used this service, while a further 36% would be willing to use car sharing in the future.
Alongside convenience and cost, the environmental impact of transportation is also a major focus for urban consumers. When asked what measures could reduce the environmental impact, 72 percent of European city dwellers stated that expanding the public transportation network would be an important step. A further 67% of urban consumers stated that investment in infrastructure for people-powered transport (e.g. bike lanes, greenways) would be an important factor in reducing carbon emissions and other environmental impacts of transportation.
Ultimately, cities need to find smart transportation infrastructure solutions to enable urban dwellers to continue their shift in mobility. This might include incentivising a culture of sharing instead of owning (e.g. by offering reserved or cost-free parking spots for shared vehicles), as well as promoting environmentally friendly transport solutions. In Germany, for example, 64 percent of the population would like to see pop-up bike lanes maintained in the long term after the lifting of COVID-19 restrictions. Increasing the connectivity of transport services, for example by providing apps that allow commuters to seamlessly switch between different modes of transport on a single platform, is another important step. Smart mobility solutions are the key to maintaining or increasing the attractiveness of cities, especially for city centres that have been heavily impacted by COVID-19.
Methodology
For the European edition of PwC’s Global Consumer Insights Survey 2020, we polled European city dwellers about their living conditions and purchasing behaviour in two separate studies. The first study was conducted before the outbreak of the COVID-19 pandemic, and it covered 6,185 consumers from 22 cities in seven European countries. The second study was conducted in April and May 2020, after the outbreak of the pandemic, and it covered 3,400 consumers from seven countries (France, Germany, Italy, the Netherlands, Spain, Sweden and the United Kingdom). Why urban consumers? Because millions of people live in cities, and this concentration has created a new era in consumption. Cities are vibrant centres of education and innovation, and seedbeds and greenhouses for new ideas. We want to understand the behaviour of these cutting-edge consumers – and then identify the implications for businesses.
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