Place Marketing in the New Era of 'Hybrid Working' - Identifying Opportunities for Provincial Towns, Cities and Regions After Coronavirus

Wednesday, 23 September 2020
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For a long time now, the big cities have looked like the winners in the economic development stakes - especially those with strengths in service and technology sectors. And an important reason for this has been agglomeration, or industry clustering.

In summary, agglomeration is the concentration of interconnected businesses in one place. It provides them with direct access to specialised knowledge, skills and supply chains, which in turn leads to increased productivity, innovation, and competitive advantage. And it's a self-reinforcing process; over time, more businesses and skilled people are attracted, making the cluster yet more successful. Obvious examples include London's financial services sector and tech in the San Francisco Bay Area.

Losers, as well as winners...


But agglomeration, unfortunately, creates losers as well as winners. As investment and skilled workers are sucked in to the big cities, peripheral towns, cities and regions can get left behind. Often, these are places with manufacturing and industrial roots, without the critical mass to compete for high-value service and tech sector investment and people.  For example, even if a town has one major IT sector employer, where's your next career move?

But there are also downsides within the big cities themselves. Where agglomeration occurs, property costs typically rise, resulting in eye-watering rents for both businesses and workers. To continue, therefore, agglomeration depends on the benefits (better profits, salaries and career prospects) continuing to outweigh the costs.

Agglomeration at the limits?


Even before the arrival of Covid-19, there were signs that, for many workers, the attraction of the big city was reaching its limits. For example, in 2015 average house prices in London were already more than 3.5 X the average in the North of England, and growing  by 10.6% annually (versus 3.7% for the UK overall). [1] As a consequence, net outward migration from London began to increase, as more workers were drawn away by lower living costs. [2]

Anecdotally, I noticed these changes in my home city of Sheffield (just over 2 hours by train from London). I met more people who said they'd moved here because raising a family in the capital was simply no longer viable. And more service-sector business people were saying that location was no longer such a big deal; technology now meant that clients in England's wealthy South East were increasingly happy to be serviced by businesses based in the North.

'Live, work and play here' - nearly, but not quite...


These changes were reflected in provincial inward investment and place marketing messages.  The 'live, work and play' pitch had long been an important element in inward investment promotion, but targeting skilled workers had, for the most part, been secondary to the core proposition: 'locate your business here'. Now, in an era of ballooning metropolitan house prices, improved communications technologies and more freelance working, the quality of life message, targeted at people rather than businesses, was coming to the fore.

And yet, while sometimes well delivered, the appeals of less economically successful locations to the lifestyle dreams of high-value workers were never quite compelling. The fact remained that most large service and tech sector employers were in the big cities, along with the best career development opportunities. So the question remained: 'Am I prepared to sacrifice career success for lifestyle benefits?' For most, the answer continued to be 'no'.

And then came coronavirus...


It seems that the jury's still out on how the coronavirus pandemic will affect living, commuting and office working patterns; however, talk of permanent change is increasingly common. As recently as March (2020), one Centre for Cities article asserted that 'once coronavirus has peaked, face-to-face interaction will continue to be more important than ever' - effectively predicting that big city agglomeration would carry on as before. [3] However, by August, footfall in the UK's cities remained a fraction of pre-lockdown levels. Office workers weren't returning, the largest cities were suffering most, and London was suffering most of all. [4]

While the UK government (for a time) called for a mass return to the office, many leading service sector employers were less convinced, and are now planning for ongoing 'hybrid working' (home and office). Because, for many businesses, large-scale home working has been a success. In the words of one Stanford University professor: 'stigma associated with the practice has collapsed'. [5]

So what does all this mean for Place Marketers?


It's worth emphasising again - no one really knows how our working lives will be affected permanently by coronavirus. But we can follow trends like 'hybrid working' to their logical conclusions to inform our place marketing strategies for this new era. 

Big city agglomeration has been a driver of wealth creation for centuries, and it's unlikely to go away. However, it seems equally unlikely that, henceforth, it will be characterised by high-value workers cramming into trains, every day, to sit at computer terminals in expensive offices doing work that could more easily, and perhaps more productively, be done at home. More home working simply makes sense, even if the big city office is reinvented as a vital networking hub.

So, if workers only need to visit the office once or twice a week, they'll be free to live much further away from the big city, and free to choose from a far wider range of possible locations. That could mean coastal resorts, the countryside, or one of the many towns and even cities that score highly for quality of life but less well for service and tech sector career prospects. According to residential estate agents, the move out is already happening. [6]

For place marketers, the obvious response is to promote their locations as places to 'live, work and play' with more vigour than ever - addressing both the rational drivers (e.g. housing affordability) and emotional drivers (e.g. a distinctive 'sense of place') that influence individual and family location decisions. Because what had, in many cases, been a nice but ultimately unconvincing idea could now be a powerful, realistic proposition for lots of people.

And the potential prize is a big one: more high-value, high-income residents with the potential to boost the wealth and dynamism of regional economies, many of which had been left behind by big city agglomeration. That's always been a central goal of regional economic development - you could call it 'levelling up'.

Author:
Nick Smillie, Managing Director
Clarity Business Strategies Ltd.


Sources:


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