• Chris King

Focus on the High Street : Part 2

Updated: Aug 2, 2019

KIBS are key: Why Knowledge Intensive Business Services are key to the high streets’ fortunes.

Part 2 of a series analysing the Scottish High Street.

At a glance

- KIBS, or knowledge intensive business services, consist of companies that specialise in accounting, law, marketing, management, consulting, finance, as well as other services focused on providing business to business services rather than business to consumer services.

- KIBS companies account for over £186 Billion in gross value added to the UK economy and 13% of all UK employment. (House of Commons, 2017)

- In Scotland there are over 5,800 KIBS firms that employ over 161k people, which contribute £38.6 Billion (28%) to the Scottish GVA. (EY, 2018)

Our analysis is based on data published in February 2019 by the Centre of Cities in City Centres – past, present and future.

Although also referred to as PBS, KIS & PKIBS, for the purposes of this post, any company that exists in a business service, accounting, law, marketing, management, consulting or finance capacity will be referred to as KIBS (Knowledge Intensive Business Services). In Part 1 of the Focus on the High Street series, we analysed the underlying causes of the decline in the high streets in Scotland and across the wider UK. The relocation of KIBS firms to the suburbs has led to a decline in the number of people in the city centres and, subsequently, spending in high street businesses. A return of KIBS companies to the city centres would promote midday and midweek footfall on the high street, bringing a potential increase in revenues for retail, food and leisure businesses.

KIBS generate a lot of revenue

In Q3 of 2018, the Scottish GVA grew by £359 million. KIBS companies contributed 47.9% of that GVA growth, £172 million (Scottish Government, 2019). In 2017 KIBS contributed 28% towards the total Scottish GVA; this is illustrated in the figure below.

KIBS contribution towards GVA highlights the benefit they provide for Scotland, in terms of overall revenue and tax generated.

Centre for Cities has published research which suggests a link between the proportion of KIBS in a city centre and the high street vacancy rate. Table 1 illustrates that for city centres with 15% or more of their demographic consisting of KIBS, the high street vacancy rate tends to be lower. In those same cities, workers also contribute more GVA per person towards the overall economy. It is worth noting that cities which have higher concentrations of manufacturing in their city centres also experience increased high street vacancies. However, as noted in Part 1 of Focus on the High Street series, there is an optimal balance that needs to be struck between the different types of businesses and commercial space in a city centre in order to yield a healthy high street. For example, Dundee and Blackpool, who have the same or higher concentrations of manufacturing than KIBS in their city centres, have two of the highest high street vacancy rates in the UK. This data also suggests that, for cities like Dundee and Blackpool, if more investment was put into attracting more KIBS into the city centre there would be a corresponding decrease in high street vacancies.

KIBS employ a high number of workers

In Part 1 of the Focus on the High Street series, we highlighted another potential benefit of KIBS returning to city centres; an increase in the number of people in city centres. The presence of more people throughout the week, for more hours per day, will have a positive effect on high street businesses. Figure 2 illustrates that whilst the majority of KIBS employees are located in Glasgow and Edinburgh, there are still over 67,000 KIBS employees located throughout the rest of Scotland with the potential to make a large impact on a city centre.

How to attract KIBS back to the city centre

Having outlined the benefits that KIBS bring to a city centre, it’s important to understand the optimal KIBS environment. Although there are other strategies that can be implemented, such as lower business rates, the Centre for Cities study found an association between high quality office space and the percentage of KIBS in a city centre. Furthermore, the high streets in these cities reported a lower vacancy rate and a higher GVA per employee. This strategy requires available high quality office space, which may require investment, however, without the availability of high-quality office, a city will find it more difficult to attract KIBS to their city centre and retain them long term.

If this article has made you rethink your city centre development strategy, contact us for a free consultation to discuss your research and development needs and how we can help your city grow.

Strathearn Strategic Consulting


+44 (0) 7913 413 699