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Freakoutonomics

Few are feeling the city’s economic pain as acutely as shopkeepers, restaurant proprietors, and small-business owners. Amid eerily empty sidewalks and race-to-the-bottom sales, the questions are: What will it take for them to survive? And how are you doling out your dollars?

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Saturday morning brunch at Balthazar.  

A friend of mine likes to walk to work from his home in the Village to his office in Tribeca. Lately he’s begun passing the time engaging in what you could call retail anthropology, a sport many New Yorkers seem to have taken up. A partial list of the changes he’s noted in just the past six months reads like this: Cosi, the upscale sandwich shop on the corner of Sixth Avenue and 13th Street, closed; a pop-up Halloween-costume shop temporarily took its place; and the space now sits vacant with a RETAIL SPACE AVAILABLE sign above the door. The Jamba Juice on the same block, which at the height of the city’s economic boom was routinely packed with stroller-pushing moms and NYU kids, is now nearly always empty, while the Murray’s Bagels right next door remains jammed, despite raising its prices substantially because of rising wheat costs. Kuhlman, the mid-price men’s-clothing boutique on the corner of Sixth and 12th, gradually began advertising ever-more-desperate sales before quietly going belly-up just a few weeks ago. The always-busy, beloved local diner Joe Junior, right across the street, is busier than ever. Business is also brisk at Laurent Tourondel’s BLT Burger, a few doors down—where the burgers cost a few bucks more than they do at Joe Junior and in fairness are a good bit better—but only on peak days, and at peak hours (a recent Tuesday lunch there was positively Hopper-esque). Jefferson Market, the decades-old grocery store of choice for many a die-hard Villager, slowly ran out of inventory, citing money problems, last fall, then closed for months and now has a sign in the window promising a full remodeling followed by a grand reopening—meanwhile, there’s a neighborhood rumor that the landlord has been showing the space to new tenants. A bit further south, business at the Duane Reade on West 4th Street seems unchanged, and Starbucks appears to be faring less badly than you might expect, though you certainly don’t have to wait in line to use the bathroom like you used to. The formerly trendy Da Silvano, wan as the crowd is most nights lately, feels like a relic from a hazy past. To cap matters off, the Banana Republic on Sixth above Houston just closed. I can’t remember the last time I saw a Banana Republic close.

New York, as any amateur anthropologist can see, is in the midst of a retail shakeout of historic proportions. On the broadest and most visible level, it appears that people have simply snapped their wallets shut. Nationally, retail and food sales fell by 9.8 percent in December (Standard & Poor’s holiday outlook, at the time the most pessimistic, was 5 percent) and by 1.8 percent more in January. And consumer spending has been steadily dropping for six months. In New York, which caught up with the rest of the country economically just when the rest of the country caught up with New York politically, the decimation began in earnest in the fall. Local outlets of national chains are clanging to the ground: The bankrupt Circuit City is gearing up to leave nine massive vacant spaces in the five boroughs. Times Square’s Virgin Megastore, the highest-volume music store in the country, is out come April. The formerly unstoppable Starbucks will shutter eleven locations by summer. The city’s most storied shopping districts—Fifth Avenue, Madison Avenue, and Soho—are suddenly pocked with empty storefronts looking out onto empty sidewalks. More recently gentrified shopping corridors like North Flatbush are faring even worse; commercial vacancies in that neighborhood are edging toward 20 percent. The city’s legendary department stores are all having their struggles. And that’s not counting the myriad tiny tragedies befalling every block. All over the city, notable restaurants, boutiques, and other mom-and-pops are pulling down the chain-link gate one last time: Fleur de Sel one day, the Oscar Wilde Bookshop the next, Mondo Kim’s video store the day after that. Almost everyone recognizes a name in the roll call of the dead.

And yet there’s more going on than an abject bloodbath. Despite the mutually perpetuating doomsday headlines and foul civic mood, stores still in business outnumber those that have gone under by orders of magnitude, and New Yorkers have not stopped shopping. Every day, millions of us still spend billions of dollars right here in the city. We eat. We wear clothes. We buy sofas. God knows, we drink. The real question, then, is not whether money changes hands, but how both buyers and sellers are adapting to the newly Darwinian economy. To find out, New York conducted a survey of more than 100 city merchants in all five boroughs, from department-store executives to Canal Street sidewalk vendors, from high-end restaurateurs to bodega owners. The results have allowed us to pinpoint a few basic truths of recession retail, some self-evident, some surprising. The one indisputable finding is this: When the dust of ’09 settles, New York will be very different. It already is.


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