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Saturday evening at Lit Lounge, an East Village bar.  

In market-research terms, purchases fall into two categories: staple and discretionary. In the past decade or so, New York consumers have had these things, the need and the want, mixed up. Now, that distinction is being reestablished, and forcefully. The wealthiest of the wealthy may be immune to the downturn, but they’re the only ones. For everyone else, the indulgences of the precrash years—the $275 nine-course tasting menu at Per Se or an impulse purchase of a pair of Louboutins—are mostly out. At high-end jeweler David Lee Holland, items priced between $2,000 and $4,000, the point a manager calls “a lady’s personal discretionary purchase,” are barely moving. “That lady,” the manager says, “is not shopping right now.” Sales of so-called super-discretionary purchases, big-ticket items like cars and home improvements that can be put off, are similarly comatose. Statistics for five-borough car sales aren’t readily available, but with the national figures for January at their worst level since 1982, the implications for New York are clear. Sales at Barney’s Hardware Store, meanwhile, are down 40 percent because, in the words of owner Willie Meistelman, “everything people use for electrical work, painting, and building—none of that has been selling.” About the only luxury items still being bought by people without billions are what you might paradoxically call luxury necessities—wedding rings, for example. The other exception is what might be called the One Thing, the special item a person values so highly—the $10,000 vintage Les Paul for the guitar junkie, say—he simply won’t give it up (though he might scrimp elsewhere to pay for it).

What is holding up well is the “staples”: groceries, basic clothing, medicine—stuff people can’t live without. Still, New Yorkers are cutting back even on the basics, buying less than usual or making do with what they already have (business at cobblers and other repair stores is generally up). Liquor, a traditional tough-times standby, is holding steady, although Greenpoint’s Mark Bar, for one, now makes its margin on the $2 “PBR special” while top-shelf booze gathers dust above. The ratio of espresso drinks to less expensive drip coffees sold at coffee shops has, in the words of one owner, “flip-flopped.” What we’re witnessing, in other words, is not a single fatal blow, but death by a thousand spending cuts.

Along the way, New Yorkers appear to have reassessed what they value. One of the hallmarks of the boom was the triumph of “aspirational” branding: a pair of Gucci-stamped sunglasses did not cost three times as much to produce as a pair of Ray-Bans, but commanded three times the price. Flush with cash (or easy credit), consumers bought the proposition that the brand itself—the status it conferred—was worth a 300 percent markup. Not any more. Not only are real designer bags hard to move off the shelves but the Canal Street knockoff market is in free fall too. A zebra-patterned fake Versace bag, which used to sell for $45 in the summer, now barely fetches $25. With the arrival of the crisis, the price tag on status has come up for renegotiation. Today’s consumer is demanding less and better at the same time.

The corporate largesse that helped inflate the retail bubble is also gone. As panicked penny-pinching has spread through the system, it has hit the city’s businesses in ways both obvious (nightclub owners report fewer Wall Streeter outings) and less so (Smash Studios, a high-end rehearsal space in Midtown, had a slim December because bands who play corporate parties had less need to practice). Corporate dollars have spectacular reach in this town—few visitors to the twee-hip Sugar Sweet Sunshine bakery on the Lower East Side, for example, would guess that 70 percent of its business comes from accounts like Goldman Sachs and AIG. That well has dried up considerably. Florists’ margins wilt as fewer firms splurge on weekly bouquets for the conference room. Times Square–area pizza joints are suffering without the twenty-pizza lunch orders from Hearst, Newsweek, or MTV. And it’s no coincidence that, of the eleven New York locations Starbucks is closing, all six Manhattan ones are in corporate-to-the-bone midtown.

The tourist deficit hasn’t helped matters. The white-hot domestic economy and the cheap dollar once drew armies of visitors to the city, both American and foreign. In 2008, tourists spent an estimated $30 billion here. But in 2009, the city expects the number of tourists to drop by 2.5 million, about 5 percent.

Emotionally speaking, for some, shopping has become a miniature psychodrama in which the customer feels equally guilty if he buys something and if he doesn’t. In January, word began making its way around town that a Fifth Avenue boutique had begun offering customers a plain brown-paper shopping bag. Even if apocryphal, the story is telling: consumption feels dirty. On the other hand, abstention feels like you’re killing the city. Who hasn’t bought something at a corner store just because the owner looked so heartbreakingly hopeful when the door chime rang?


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