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Freakoutonomics

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From left: Sunday evening at Kurve, a new restaurant on Second Avenue; Customers at Buffalo Exchange, in the East Village; Guitars on sale at Matt Umanov, on Bleecker Street.  

All these factors add up to a do-or-die moment for New York’s merchants. “Retail is historically about birth and death,” says psychologist Paco Underhill, the author of Why We Buy. “If you have a sign ‘open since 1927,’ it’s because everybody around you has closed. And right now there is blood in the water.”

In response, New York retailers are being forced to radically alter the ways they do business. Prices, of course, are plunging. Del Posto has cut the cost of its tasting menu from $175 to $125. Coach has reduced the price of some of its major handbag lines by 15 percent. “Under $100” seems to be the new magic number for shoes and apparel. J.Crew’s ballet flats, previously sold at a minimum price of $130, now start at $98. Repricing can be even more extreme at smaller stores desperate for cash flow.

Sales, meanwhile, are ubiquitous. Deals that haven’t been seen in this town in decades are now commonplace. Last week alone, Eleanor Duffy sold coats and jackets at a 60 percent discount, ABC Carpet & Home was burning off its antique furniture at up to 40 percent off, and West Village pet shop Groom-o-Rama advertised a sad-sounding “Dog Sale 20% Off.” “It’s become literally necessary to have this kind of 50 percent off, 70 percent off sale,” says a manager of a women’s boutique in Forest Hills. “As you go down the street, there are stores that have covered their entire window with a sale banner. There’s nothing in the window, but what’s getting people inside is the sale.”

To adapt to these new price points, retailers have had to alter what they sell. Restaurants are going for cheaper cuts of meat (less rib eye, more hanger steak), and burgers are popping up at all manner of restaurant all over town (not the discretionary $50 foie gras–stuffed haute burgers of yesteryear; the staple burgers). Down on Forsyth, the outer edge of the Lower East Side’s fading shmatte district, Harris Levy has been selling luxury bedding in the range of $200 to $1,500 for a set of sheets; a recession-era best seller is a recently added under-$100 option (again), sourced from China. “These new items may not be crème de la crème, but they’re very nice,” says the fourth-generation owner, Bob Levy, without much conviction. Belle Fleur, instead of offering an “overabundant” bouquet of expensive peonies, now floats three flowers and some candles in a “really really cool vessel.”

Preciousness is out as a guiding retail principle. More and more businesses are abandoning their original lofty purposes—only deadstock wool, only vinyl records—to stay afloat. In the ultimate hipster sacrifice, an indie sneaker store in Soho has put up the sign reading we have uggs. A compromise, yes, but an understandable one: Sales of the well-past-their-moment boots are up 57 percent for the past year.

Sellers with no option to switch merchandise are becoming more inventive—read thrifty—about the ways to deliver it to the buyer. Experts predict a rise in so-called pop-ups, stores leased for a short period of time for a quick hit of cash. (There’s certainly a growing wealth of empty storefronts to choose from.) Target has put a pop-up in Times Square, with good results. Local handbag designer Jennifer Lagdameo is selling her Ananas collection in a six-week pop-up in Nolita. Delis have started home delivery.

Our survey findings were emphatic about a few more things: Foot traffic is dead. Impulse buying is disappearing fast. Nobody is shopping anymore on weekdays—Mondays and Tuesdays in particular—but weekends are still busy. Where people used to buy three items, they are now buying one. Where they used to freely spend $200, they are now spending $99. (Says Jonathan Rubinstein, owner of Joe the Art of Coffee, of his own consuming habits, “When I go out to dinner, I look at an entrée that’s $26 versus $18. I definitely stop for a second and think, ‘Recession.’ ”) While some retailers are expanding hours to catch that elusive 10 p.m. shoe shopper, others are cutting their losses on the slowest days of the week. Restaurants are starting to close earlier, boutiques later: It costs a lot more, after all, to keep the kitchen open than to pay a lone clerk for a few extra hours.

Service, an all-but-forgotten notion in the boom years, is now an essential means of survival. The name of the game is regulars—creating new ones and holding on to old ones. Restaurateurs are plying customers with amuse-bouches, managers are visiting and revisiting tables. Stores are offering free gift wrapping and delivery. Shopkeepers who once treated customers with haughty indifference now practically sprint to the door to greet them. Henri Bendel recently gave away brownies.


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