Gotham Gazette

The Place for New York Policy and politics

New York Shopping: Chains and Bargains

As she prepared to ring up a young couple’s purchase of heavily discounted women’s clothing at the Century 21store in lower Manhattan, the sales clerk made the routine request. “Would you like a Century 21 Card?” she asked.

The man declined. “We’re from Denmark,” he explained, adding the card would probably be of little use there.

Many shoppers at the discount store and other stores across Manhattan would have similar reasons for passing up the opportunity for a charge card. In this time of a plummeting dollar, foreign visitors account for a rising portion of sales in New York City. They make Macy’s and Bloomingdale’s among the city’s top tourist destinations, cram the streets of SoHo and in an intrepid move to capitalize on the buying power of their currency – particularly the euro or the pound – brave the fitting rooms lines rooms and general chaos at Century 21.

With the U.S economy slowing and the spread of chain stores dimming the allure of shopping for some New Yorkers, foreigners seem likely to stave off any major reversal in the retail economy at least for now. No wonder the Bloomberg administration has launched a campaign to lure additional touriststo city streets – and shops.

Uneasy Holiday

Shopping has long been a key industry in New York City. Department stores were invented here, and by the 1890s, a tourist guide said, "All America goes to New York for its shopping."

New York City boasts some 53,600 stores or more than 170 per square mile, according to one estimate. During the holiday season, some 300,000 New Yorkers will work in retail, including food stores, said Frank Braconi, chief economist at the city comptroller's office. Last year, retail workers earned a total of $9.6 billion, with stores ringing up a total of $67 billion in sales.

The weeks between Thanksgiving and Christmas are key to the health of retail. Sales of all goods in the city are approximately 30 percent higher in December than in an average month, Braconi said. In fact, he said, New York’s retail industry is somewhat more dependent on the holiday season than stores in the rest of the nation, partly because so many tourists come to New York to shop.

This year stores have had reason to worry. Nationwide figures found sales on so-called Black Friday (the day after Thanksgiving when, if all goes according to plan, merchants’ red ink turns to black) up by 8.3 percent from the same day a year ago. Analysts concluded, however, that, while more people went shopping, the average shopper spent less money than he or she had in 2006. Retail industry analysts reported consumers “trading down” or frequenting less expensive stores than they had last year. “People are cheaping out,” Bill Dreher of Deutsche Bank Securities has said.

In New York State, the Siena Research Institute found consumer confidence falling, particularly in the city. Based on interviews, a third of the state’s consumer plan to spend less this year than they had last holiday season. Only 8 percent said they would spend more. Perhaps reflecting this, New York City businesses have decided to hire less seasonal workers than usual this year, according to the state Department of Labor.

Rebecca Marion, a spokesperson for the Retail Council of New York, though, has disputed the pessimism. ”Our members are happy,” she told the Albany Times Union. “We’re going to have to wait and see.” Eighty percent of merchants in the state reported that their sales for Thanksgiving weekend “were the same as or better than their sales over the same period of time in 2006,” the federation found.

By some accounts, Black Friday in the city went well. “We didn’t see any indication of declining sales,” a spokesperson for J&R Computer World toldthe New York Sun.

More recent national figures have proved more discouraging though. (Breakdowns of sales by city or state were not available.) ShopperTrak, a private research company, foundsales for the week after Thanksgiving, which ended December 1, dropped by 4.4 percent from the same week in 2006.The firm attributed some of this to bad weather in the Northeast and the Midwest and to the long holiday shopping season this year. “Retailers shouldn’t panic as there are plenty of good shopping days left in the 2007 season,” ShopperTrak’s Bill Martin said in a written statement.

Chain Store Invasion

The possible slowdown comes at a time when shopping in New York has undergone a number of changes, including the emergence of more retail outlets outside of Manhattan and the growth of on-line shopping. Perhaps none has been as striking as the growth of chain stores and the accompanying decline of locally owned stores.

Drugstores and Starbucks have led the way. In January, one count found 220 Duane Reade drugstores and 205 Starbucks in the five boroughs, with larges number of Rite-Aids and CVS stores as well. Payless shoes had 60 outlets in Queens and Brooklyn alone, while the Children’s Placeboasted more than 30 New York City stores.

In general, the number of clothing stores in New York City rose by 6.4 percent from 2000 to 2004 and chains accounted for much of that increase. Some applaud the trend for giving New Yorkers the same choices consumers in much of the rest of the country have and for bringing down prices. Shoppers in New York City pay about 10 percent more for clothing than people elsewhere in the U.S., Elizabeth Macbride reported in Crain’s New York, but that is 10 percent less than they paid in 2000. During the same period, prices for furniture and household goods declined as well, according to Macbride.

The chains bring service to parts of the city that may not have had adequate services previously. “There are some areas of the city that are dying to get chain stores in,” said Vanessa Gruen of the Municipal Art Society, noting that many residents of Bedford-Stuyvesant were “delighted” when an Applebee’s Restaurant opened in their community.

But others see the chains as stamping out local businesses that take a greater interest in the community. Residents of the Upper West Side, for example, have seen a decline in the number of so-called Safe Havens– stores where children can go if they are being bothered in the street -- as locally owned businesses shut their doors. Chain stores often refuse to take part in the program.

When an owner-operated stationery store in Park Slope closed several years ago – a victim of Staplesand rising rent—students at the local elementary school found it difficult to find required school supplies. The owner had had an agreement with the principal and teachers to stock materials the students needed. Staples does not do that.

The change also affects the character of the city.

“ What makes New York City so wonderful is the uniqueness of the neighborhoods and the uniqueness of the stores,” said Gruen. In a city where people walk so much, they “want to see interesting stores,” she said – not just another Banana Republic or Gap.”

Jeanne Giordano, who oversaw redevelopment of the retail space in Grand Central Terminal, believes chain stores have a place in the city. “There are many different neighborhoods to choose from in terms of shopping so if you are industrious in scouting out the options, there is something for everyone,“ she said in an e-mail. “Chains show up in certain areas and not others and chains are not all that bad for basic cheaper stuff. Precious boutiques have higher priced items… If you shop the whole city you get the mix.”

Ethnic Enclaves and Other Choices

Some alternatives remain in New York, particularly outside Manhattan. Many of these are ethnic retail strips catering to immigrant shoppers from the city and the surrounding areas. A recent report by the Center for an Urban Futurefound a number of “once modest retail areas [that] have evolved from primarily serving local customers into regional shopping districts that routinely attract large numbers of second generation shoppers from the suburbs who come to buy saris, spices, plantains, herbal medicines and an assortment of other ethnic products.”

These areas include Jackson Heights, which caters to South Asians; Flushing with products and services for Korean and Chinese shoppers; and Richmond Hill, which has seen a sharp growth in businesses owned by and aimed at Guyanese, Sikhs and Trinidadians from throughout the metropolitan area.

The sharp rise in the number of businesses — businesses in Flushing, for instance, grew by almost 55 percent between 1994 and 2004 — has fueled a corresponding jump in jobs in these communities, according to the report. Employment in Flushing rose by 12 percent during the decade, while Washington Heights, with many businesses serving Dominicans, saw employment increase by about 34 percent.

While suburbanites have little reason to come to New York to go to The Gap, the ethnic businesses serve as a lure. “You do have a large percentage of people coming from Connecticut, New Jersey Massachusetts,” Mabel Law, executive director of the Flushing Business Improvement District, told the center. ”This is where they can get certain foods and products that aren’t available where they live.”

A number of private efforts have tried to foster locally owned business. One of the most prominent is Chelsea Market on 9th Avenue. When Irving Cohen decided to develop the former Nabisco factory in the 1990s he insisted that all tenants be family owned businesses. “It was a bit crazy, but it was a social experiment,” Cohen has said. “It worked out very, very well.”

At a forum last year, Cohen said he hoped to help develop projects to encourage family-owned businesses at La Marqueta in East Harlem and Hunts Point in the Bronx.

Project Enterprise, which offers no-credit, no-collateral loans to black and Hispanic entrepreneurs in New York City also hopes to foster locally owned businesses. “There has been a lot of gentrification so it’s very hard for small businesses to stay open,” said the organization’s marketing director, Christina McSwain. To promote the businesses, the project recently sponsored a bazaar with 35 vendors, offering products such as African sculpture, food and soaps.

The City’s Role

While individual organizations and businesses work to preserve and promote local entrepreneurs, the city government has been largely absent. The last government effort to address the issue came in the late 1980s when a push for commercial rent control failed. More recently, some argue that the massive development projects promoted by the Bloomberg administration, and particularly by Deputy Mayor Daniel Doctoroff. who said last week that he would be stepping down, have promoted chains at the expense of local stores.

Gruen has said she fears that the huge Atlantic Yards developmentin Brooklyn would bring more chain stores to the area, which already is home to such businesses as Target, Marshall’s and DSW shoes, and drive up rents in the neighborhood, pushing out the remaining locally owned businesses.

Crafting policies to address the retail mix in New York presents a challenge Gruen said, because the needs vary so much from community to community. “The city should have a menu of different options,” she said.

Vicky Weiner of the Pratt Center for Community Development has outlinedsome possible ideas, including banning chain stores in some neighborhoods or putting a cap on them, requiring that there be a review of what impact new business would have on a community, offering inducements for government to buy from local businesses and providing tax deductions for small businesses. A handful of smaller cities have implemented some of these strategies, and San Francisco has restricted chains in part of the city.

Zoning can provide a tool as well, according to Victor Dadras, an architect who works with communities to preserve downtowns and main streets. For example, he said, some cities do not allow banks on corners in certain areas.

Dadras sees such effort as vital to New York City. “Once every neighborhood has the same stores -- Starbucks, Rite Aid, Papa John’s Pizza, and all the others –- there is no reason to go from neighborhood to neighborhood”— or from city to city, Dadras said at a forum last year. ”New York City is, along with Boston and Philadelphia, one of the older cities in North America, and we need to be at the forefront of preserving character, which is ultimately what makes people who visit New York come back to shop.”

Shop Til They Drop

Chain stores or not, though, people still come to New York to shop. These days many are from other countries.

Last year, well before the dollar’s latest plunge, foreign tourism rose about 7 percent with more than 7 million visitors from other countries, according to NYC & Company, the city’s tourism agency.. These visitors spent almost $5 billion shopping. After dining out (see related story) shopping represents the most popular activity for visitors to New York.

With the Euro worth almost $1.50– a far cry from the days when the currencies were essentially equivalent -- and the pound about $2 – every day in the U.S. is a sale day for European shoppers. And if you’re coming to the U.S. to shop, New York makes for a more appealing destination for many than, say, a mall in the suburbs.

“I would be hard-pressed to find another metropolitan area that is going to see as big an effect from the falling dollar,” Marisa DeNatale of Moody’s has said.

Some companies, such as Ireland’s Tour America, have offered shopping trip to New York. “The number one attraction for Irish people coming to the states – and we’ve done our research – is not DisneyWorld in Orlando,” the company’s Mary McKenna told the Irish Times. “It’s shopping.”

Century 21 has reported that about a third of the business at its New York City location comes from foreign tourists. Tiffany and Co. said sales at its Fifth Avenue jewelry store rose 30 percent in the second quarter of 2007, fueled largely by European shoppers. “They’re buying engagement rings, diamond jewelry, silver jewelry and everything in between,” the store’s Mark Aaron has said. At Macy’s another popular destination, handbags are the number one seller among foreign visitors. McKenna reports that her clients come to New York to the buy name brands that cost them far less here as well as cosmetics, accessories and electronics.

European papers offer tips for where to shop in New York – Century 21 and the Woodbury Common Mall, for example—along with breathless accounts on shopping forays to New York. Writing under the headline “Saks and the City” in London’s Daily Mirror, Emily Stott describeda three-day binge in the city. After snatching up a DKNY watch for half the price it would have cost “at home,” bagloads of cosmetics and shampoo and the “most impractical ever dress” from Diesel,” Shott explained, “Al this shopping leaves time for only a few hours sight-seeing.”

The women did take a ride on the Staten Island, which, since it’s free, will remain a bargain whatever, the currency exchange rates. 











































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