Is NYC's 'Retail Apocalypse' Turning Around?

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Brian Lehrer: Brian Lehrer, on WNYC. We'll turn to the economy now, national and local, and, to some degree, political. Nationally, the latest twist in the post-pandemic recovery came on Friday, with a lower-than-expected number of jobs created last month, but that made the stock market go up. Locally, Greg David, from the news organization The City, has an article called New-to-New York Stores Are Helping Turn Around the Retail Apocalypse.

Greg David is also director of the business and economics reporting program at the Craig Newmark Graduate School of Journalism at CUNY. Hi, Greg. Always good to have you. Welcome back to WNYC.

Greg David: Always good to be on.

Brian Lehrer: I don't know if you wrote or approved the headline, but what's the retail apocalypse?

Greg David: Well, that's what happened after the pandemic, when stores shuttered, had a hard time getting back up, and indeed, in most ways, we have not recovered the retail jobs lost in the pandemic. Why? Well, part of it's the pandemic. Part of it's the lack of return to office, and part of it simply is, of course, long-term trends as more and more people shop online, but the good news in my story is that a whole series of first-to-New York retail shops are coming here because they think they have to be in New York.

I wrote about Orior, a furniture maker from Northern Ireland. Lahav, a bridal fashion brand from Israel. TOTEME, a swedish apparel company. Thuma, a San Francisco mattress company. I talked to a bunch of spas in the Flatiron area, who are opening here for the first time. That's a good sign. People feel the need to come to New York City.

Brian Lehrer: Your article on newcomer stores begins in SoHo, one of the premier shopping areas in the city, as you describe it, it's also one of the most high-end. You wrote that its retail occupancy rate is now 84% higher than before the pandemic. Who left, and who are these invaders, as you call them? You just mentioned some particular stores that are coming in, but are they different in kind?

Greg David: Well, SoHo has always been a destination for retailers. We always get international brands, but there was a big pause during the pandemic. They're not different in kind. The difference here, and I think it's very important to note, is that these are relatively small stores. It's not like we're getting a wave of big box retailers, not like we're getting a wave of chain stores. They're taking smaller spaces, and they're only taking them in some neighborhoods. SoHo is the number one destination for all these people.

It has a small office component. It has a strong residential component, and of course, it's overrun with shoppers and tourists from all over the region, but they are going to places like Nolita, NoMad, and Flatiron as well, but where they're not going is to the main business districts, the heart of midtown, or downtown. That's because they want to be in some place hip, and these days, those places are not hip.

Brian Lehrer: Listeners, we don't want this all to be about the high-end districts that are prestige and have the most money in them to begin with. We also want this to be about retail all around the five boroughs, really all around the region, but Greg David reports on New York City in particular. Listeners, wherever you are, how is retail doing in your district four years after the start of the pandemic in your neighborhood, let's say?

Anybody who owns a retail store, maybe one that went out of business, how do you see the storefront that you used to occupy right now? How about anybody who owns a new business, or works at one? What do you see? Just people who live somewhere, what do you see as you walk down the shopping strip? Any of the shopping strips in your neighborhood, whatever your neighborhood is, give us some anecdotal evidence on whether the retail apocalypse happened, whether it's ending, and to what degree in your neighborhood.

212-433-WNYC. 212-433-9692. Greg, I wonder, is this exacerbating the tale of two cities, that we always have to a large degree in New York? Is retail coming back in middle and lower-income areas too?

Greg David: The answer is it's coming back somewhat, but clearly, we are suffering from a decline in chain stores, and we are suffering from a decline in some big box retailers, but this is not about the pandemic. This is about the move to online shopping, and how will retail, in the end, shake out. Macy's, probably our one remaining major home-based retailer, is shrinking its store footprint again.

The Center for Urban Future's chain report last December saw a decline in chain stores, and The New York posted a story I'm not very fond of, but on 6th Avenue, from Union Square going north, there are a lot of empty stores, as companies like CVS and, to some extent, banks start cutting back.

Brian Lehrer: What about the chain stores in particular? You report on that, to some degree, in your article.

Greg David: Well, chain stores are cutting their presence, and there are two reasons, one of which is clear. There's less happening in the stores because people are shopping so much online, but the other one is there's a lot of talk about the retail theft surge, and how much that is affecting retail. I have no doubt it is a factor. How big a factor remains very hard to determine, but I did a story about two months ago, in which I talked to small retailers who are very hard-pressed because of retail theft.

When Target closed its store in East Harlem, it said that retail theft was a major issue. Of course, it did open one not too far away.

Brian Lehrer: Right, there's a lot of skepticism about that, right? This pertains to Rite Aid also. A lot of Rite Aids have gone out. That whole company is having trouble, and I think some people from that company were quoted as saying retail theft was a big contributor, but a lot of other people are saying, "No, you just didn't manage it so well." I don't know the truth. Do you, as a business reporter?

Can you suss out how much of the retail theft claim is an excuse for owners of businesses, that they're just managing badly, or that are failing for economic reasons?

Greg David: I would say that it's not the major reason, but it is a factor, and it's clearly a factor that burdens smaller businesses because I've talked to them. Now, of course, we passed retail theft legislation in the budget, that increases penalties, provides money for the state police to target bigger operations, give some money to businesses to improve their security. We have done something, we'll have to see. Is it an issue? Yes. Is it the overriding issue? No.

Brian Lehrer: Judy, in Brooklyn, you're on WNYC. Hi, Judy.

Judi: Hi, Brian. How are you doing?

Brian Lehrer: Doing okay. I see you own a retail shop. Tell us about it.

Judi: I have a denim-- I specialize in women's denim. I'm in Nolita, and I've seen an increase in foot traffic, which has been great, and sales have definitely gone up in the store, but the cost of doing business has risen so much. There are so many fees that are involved in running a business, and so many things have gone because of having to compete online as well. You can't just have a brick-and-mortar store. It's impossible.

Brian Lehrer: Do you think the pandemic permanently changed people's behavior, even if they're not afraid to go in your store anymore, or go shopping in general, that people who may have shopped at your store have just gotten so used to shopping online more, that it's affecting you?

Judi: No, I have an older customer. I find that the difference now is that people in general are used to-- I have a shop that doesn't have-- I don't have a lot of exposure. I'm really small, and people are so used to knowing exactly what they're going to be getting before they walk in a store. They've been sold to online so much that walking into my store is like an anomaly for them.

They have no idea what they're walking into. It's like they have to have different expectations, whereas pre-pandemic, that was the norm. You went walking around a city, and you discovered what you could discover. You didn't know what was already going to be given to you.

Brian Lehrer: Right. Judy, thank you.

Judi: I see that people coming in are wondering what's going on.

Brian Lehrer: Good luck with your store. Did you name it at the beginning of your call? You can if you want.

Judi: It's Judi Rosen New York. I'm on Elizabeth Street, across from The Garden. Save the Garden.

Brian Lehrer: Thank you, Judi. Well, Greg, there's our caller of the week. I realize it's only the first hour of the show on Monday, but at least so far. People have to be retrained to shop in stores.

Greg David: Well, I don't know that that's ever going to happen. All the listeners can ask themselves how much are they buying online, and how much are they buying in stores. There's a role for brick and mortar. We clearly know that. The brick-and-mortar stores have to be online as well, even when they're small, and that's an enormous commitment of investment and energy. There will be all kinds of brick-and-mortar stores that survive, but it's clearly much harder than it was five years ago.

Brian Lehrer: Rob, in Ossining, you're on WNYC. Hi, Rob.

Rob: Yes. Hello, Brian. I'm calling from Hudson Valley Books for Humanity in downtown Ossining in the old Olive Opera House. We are an independent bookstore. We opened, believe it or not, just after the pandemic. In the two and a half years, we have become a community gathering place bookstore, an independent bookstore. The independent bookstores were like the Buffalo. They were almost extinct, but they're coming back now.

In fact, so much so that in the Hudson Valley alone, we have a Hudson Valley book trail, which links all the Hudson Valley independent bookstores together, from just about the New York City border, all the way up to Albany.

Brian Lehrer: That's neat. Do you think there's something about books or bookstores that has people coming back to retail more than other things?

Rob: I don't know. We have a lot of people that come in that went to their tablets, to their digital, and they just miss the feel of books, and they miss the feel of discussing books. We have author events, we have concerts, we have shows. We've made it a little bit more than a bookstore, and so much so that I think some of the bigger retailers are beginning to take notice, such as Barnes & Noble, which is now opening a new store which will have a cafe and whatever, not in our town, but in one of the towns closest to us.

I think the bookstore is coming-- People realize the value of books. Also, we don't only sell new books, which is a small portion of our inventory, but we sell a lot of what we call pre-loved books, or used books. The idea is we didn't want the books that have life in them, we didn't want them to end up in a landfill. We have a bookstore with a mission, and also to bring people together from the community. We have a very diverse community.

Brian Lehrer: Pre-loved books. I love that. Of course, somebody might have hated the book, you don't know, but I still get the category, and I like it. You want to say the name of your shop again?

Rob: Yes. It's Hudson Valley Books for Humanity. We're in downtown Ossining, in the historic Olive Opera House, which was built in 1865.

Brian Lehrer: Thank you, Rob. As we gauge how much retail is coming back, and where, after the pandemic, with Greg David from the news organization The City, and the CUNY Graduate School of Journalism, where he directs the business and economics reporting program. Greg, go ahead.

Greg David: Well, Brian, you're exactly right. Something's different about books. We thought all the bookstores were going out of business. The independents are thriving, and Barnes & Noble's doing really well too. They've got a new strategy. They're expanding. I must say, on a personal note, I don't understand it, because I love reading books, magazines, and all other content on my iPad, but I am not in the majority. That's very clear.

Brian Lehrer: Yes. I've gone back and forth myself, for what it's worth, where I was so happy when reading on an iPad, I used an iPad, I never had a Kindle, came in, because not only was it convenient, and I didn't have to carry books around, I was carrying the iPad, anyway. It was easy, like anything digital, to know exactly where you were and to mark and highlight things, and go right back to them, which is helpful when I'm prepping a book interview for the show, but I've also now come back the other way.

I used to sometimes do my own bedtime reading also on the iPad, and it was so convenient, It was there, I just had to flip, and I'm sick of it. I'm sick of the light, and I've gone back to reading physical books, at least for my own personal reading, as much as I can, so I don't know. There's a pendulum, and I guess everybody's different.

Greg David: I think so.

Brian Lehrer: Movie theaters, Greg. Movie theaters. There's the news in the last few weeks that Multiplexes are closing in Queens and in the Bronx, and in the case of the Bronx, there's only one Multiplex left. Do you have anything on movie theater economics right now, in New York City?

Greg David: What we know is that we don't know where the movie business is going to shake out. We're still in the fallout from the pandemic, and the fact we all streamed everything, the fact we're subscribing to many streaming services, and that some movies are in the theaters for only a week, especially if they were produced by Netflix, Amazon, or places like that. I live in Westchester, and there used to be three Multiplexes near me, all of which are gone.

The only place I can go see a movie, frankly, is the Jacob Burns Center in Pleasantville. The world has changed how we get our content, and we don't know what the end result of this is going to be.

Brian Lehrer: Listener writes, "I love in-person shopping, but it's a sad and frustrating experience these days. I was in Paragon Sporting Goods last week, and what used to be an almost always bustling store,-" no, that starts around Union Square, "-was a ghost town," writes this listener. How about Alec, in Brooklyn? You're on WNYC. Hi, Alec.

Alec: Hey, Brian. I wonder if we should question the premise of being sad about the decline of the big box store. I feel like I was sad about a scourge of big box stores. I wonder if there's [unintelligible 00:17:15] some--

Brian Lehrer: [crosstalk] I'm not sure that's our premise, but go ahead.

Alec: I wonder if this creates an opportunity for a return of small retail.

Brian Lehrer: Great question. Greg?

Greg David: I don't think so. Small retail is really hard, but let's examine what the premise is here. A big box store employs a lot of people and pays higher wages than most small retailers, because they can. If you want to look at it in terms of the employment picture in the city, the demise of the retreat, I should use, the retreat of big box retailing is really bad for employment, and of course, it's really bad for employment of people of color, who particularly get their first or second jobs in those places.

That's why I would be-- Sad is the wrong word, but I am worried about the consequences of the retail retreat of those stores. I would just note that there was a major report from the Center of the Urban Future last year, which raised the same concerns.

Brian Lehrer: David, in Manhattan, you're on WNYC. Hi, David.

David: Hi there. How are you?

Brian Lehrer: Okay. Thanks.

David: Hi. Can you hear me?

Brian Lehrer: Yes. Go ahead, David. We got you. Can you hear me?

David: I'm sorry. Yes. I can hear you now. I'm sorry. Yes. I own a wine and spirits store on 10th Avenue, between 18th and 19th, called Community Wine and Spirits, and it's been pretty fascinating to watch our business through the pandemic, where online wine and spirits really boomed. It was very successful for wine and spirits stores. We chose to open a brick-and-mortar store because we believed that people would come back to brick-and-mortar shopping if they had a way to interact with the product.

Not simply shop for the product, but have experiences that relate to the customer in ways for the customer to shop differently. Then, that would be a way to drive foot traffic into stores.

Brian Lehrer: Greg, anything on that?

Greg David: I enjoy going to wine stores because there's a chance to walk around, and there's a chance to ask people what to buy. I have one favorite that I go to all the time. Yes, I think that there are stores that are like that and will continue, and the laws make it very difficult for us to have chain-liquor stores anyway. That's one area that can succeed and do that. I would note that wine and liquor stores did wonderful business during the pandemic, because many people thought they needed to drink more.

Brian Lehrer: Right. They were bored. [laughs] Needed to do something. [crosstalk]

Greg David: [laughs] Or worried, Brian, worried or tense.

Brian Lehrer: Yes. That's right. Absolutely. Tangentially to that, we're getting any number of texts that say things like, "Oh, all the stores in my neighborhood are weed stores now, or vape shops, or that kind of thing." Somebody else writes, "Can you say something about the insane rents for little stores and cafes, et cetera?"

Greg David: The answer on the weed stores, it's a big problem, as you know, we passed legislation that will allow the city to close them. The mayor promises many of them will close within the next 30 days. I've been amazed that landlords were willing to rent to those stores. There's one right across the street from the J School, although that one doesn't have any business, so I don't understand. The leaders of the bids around the city are just apoplectic about the impact the weed stores have had.

Rents are high in New York. They came down during the pandemic. They're still down in a bunch of places. They're up in the areas we're talking about, SoHo, et cetera. Look, landlords sign long-term leases, so it makes sense for them to leave a store vacant for even up to a year if they're going to sign a 10-year lease. We have to see the economics sort out, but at some point, the market will set itself for what those stores can pay and make a profit.

Brian Lehrer: About all the illegal weed stores, if they're popping up so much, it means there's a market for them. I wonder what that says to you about retail in general. You're saying the other kinds of stores don't want them there, but then again, if it drives traffic to a retail strip, maybe it's good for the neighboring stores. What do you think?

Greg David: What I think is that the law that was passed by the legislature and the ridiculously incompetent rollout at the state level is the problem.

Brian Lehrer: It's not good for the legal dispensaries, obviously, but what about for the other stores on the block?

Greg David: I don't know those stores. There doesn't seem to be a lot of support for them. The bids reflect the view of the store owners, and they don't want them there. Look, we want a legal, thriving cannabis business, and we want it to be through stores that are regulated. The regulations are so tough that the illegal weed stores can greatly underprice their product compared to the other ones.

We want many of those weed stores to be owned by people who were disadvantaged by the unfair enforcement of marijuana laws in the past. I think we should have a lot of legal weed stores, and to do that, we need to get the illegal ones out. Hochul has to deliver on her promise to fix the problem. She said that it was a disaster, the rollout. That's right, but she's responsible for the people who did the disaster.

Brian Lehrer: By the way, on the big-box stores going out, listener writes, "Big-box stores have been the victims of merger after merger, where private equity and similar outfits come in, strip the businesses of assets, and leave them burdened with debt." Agree?

Greg David: I'm no fan of private equity, but that's not a big story in big-box stores.

Brian Lehrer: One more call. Paula, in Westchester, who works for another sector adjacent to retail. Is that how you'd put it, Paula?

Paula: Yes, my husband was a vendor for many years, for big-box stores. One of the biggest concerns we have about those stores is that these huge consultancies, these hedge funds, invest in the stores and then restructure them, forcing them to take on so much debt that they can't survive. Look at Bed Bath & Beyond, Toys R Us, I don't know who else, but it's one of the issues contributing to the decimation of the [unintelligible 00:24:27].

Brian Lehrer: Backing up what that last text message said, Greg, give us a last thought, and then we're out of time. Talk to Paula.

Greg David: There were private equity buyouts of stores like Toys R Us that were disasters, but there haven't been any recently. The stores that are retreating are publicly held companies, that are doing so because that's how they have to build profits.

Brian Lehrer: Greg David, who reports on business and economics for The City, and teaches it at the Craig Newmark Graduate School of Journalism at CUNY. His article on The City news site is called New-to-New York Stores are Helping to Turn Around the Retail Apocalypse. Greg, thanks.

Greg David: Thank you.

 

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