Squeezed by soaring rents, small stores are getting creative

Last March, Emily Schildt inaugurated Pop-up grocery store on the corner of Bleecker Street in the West Village, selling artfully packaged condiments, drinks and other products made by small, emerging brands in a fee-based business model.

Customers can purchase artisanal hot sauces or zucchini chips from brands like People of Peepal And Van Van who pay a fee to be on the shelves. Typically, 150 to 200 brands are on display at a time, and some are replaced every quarter.

“If we were to rely solely on product sales, we would need to sell at a much higher volume,” Ms. Schildt said. “It’s simply impossible when you’re talking about a store made up of completely unknown products.”

Commercial space rents in New York continued to increase last year, according to real estate services firm CBRE, making it harder for independent businesses to survive. A 27-square-foot space in the West Village, an affluent Manhattan neighborhood, was recently listed for sale for $5,000 a month. But some ambitious entrepreneurs are experimenting with business models, like charging sales fees or selling in bulk to make ends meet.

“You either have to get creative or you have to leave New York,” Ms. Schildt said.

Retail is being reconfigured to meet the values ​​of the new customer, said Thomaï Serdari, who teaches marketing at the NYU Stern School of Business. “Innovation comes from those who, out of necessity, have updated their business models,” she said.

But independent retailers face challenges, including high operating costs and the need to find a model that works.

“Technology is evolving, our mobile phones are evolving and physical stores are evolving,” said Ani Sanyal, who founded with her brother Ayan Calcutta Chai Co., which sells products online as well as in two retail locations in downtown Manhattan.

Their business sells hot chai, Indian street food like samosas, seasonal chai, as well as bags of their chai blends and merchandise. Foot traffic is steady at both locations, Ani Sanyal said, but the company’s e-commerce business accounts for 75% to 80% of its revenue.

Kolkata Chai Co. also sells wholesale chai concentrate to Equinox, Juice Press and Boba Guys. The company has collaborated with brands like Transcendence Coffeehas teamed up with celebrities like Hasan Minhaj, all of whom have been posted on his social media feeds.

By using an omnichannel approach – e-commerce, wholesale and in-store – the brothers believe they can expose a wide range of people to their winery and create lifelong customers. “As chai is a product that has been bastardized and misrepresented in this country for so long, it was really important for us to be able to have the true experience of our culture,” Ani Sanyal said.

Dolce Brooklyn sells ice cream and gelato from a store in Brooklyn’s Cobble Hill neighborhood, but it’s the company’s wholesale business, selling to high-end restaurants, some with two Michelin stars, that makes a profit. “You have to find different revenue channels,” said company owner Pierre Alexandre.

Rachel Krupa’s omnichannel approach to her business, the goods market, includes the preservation and distribution of snacks in hotels, cafes and corporate pantries. At her minimalist SoHo store, one of three locations, she sells packaged snacks from 200 brands, mostly emerging producers, like chili garlic chips made by Mom Teava company from Oakland, California.

The Goods Mart was one of Mama Teav’s first accounts when it debuted two years ago, and today Mama Teav products are stocked in 420 stores across the United States. “As a small manufacturer and new brand, we’re not going to jump into Whole Foods right off the bat,” said Christina Teav-Liu, founder of Mama Teav’s.

Ms Krupa said she wouldn’t be able to give visibility to brands like Mama Teav’s if its owners were just trying to make money. Its first owner, Bret Trenkmann, saw the value in its mission and gave it a fair rent in SoHo, as did another owner, Tishman Speyer, on its second location in Rockefeller Center.

Consumers, especially tourists, want authentic experiences they can’t get at home, said Ms. Krupa, who also runs a public relations firm, Krupa Consulting, which works with packaged food and convenience brands. -be. “You’re not going to say, ‘Oh, my God, I went ice skating at the Rock Center — and I ate at Chili’s,'” she said.

Owners play a major role in the growth and survival of independent businesses, said Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, a nonprofit that advocates for independent businesses. National chains might be a safer financial choice than an independent contractor, but renting to them is short-sighted, Ms. Mitchell said.

And giving small business owners a break can be beneficial for owners. “The quality of street-level businesses affects the rents they can get for the upper floors, whether it’s office or residential,” she said.

The United States is currently experiencing a cultural shift when it comes to retail shopping, said Syama Bunten, founder of Scaling Retail, a San Francisco-based consulting firm. The direct-to-consumer model, pioneered by companies like Dollar Shave Club and Stitch Fix, was an innovative approach years ago, but it’s now saturated.

The new phase of shopping falls into two main categories: cheap and easy on Amazon and with a feeling of connection within physical stores.

Another way for independent owners to grow their business is to connect and build community, often through in-store events, which creates vibrant street life, foot traffic and a gathering of people sharing the same ideas. A bus shelter ad can give brand exposure, Bunten said, but creating events and spaces for customers creates a much stronger emotional connection.

“It may not be possible for 100% of visitors to convert into customers,” she said, “but you have a 100% chance that your brand will have a much more lasting effect in the minds of someone other than a traditional advertising element.”

Despite some levels of success, some small retailers question whether it’s worth it. Many of them invested their entire savings into their business and raised additional funds from institutional and angel investors, not to mention friends and family. They operate sustainable business models and constantly post on social media. However, the cost of renting and creating a space remains a barrier.

“Something has to change,” said Ms. Schildt of Pop Up Grocer, who spent 18 months searching for the right storefront.

If city officials and landlords don’t realize the prohibitive rent costs for independent retailers, “the city will lose its color,” said Ani Sanyal of Kolkata Chai Co. “It will lose the things that make you want to for people to come. At New York.”