Small Businesses Feel the Effects of the Slump in Spending
By 2 pm, Pitkin Communications had only serviced three customers from the moment the cellular phone store opened at 10 am. The customers came in to buy minutes for their cell phones; a transaction that only brought in five percent per card and did not, by itself, help meet business expenses. To make sure that they could pay the overhead, the business owners, George Wolinsky and his wife Daisy, have stopped going out to eat and on this day they ate leftover soup.
“I told her to dress warm,” said Wolinsky, who had a $400 dollar electric bill the previous month. “Because I wasn’t going to turn the heat on.”
suffer from a decrease in consumer spending.
The national downturn in the economy and slowdown in consumer spending has had an acute effect on the stores of Pitkin Avenue in Brownsville, Brooklyn, an area distinguished for a poverty rate that hovered around 51.5 percent on 2000. Here, the stores prayed to survive until neighborhood residents — 85,000 according to the last census — received their tax returns and stimulus package rebates to supplement a median household income of $15,042.
“This is one of the places where you will be able to see if the stimulus package really works,” said Gerald Coleman, executive director of the Pitkin Business Improvement District, BID. “The majority of our consumers are at the lower end of the consumption class and they will spend that money on things sold on Pitkin Avenue: sneakers, jeans, household items.”
But until the people in this neighborhood received their rebate checks, the shoppers on Pitkin spend their money on necessities.
“I try to find a lot of bargains, that’s why I shop every day,” said Shamene King, a thirty-something mother of eight children. “I go to all the stores.” King also said she saved on entertainment because the kids had all they needed at the house.
Michelle Blair, a single mother of a two kids, said she watched her money.
“The cost of living has gone up and there is an increase in prices,” she said. “I don’t shop as much as before. Only when necessary.”
On the avenue, the window at Pitkin Wonderful Shoes displayed winter boots and sale stickers. Andrew Song, the second-generation co-owner of the family-run business worried not just about the consumers tightening their wallets, but also the lackluster winter.
“Another factor is that there is no snow,” said Song. “Storeowners bought a lot of boots and now they’re stuck.”
The winter had been particularly difficult for the shops on Pitkin who had seen a decrease of 15 to 30 percent in their sales receipts this winter compared to last, an oddity since the holiday season usually helps businesses turn a profit for the year. One store in particular, Shopper’s World, saw a 50 percent decrease on February 11, 2008 from same-day sales on February 11, 2007. The Jimmy Jazz store near the corner of Amboy Street had 50 percent off signs, the lowest discount they had ever given, said Amer Ali, the store manager. And despite the sale signs, merchants had been unable to move merchandise off the shelves. The gloomy sales had begun to affect the storeowners.
“I just did a survey of the merchants on Pitkin,” said Coleman. “Across the board everyone was very depressed and disappointed with their sales during the holiday season.”
At Shopper’s World, where leftover Valentine chocolates and teddies — the bear and lingerie kind — still filled shelves at the front of the store, the general manager had tried not to lay off any of his 35 employees, so he made a few adjustments.
“I had to cut hours back due to insufficient sales,” said Mark Tanis, who’s been at the 40 thousand square foot store four years. “I tried to keep as many employees as possible.”
If sales do not improve, stores on Pitkin might have to let go of more people. “I had a guy working here but I had to let him go,” said Wolinsky. “It’s just me and her.”
The New York City Independent Budget Office, which analyzes local and national economic reports, said in their January 2008 report that the total employment growth in 2008 will be 500 jobs compared to over 41,000 created in 2007 and over 62,000 in 2006. The United States Department of Labor’s Bureau of Labor Statistics reported that in January non-farm payroll declined 17,000 jobs. The result of the lack of job growth will be declines in personal income.
“We are looking at virtually no job increase in 2008 and a modest growth in 2009,” said Douglas Turetsky, director of communications at the New York City Independent Budget Office, IBO. “That does not bode well for the merchants on Pitkin or throughout the city.”
Pitkin Avenue with its 200 storefronts had been the main economic hub in Brownsville for over 50 years. Some stores had weathered previous bad economies, while some closed. Still, Pitkin Wonderful Shoes, which had been in the same location for 35 years, knew it would get by.
Snow flurries began started to fall as Song stood outside his family’s front and watched the passersby. “Great, now it snows,” he said.