Squeezed by rising rents, small businesses get creative


Last March, Emily Schildt opened Pop-up grocery store on a corner of Bleecker Street in the West Village, selling cleverly packaged condiments, drinks and other products made by small, emerging brands on a pay-to-play business model.

Customers can purchase artisanal hot sauces or zucchini chips from brands like mischievous people and Van Van who pay a fee to be on the shelves. Typically between 150 and 200 brands are displayed at a time and some are replaced quarterly.

“If we were to rely solely on product sales, we would need to sell in much higher volume,” Schildt said. “This is simply impossible when it comes to a store made up of completely unknown products.”

Commercial space rentals in New York continued to increase last year, according to real estate services firm CBRE, making it difficult for independent businesses to survive. A 27-square-foot space in West Village, an affluent Manhattan neighborhood, recently went up for sale for $5,000 a month. But some ambitious entrepreneurs are experimenting with business models, such as charging shelf fees or selling wholesale to make ends meet.

“You either have to be creative or you have to get out of New York,” Schildt said.

Retail is being reconfigured to address the values ​​of the new customer, said Thomaï Serdari, a marketing professor at New York University’s Stern School of Business. “Innovation comes from those who, out of necessity, have updated their business models,” he said.

But independent retailers face challenges, including high operating costs and finding a model that works.

“Technology evolves, our mobile phones evolve and physical stores evolve,” said Ani Sanyal, who along with his brother Ayan founded Kolkata Chai Co.., which sells products online and in two retail stores in midtown Manhattan.

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

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

Using an omnichannel approach (e-commerce, wholesale and in-store), the brothers believe they can expose a wide range of people to their chai and create customers for life. “Since 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 truly experience our culture,” Ani Sanyal said.

Sweet Brooklyn It sells gelato and ice cream out of a shop in Brooklyn’s Cobble Hill neighborhood, but it’s the company’s wholesale business, which sells to high-end restaurants, some with two Michelin stars, that makes a profit. “You need to find different revenue channels,” says company owner Pierre Alexandre.

Rachel Krupa’s omnichannel approach to her business, the goods market, includes the curation and distribution of refreshments in hotels, cafeterias and corporate pantries. At its minimalist store in SoHo, one of its three locations, it sells packaged snacks from 200 brands, mostly from emerging producers, such as chili-garlic crisps made by Mama Teav’sa company in Oakland, California.

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

Ms Krupa said she couldn’t give visibility to brands like Mama Teav if they had owners who were simply trying to make money. Its first owner, Bret Trenkmann, saw the value in her mission and gave it a fair lease in SoHo, as did another owner, Tishman Speyer, at its second location in Rockefeller Center.

Consumers, especially tourists, want authentic experiences they can’t have at home, said Krupa, who also runs a public relations firm, Krupa Consulting, that works with packaged foods and wellness brands. “You’re not going to say, ‘Oh my God, I went ice skating at the Rock Center and ate at Chili’s,’” he said.

Owners play an important role in the growth and survival of independently owned 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 option compared to an independent business owner, but leasing from them is a short-sighted option, Mitchell said.

And giving small business owners a break can be good for owners. “The quality of the businesses at street level affects the rents they can get for the upper floors, whether they are offices or housing,” he said.

The United States is undergoing a cultural shift in retail shopping, said Syama Bunten, founder of Scaling Retail, a consulting firm in San Francisco. 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 sense of connection within physical stores.

Another way for independent owners to build businesses is through connection and community, often through in-store events, which creates vibrant street life, foot traffic, and a gathering of like-minded people. A bus stop ad may gain brand visibility, Bunten said, but creating events and spaces for customers creates a much stronger emotional connection.

“It may not be that 100 percent of visitors become customers,” he said, “but there is a 100 percent chance that your brand will have a much longer-lasting effect on someone’s mind than a traditional advertising piece. “.

Despite finding levels of success, some small retailers are wondering if it’s worth the effort. Many of them have invested their life savings into their businesses and raised additional funds through institutional and angel investors, not to mention friends and family. They operate sustainable business models and post constantly on social media. However, the cost of renting and creating a space remains a barrier.

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

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

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