The Problem With Chain Stores

A new survey found that chain retailers haven’t fully bounced back in the city after the COVID-19 pandemic. City Council members say local businesses could fill the gap.

| 05 Jan 2023 | 02:24

On the Upper West Side, vacant storefronts mark the spots where chain stores died. Council Member Gale Brewer can easily rattle off a list of recent examples: a 7-Eleven closed its outpost at West 89th Street and Columbus Avenue, there’s been an empty space at West 68th Street and Broadway and another on West 86th Street and Columbus Avenue, soon to be filled by a pet store, according to the Council member.

“I’m one of these people who doesn’t love the chains, so I’m not upset about it,” Brewer said. “I used to really complain about them, but now because there are fewer, I can’t so much.”

The citywide growth of chain retail stores stalled in 2022, with an increase of only .3% compared to 2021’s still-paltry 2.7%, a new survey revealed in December. Years after COVID-19 shut down life as New Yorkers knew it, “most national retailers in the city haven’t come close to reaching their pre-pandemic levels,” according to the Center for an Urban Future’s annual “State of the Chains” report. The rebound failure has proven most severe in Manhattan — where City Council members say local small businesses could seize an opportunity to fill the gap.

A Changing Landscape

The presence of national chains in Manhattan has dropped by 14.4% since 2019, according to the recent report, which tallied 427 fewer such stores now, compared to then. In other boroughs, the percentage decline over the same three-year period has been less drastic, not exceeding the single digits.

Dunkin’ Donuts, now just called Dunkin’, still holds the title as the chain with the greatest number of stores in the city — as it has for the past 15 years that the Center for an Urban Future has released reports. But this year’s survey showed a wide gap between Dunkin’ and the number two chain: instead of Subway (which in the first 2008 “State of the Chains” release lagged behind Dunkin’ by only six stores), Starbucks took the silver medal, lacking over 300 locations compared to the top chain retailer. Duane Reade, acquired by Walgreens over a decade ago, downsized the most of any chain in the city this year, losing 22 stores.

TriBeCa experienced the biggest boom of chain stores of any zip code in the borough over the past year, with the addition of seven new stores. The number fell by 4.3% in Chelsea and by under 2% on the Upper West Side. Across the park, on the Upper East Side, the opening of three new stores was outpaced by five closures.

The reasons for stunted growth are many. “Certainly, the lack of commuters and tourists have had a double-whammy impact on foot traffic to many businesses,” said Upper East Side Council Member Julie Menin, who chairs the Committee on Small Business. “And that is also compounded by remote work, because with remote work, one of the trends that we’re seeing is an increase in online shopping.”

“It’s almost a perfect storm.”

Combatting Vacancies

On the Upper West Side, vacant storefronts are most apparent on Broadway, Brewer explained. “These new buildings, they love to have the big stores come in,” she said. “They build these big spaces and then they leave them empty forever, it seems.” On other throughways, it’s been less of a problem.

In 2012, when Brewer represented the same City Council district, she led a charge to enact zoning regulations drafted by the City Planning Department limiting the size of new street-level retail developments north of West 72nd Street. As a result, incoming bank storefronts on stretches of Broadway, Amsterdam and Columbus Avenues can’t span more than 25 feet (north-south blocks are on average just over 260 feet long). On Amsterdam and Columbus Avenues, only supermarkets, schools and places of worship can take up more than 40 feet.

“We cannot be successful as a neighborhood if it’s all banks, and that’s what it’s becoming,” Brewer told The New York Times then. Today, she’s keen on maintaining diversity. “I do want every store to be filled, every storefront — everybody does,” she said. “I would like to see the variety that local stores bring.”

Business Improvement Districts (BIDs), by which stakeholders manage and fund commercial corridors, help in that regard, according to Brewer and Menin. Menin advocated for the recent allocation of $4.7 million in city funding for 35 “small” BIDs (those with budgets under $500,000 per year), despite the fact that none currently exist in her district — something she’s been working to change since taking office at the start of last year.

Menin has heard complaints from some residents as chain stores close; there are currently 238 such retail locations on the Upper East Side, compared to 263 in 2019. But chain retailers still, in many ways, have the upper hand.

“The mom and pops have to compete with these large retail chains,” Menin said. Now, she believes that storefront vacancies — and the possibility of negotiating more affordable rent prices — could help small businesses bloom in the rubble.

Boosting The Underdogs

Local businesses got a boost on “Open Streets,” traffic-free blocks where restaurants and bars were found to have “significantly outpaced” the sales growth of their boroughs’ averages, according to a DOT report released in October. The zones also saw a greater share of existing businesses stay open, accompanied by “faster growth” of new ones.

Other initiatives have been signed into law to help business owners, like Menin’s bill creating a “One-Stop Shop NYC Business Portal,” which will consolidate all small business applications, permits and licenses on a single online platform. In September, she introduced another bill that, if passed, will create an “Office of Small Business Digitalization” to “help bring local small businesses into the modern era of online marketing,” she explained.

But the stores that make the most desirable tenants on Manhattan’s streets, Brewer said, are those for which the shopping experience can’t easily be replicated via online shopping, like restaurants and even grocery stores.

Not all chains are created equal: on West 42nd Street, Brewer offered as an example, some mourned the loss of a Duane Reade, because they’d “gotten to know the pharmacist,” she said.

But Brewer did take pleasure in one chain’s recent demise. On West 86th Street and Broadway, she noticed that Jokr, one of the delivery app “dark stores” she has fought adamantly against, would be replaced by a Key Food supermarket in the new year. “Oh my god,” she said, “this is so exciting.”

“I’m one of these people who doesn’t love the chains, so I’m not upset about it.” Council Member Gale Brewer