Squeezed by Soaring Rent, Small Shops Get Creative

Last March, Emily Schildt opened Pop Up Grocer on a Bleecker Street corner in the West Village, selling artfully packaged condiments, beverages and other products made by small, emerging brands in a pay-to-play business model.

Customers can buy artisanal hot sauces or zucchini chips from brands like Peepal People and Van Van that pay a fee to be on the shelves. Typically 150 to 200 brands are on display at a time, and some are replaced on a quarterly basis.

“If we were to be solely reliant on product sales, we would need to sell at a much higher volume,” Ms. Schildt said. “That’s just an impossibility when you’re talking about a store made up of completely unfamiliar goods.”

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

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

Retail is being reconfigured to address the values of the new customer, said Thomaï Serdari, who teaches marketing at N.Y.U. Stern School of Business. “Innovation is coming from those who, by necessity, have updated their business models,” she said.

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

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