The retail sector, one of New York City’s biggest employers, is having an uneven recovery from the COVID-19 pandemic, with “non-essential” retailers struggling but online sellers booming, according to a report released today by State Comptroller Thomas P. DiNapoli.
“2020 was a bleak year for brick and mortar retailers, and the holiday season's tepid start as infection rates rise may push many to insolvency,” DiNapoli said. “Stores do not have the usual crowds this holiday season and many people are buying online, if they have enough money to buy at all. New York City is one of the world’s premier shopping destinations and retailers are a vital part of its economy. Federal stimulus funding directly to consumers, as well as state and city support, is needed to help these stores survive into next year and beyond.”
In 2019, the city’s retail sector had 32,600 businesses that provided 344,600 jobs, paid $16 billion in total wages citywide, and contributed $55 billion in taxable sales to the city’s economy, according to DiNapoli’s report. About 44 percent of all retail workers who lived in the city were immigrants. Including both immigrants and native-born residents, Hispanic and Latino people made up the largest share of the city’s retail workforce (31 percent), followed by White (25 percent), Black and African American (22 percent) and Asian (19 percent).
By March 22, when New York’s statewide stay-at-home order went into effect, the city essentially shut down, causing the closure of many retail establishments, including clothing, general merchandise, and furniture stores. By April, retail sector employment had dropped to 245,000 positions.
In Manhattan, foot traffic in key corridors initially fell by more than 90 percent at the onset of the pandemic and is still less than half of its 2019 levels in some commercial corridors. The borough had nearly half of all retail jobs in 2019, and these paid an average salary of $59,400, above the citywide average of $46,600.
DiNapoli’s report found that by August 2020, employment in essential stores, such as groceries and pharmacies, had returned to pre-pandemic levels. While online retailers and some essential businesses have experienced growth since the beginning of the pandemic, others have struggled. In most retail subsectors, such as clothing and clothing accessories stores, employment as of October remains below levels from a year earlier.
As the city reopened and progressed from Phase 1 at the beginning of June to Phase 4 at the end of July, employment grew, reaching nearly 309,000 positions by October. Although employment at clothing and clothing accessories stores increased to 41,600 jobs in October from a low of 29,000 in May, DiNapoli noted it was still nearly 40 percent below the level of a year earlier. Taxable sales in retail trade declined by nearly one-third from March to May 2020 compared to one year earlier, with all sectors posting declines except online retailers.
Retail firms in New York State have relied primarily on federal assistance to shore up their businesses. Retail firms sought assistance mainly from the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDLs) and the Small Business Administration’s Loan Forgiveness programs, while nonretail businesses sought relief from these as well as other federal programs and commercial banks.
More than half (52 percent) of the city’s retailers were approved for PPP loans. The number of retail jobs reported by them accounted for 38 percent of all retail sector jobs. Loans to food and beverage stores, health and personal care stores, and clothing and clothing accessories stores accounted for 57 percent of all retail sector loans and 62 percent of all retail sector jobs reported.
The report said that extensions of these or other similar programs can help to pay for labor and other expenses, while other programs for individuals may support spending, aiding retailer revenues and taxable sales. More direct federal funds to state and local governments would also provide resources for more alternative assistance programs at the local level, where additional support may be difficult given widespread difficulty balancing budgets at this time.
New York City’s Open Storefronts program, which allows some retailers to use sidewalk space to sell their goods, provides one example of a shift in city policy based on dialogue with local store owners, and offers some support for retailers during the holiday season.
DiNapoli’s report noted that brick-and-mortar retailers, already concerned with rent costs, are now experiencing more acute need from the lack of revenues that used to come from their physical stores. The state and city governments have been called upon by business owners, landlords and some legislators to enable rent relief. Any such programs would need to be weighed against their budgetary impact and could be facilitated with federal funding.
Today’s report is one in a series looking at the financial recovery across different sectors of New York City’s economy.
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