Squeezed by soaring rents, small shops get creative in approaches

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 such as 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,” 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 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, including 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,” Schildt said.

Retail is being reconfigured to address the values of the new customer, said Thomaï Serdari, who teaches marketing at New York University 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.

Rachel Krupa’s omnichannel approach for her company, the Goods Mart, includes curating and distributing snacks at hotels, coffee shops and corporate pantries. At her minimalist shop in SoHo, one of three locations, she sells packaged snacks from 200 brands, mostly emerging producers, like garlic chili crisps made by Mama Teav’s, a company in Oakland, California.

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

Krupa said she would not be able to give exposure to brands like Mama Teav’s if she had landlords who were simply trying to make money.

The United States is undergoing a cultural shift in retail buying, said Syama Bunten, founder of Scaling Retail, a consultancy in

San Francisco. The directto-consumer model, pioneered by companies such as Dollar Shave Club and Stitch Fix, was an innovative approach years ago but now is saturated.

The new phase of shopping falls into two main categories: cheap and easy on Amazon and with a feeling of connection inside brick-and-mortars.

Another way for independent owners to build business is through connection and community, often through in-store events, which creates vibrant street life, foot traffic and a gathering of like-minded people.