October 23, 2008 Issue                                       

©2007 The Chestnut Hill Local

Avenue businesses feel the recession
Chestnut Hill merchants hope to combat slowdown in the economy.
by JENNIFER KATZ

Joe Magarity, pictured in the showroom of his Ford dealership at Germantown Ave. and Hartwell Ln., has had to make cut backs and diversify his fleet to keep afloat during these trying economic times. (Photo by Joel Hoffmann)

The news isn’t good. The Dow Jones Industrial Average is dropping and rising with the frequency of dough in the hands of a pizza baker. The National Retail Federation’s name has become synonymous with apocalyptic gloom, and the “big boys” of the corporate world are looking more like exposed bullies on the playground.

For years now, Hillers have debated the fate and general economic health of the Avenue, specifically that illustrious strip from Bethlehem Pike and its environs to the very bottom of the bottom of the Hill at Cresheim Valley Road.

There have been forums and PowerPoint presentations, surveys and studies — all aimed at taking the temperature of the businesses along the Avenue in Chestnut Hill.

It should come as no surprise, then, that these undeniably tough economic times have caused a certain amount of strain on Avenue businesses. Before the tumultuous market fluctuations of September, the number of empty storefronts was already rising.

With three of the four corners at Willow Grove and Germantown avenues vacant, and several more businesses slated to close by the end of the year (Express and Chico’s and Stacia’s Boutique), and the lingering Germantown Avenue Reconstruction Project incomplete, the timing of the nation’s economic crisis could not be worse for Avenue merchants.

Fran O’Donnell, owner of O’Doodle’s toyshop and main street manager for the Chestnut Hill Business Association, said business is down on average between 5 and 15 percent along the Avenue. He said the recent economic downturn has brought the second part of a double strike against the businesses.

“A couple of months ago, the traffic counts were flat but people were still spending,” O’Donnell said. “Not now.”

Peggy Bertholf, co-owner of Mango, said she has seen the same thing with her customers. Bertholf said her store’s shoppers, which she considers a loyal following after 20 years, are spending less these days.

“I’ve seen the anxiety in our sales,” Bertholf said. “September is usually when it picks up, after people return from vacation.”

Bertholf also said she has noticed a change in traffic. During the week, there are few customers, while the weekends are still seeing brisk business. But again the numbers are lower.

“We are not as affected by it because many of our things are moderately priced,” she said.

Bertholf unknowingly tapped into one of the trends that Hill business owners are seeing as they navigate their way through this crisis: the less expensive the merchandise, the better the chance of selling.

The unique and moderately priced fare at El Quetzal is still finding its way home with shoppers. Owner Adina Gorski said her sales have been relatively normal, although she said figures from August and September were not available yet. The store has been a Chestnut Hill staple since 1963. Gorski and her husband have owned it for the past 13 years.

“My theory is that our store provides such priced items that when the economy is doing so well we don’t do as well (because people want to spend more money on gifts) and that when the economy slows down we tend to do better,” she said.

Gorski said the newly opened store in Doylestown is holding its own. It has not grown as quickly as she had hoped, however.

Concern is also growing with the recent closing of Caruso’s Market. Gorski said the market brought traffic to the Avenue, which already feels its absence.

“It was one of the centers of the community,” said Gorski, whose store is located directly across the street from the former family market. “People would come to Caruso’s and they could look across the street and see our store. They might wander over to see what we have going on.”

At Magarity Ford, owner Joe Magarity is worried.

“It’s tough – the car business is tough,” said Magarity, who has owned the corner dealership for 20 years. “The economy made it tough.”

He said people are holding themselves back out of concern for how much worse things might get.

“People are frozen in their tracks,” he said. “They don’t know what to do.”

Magarity, who also owns Magarity Chevrolet in Flourtown, said he has made cutbacks, become “leaner” and is working to reeducate both his staff and his customers on adapting. Because, he added, not only does the economic downturn have people scared to buy, but it has also coincided with a change in the industry trend from larger SUVs to crossover vehicles.

Magarity is also finding his niche. Being a smaller dealership, he said, has been very useful in “weathering the storm.” He said it helps that his firm, like other Avenue businesses, isn’t a large operation that has to rely on selling big cars. In contrast, Magarity said his service department is staying busy, which helps.

Custom jewelry designer Caleb Meyer also said his business survives because of its niche in the community. While he has seen a steady decrease in foot traffic over the last four to five years, he said his loyal customer base and his unique offerings keep him afloat even in trying times.

“I’ve been here for 14 years and the decline has to do with the shifting variety of stores,” he said. “Banana Republic and Gap are better for foot traffic than banks.”

Meyer said that when it comes to small business corridors, or Main Streets, an independently owned outfit is ideally suited for the Avenue.

“We are not a chain” he said. “We offer a unique product that people feel proud to support. Chestnut Hill has lost a lot of its personality since I’ve been here.”

It seems incongruous that a lack of chain stores would cause a decrease in foot traffic, while more independent shops are what is needed on an Avenue that boasts a vast majority of independently owned businesses.

According to O’Donnell, the one truly unique business sector on the Hill — its many locally owned restaurants — are thriving. But is that convenience or astute neighborhood acumen?

Sanctuary, the only yoga shop on the Hill, is struggling. Owner Chris Aibel said business is way off from last year. She said sales are down approximately 37 percent. And like the situation at Mango, she said weekends remained “ok” while weekdays were bad.”

“There are less people walking in and spending less money,” said Aibel, echoing O’Donnell’s statement. “They want to buy less expensive things. They are looking for sale items.”

Aibel also has made changes and cutbacks. She added layaway to her store’s policy, so people can pay over time. And she is buying less inventory.

Bertholf, at Mango, also said she is considering buying less inventory, especially for the upcoming holiday season.

As it is on the national stage, the holiday season is the elephant in every store. The anxiety that proprietors are seeing in their customers is two-fold in themselves.

“We don’t know what to do,” said Bertholf. “And I’ve talked to other store owners I know who are in the same boat.”

Barry Eichner, manager at the 3000 BC spa, said they are jumping out early with promotions and pushing, pushing hard to save their year-end sales numbers.

“We are fighting it tooth and nail,” said Eichner.

While the Spa’s sales numbers are holding steady, Eichner said he has seen a stark difference between the first part of the year and last month’s numbers.

“In the first part of the year we were blowing away last year’s numbers,” he said. “Now we are barely matching our numbers for this time last year.”

And the success they are having, he said, is due to the addition of a medical skin care line. The spa is partnering with Dr. Brian Buinewicz of Abington Hospital to provide botox treatments, dermal fillers and medical level skin peels.

“Without the medical skin care line we wouldn’t be seeing any of this,” Eichner said of the steady sales numbers so far this fall.

So to head off further decline, Eichner said the spa would continue to offer major promotions.

“We took a major step to dramatically reduce prices in order to meet or beat last year’s numbers,” he said.

For the holidays, Eichner is already planning a menu of special promotions, including a wide array of gift items priced comfortably at $25, $50 and $100 levels. He also plans to start the promotions early to bring people in the door. Between Nov. 28 and Dec. 5 patrons will be able to purchase a $65 gift certificate for a 50 minute Swedish massage. The massage usually costs $105, and the gift certificate will be redeemable between Jan.1 and March 1 of next year.

O’Donnell said that the business association is also preparing for the holidays, working with Avenue businesses to create package deals for customers bringing two services together in one gift and cross-marketing the product. O’Doodle’s customers receive a $5 coupon off haircuts at Cookie Cutters, while the kids hair salon customers receive O’Doodle dollars for each haircut that are redeemable at the toy store.

Additionally, in December businesses will stay open late on Wednesdays as well as Fridays, and O’Donnell is hoping the campaign to light the trees will help attract customers.

Also diners at local eateries will receive a discount at participating stores with a valid receipt from their meal. The list of participating stores has not yet been completed.

O’Donnell echoed other merchants sentiments, expressing uncertainty about how the holiday season will unfurl.

“As Christmas comes are people going to continue to spend less or will they say ‘you know what, I’m going to get that big gift,’” he said.

“The one thing we can say is that we have a supportive community,” he added. “We know our customers and our customers know us.”

O’Donnell said he believes that the community understands that having a healthy Avenue is healthy for it also.