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Small Businesses Struggle Through Slow Reopening

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Last Monday, after two months of government-mandated lockdown aimed at stopping the spread of COVID-19, San Francisco entered what officials are calling “Stage 2A” of a carefully-designed plan to reopen retail businesses across the city. It was the first step of many in transitioning back to a normal economy, and it was celebrated with much fanfare.

“Allowing retail to operate storefront pickup is a great step for our small businesses, which have been struggling since the beginning of the COVID-19 pandemic,” Mayor London Breed announced in a press release days before Stage 2A went into effect on May 18. “Businesses that will be allowed to open next week won’t be able to operate like they used to, but this hopefully offers a measure of support.”

It was a welcome announcement, as San Francisco has seen a handful of retail businesses close in the wake of the shelter-in-place ordinance. Clothing retailer Azalea shut its Valencia Street location, along with its men’s clothing spinoff, Welcome Stranger, in Hayes Valley. Neighboring vintage shop Ver Unica threw in the towel after two decades in business, and a few blocks over, the beauty supply store Nancy Boy called it quits.

But as journalists dashed to popular retail corridors on day curbside pickup began, they were met with a sad reality: most stores eligible to reopen remained boarded up, and foot traffic was nearly nonexistent. Curbside pickup, it appears, is not the economic boon Breed hoped it would be. And as retail owners struggle to survive, many have opted not to reopen for pickups at all.

‘NOT WORTH IT’

On the afternoon of the day San Francisco moved into Stage 2A, fewer than a dozen businesses on the normally-bustling Haight Street had reopened. Vape shops and shoe retailers topped the list, and were joined by a few specialty spots: Sockshop Haight Street, the skateshop FTC, and gift store My Favorite. But many of the neighborhood’s most popular destination retailers — Amoeba, Buffalo Exchange, The Wasteland — remained closed, their metal gates locked tight.

Lauren Graham, owner of Sockshop, was cautiously optimistic about curbside pickup on its first day.

“People aren’t knocking down our door to buy products, but it’s nice to feel like we’re part of the community again,” she told SF Weekly. “It’s definitely not been anything close to normal business and we’re not expecting it to be. But we’re trying to do the best we can with the new normal. This might last a really long time so we have to figure it out.”

For Graham, opening up for curbside pickup hinged on one key factor: securing a Paycheck Protection Program (PPP) loan from the federal government. Under PPP guidelines, if an employer uses 75 percent of the loan to cover payroll, the debt will be forgiven; ie, it doesn’t need to be paid back to the government. However, PPP loans have been hard to get; Graham only heard she’d secured one for her businesses the Friday before curbside pickup went into effect.

Looking at the shuttered neighborhood around her, Graham said “I think PPP has a lot to do with it. If people don’t have enough money to pay employees it’s not worth it. I’m not making as much as I’ll be paying out in payroll. That’s for sure.”

Joe Goldmark, co-owner of Amoeba Records, says curbside pickup isn’t financially viable for his business.

“We’re a huge brick and mortar with around 70 employees who buy, price, sort, display and sell every piece of music that we get, new and used,” he says. “Selling in dribs and drabs with curbside pick-up actually adds a labor step, as we’re now also shopping for the customer. Our store depends on people looking for music they want, and finding a few other treasures that they didn’t know they wanted!”

Some merchants on the Haight Street commercial corridor have been open for curbside pickup since Monday, May 18, but construction has hindered pedestrian foot traffic and many businesses, like Amoeba Records (bottom right) remain shuttered, as the curbside pickup model isn’t financially viable for them. (Photo: Kevin N. Hume/S.F. Weekly)

Down the street from Amoeba, the newly-opened Cary Lane also remains shuttered. The clothing store sells deeply-discounted designer apparel — but nothing stocked is in large amounts. It’s a sift-through-racks experience, and since every designer sizes slightly differently, trying things on is key. This alone makes the concept of curbside pickup nearly impossible.

“We usually only have anywhere from one to 10 units of one style,” owner Cary LaScala explains. “I have tens of thousands of clothing items throughout my three stores and warehouse that are a mixed bag of brands, sizes, styles, and categories that consist of one of this or seven of that.”

This also makes opening an online web store — a move both Sockshop and Amoeba employ — tricky.

“The amount of legwork, time, payroll costs it takes to photograph, write copy, upload to our website and Instagram, then hopefully making a sale, grabbing the item, folding and packaging it up, shipping it out, just isn’t feasible at the moment, especially when we might only have literally that one item,” LaScala explains. “We’re basically losing money on every online order we’ve shipped out or had a customer meet to pick up their order so far.”

SERIOUS SETBACKS

With bills piling up, LaScala launched a GoFundMe in an effort to make rent on his three locations, but it hasn’t raised enough to make a dent.

“This pandemic has forced me to also consider closing my business altogether after 11-and-a-half years of continuous growth,” LaScala says. “My projections and numbers at the end of this past February were surprisingly higher than expected. It was looking to be our highest revenue quarter ever. We were about to hire another five sales associates and three more inventory specialists right before the shelter-in-place order. Now my revenue has virtually dropped to zero for the past two-and-a-half months.”

The mounting bills of running a business have also hit Michael Musleh, the owner of Vinyl Coffee and Wine Bar on Divisadero Street, and Stanza Coffee, and Pork Store on Haight. He owns the buildings that each of his businesses reside in, but that adds an extra cost; the city gave him a September deadline for seismically retrofitting Vinyl, and so he’s shut it down for the foreseeable future to do the work.

One of the biggest issues Musleh faces in reopening is rehiring employees. He has yet to secure a PPP loan, which makes paying employees trickier with a natural reduction in business. And, many of his employees are on unemployment, which makes returning less attractive.

“I’ve applied for all the loans, but I haven’t got them,” he says. “Half of the employees don’t want to come back because they’re making more money on unemployment. My accountant says half the stores have problems like this.”

To remedy this, Musleh’s moved all Vinyl’s existing employees over to Stanza and Pork Store during the seismic retrofit. But now he faces a new challenge: the ongoing construction on Haight Street hasn’t ceased, and foot traffic has suffered as a result.

“How am I going to pay my employees if there’s no one on the street?” he asks.

SEARCHING FOR ANSWERS

In the face of all these challenges — loan applications, seismic retrofits, online shopping, and myriad business models — it’s no surprise that curbside pickup isn’t the answer to many small business’s problems.

And even the new shared spaces program, announced by the city this week, doesn’t seem like it will fix the problem of the aforementioned retailers. Under the proposed plan, merchants and restaurant owners can apply for sidewalk or street space to expand their businesses outdoors. For restaurants, this may be a chance to slowly bring dining back into their business model. But for retailers, the move only signifies an expansion of the curbside pickup model, which for many, already doesn’t work. With the pandemic far from over, it appears massive systemic change will be required to save many the city’s small businesses.

“Once retailers can open back up, I figure my revenue will drop by 70 percent of what it was and stay that way for a while,” says Cary Lane’s Scala. “Then if you take into consideration a second wave of this virus coming back, it’s hard to see the benefit in fighting for my business much longer — especially if my landlords aren’t willing to forgive or considerably reduce rents.”Nuala Bishari covers news for SF Weekly. @TheBestNuala

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Nuala Bishari

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