The rising social disorder and crime of the 1970s and 1980s drove out not only hundreds of thousands of residents from New York City, but also many businesses. Within a few years, entire communities lacked basic amenities like supermarkets and drugstores; empty storefronts littered shopping districts. That started to change only when crime began falling in the 1990s and neighborhoods rebounded—first in New York and then in other big cities—prompting national retailers to begin setting up shop in places that they had once avoided. Thousands of stores and tens of thousands of jobs blossomed in New York alone thanks to this retail revival. But those gains are vanishing before our eyes as rising retail theft is driving a new era of closings.
It took decades for New York’s retailers to recover from the disorder and crime waves of the 1970s and 1980s. Entire districts lacked basic shopping choices, including Harlem, a community of more than 100,000 residents that didn’t have a single large-chain supermarket for more than 20 years. Once-flourishing shopping districts in the South Bronx and in neighborhoods like Bushwick in Brooklyn played host to boarded-up storefronts—vestiges of rioting and arson. National retail chains with the everyday stuff people wanted—Home Depot, Lowes, Target—shunned the city, leading to an exodus of dollars. One study in the early 1980s estimated that Queens residents alone spent half of their purchasing power, more than $1 billion a year back then, shopping in Nassau County. By the early 1990s, a consumer survey found that 56 percent of city residents left New York at least once a month to shop. Nearly 30 percent said they went specifically to buy at stores that didn’t exist in the city—an irony, considering that Gotham had once been considered one of the world’s great retail cities. One reason residents didn’t buy locally was that shopping in a so-called retail desert meant that you had to pay more for just about everything.
All this began to change beginning in the mid-1990s. Plagued by high crime rates, Downtown Brooklyn had struggled to attract retailers, despite the city’s offering businesses big incentives. But declining crime in the second half of the 1990s sparked new investment, including in the development of hundreds of thousands of square feet of new retail space. Bushwick similarly revived, becoming a mecca for foodies. Big chains rushed into Queens, Brooklyn, and even Manhattan as the city welcomed them with zoning changes that allowed easier redevelopment of empty spaces. The result: a transformational era of retail investment and employment. From a low of 243,000 jobs in 1992, the city’s retail sector exploded, adding 135,000 jobs by 2016—an increase of 56 percent.
These days, the news is filled with reports of announcements from big retailers like Target, Whole Foods, and national drugstore chains closing stores that have become unprofitable in the increasingly chaotic neighborhoods of cities like Chicago, Portland, and Seattle. New York City has lost approximately 675 outlets operated by national chains since the pandemic began, according to a retail census. Much of that decline can be attributed to the triple whammy of Covid shutdowns, residents leaving the city, and rising social disorder in the wake of Black Lives Matter protests in June 2020. More worrying is that a post-pandemic city that should be seeing a return to normal is now plagued by retail theft, spurred by bail reform and reduced charges for shoplifting. As a result, post-pandemic New York City still has 60,000 fewer retailer jobs than it did during the height of the pre-pandemic boom. By contrast, many cities—including Dallas, Houston, Nashville, Orlando, Tampa, Charlotte, and Raleigh—have regained and surpassed their pre-pandemic retail job numbers.
Most troubling, perhaps, has been the decline of city drug stores. Duane Reade (a chain owned by Walgreens) and Rite Aid have collectively closed more than 100 city stores since 2019. Already beset by everything from online competition to supply-chain woes, the stores now face the task of coping with out-of-control theft. One of Rite Aid’s top executives recently discussed the difficulty of stopping theft in New York. “I think the headline here is the environment that we operate in, particularly in New York City, is not conducive to reducing shrink [i.e., theft] just based upon everything you read and see on social media and the news in the city,” he said.
Other essential stores are also disappearing. Key Food, a chain of small supermarkets, has closed ten outlets, leaving residents in communities like Glen Oaks, Queens, without a supermarket. Dollar Tree, a chain of low-cost general-merchandise stores that saw its recent financial performance eroded by rising thievery, has shuttered 12 New York City stores. In stores that remain open, the chain has stopped selling some name-brand items most heavily targeted by shoplifters.
Nearly 30 years ago, policymakers began describing communities that lack essential retailers, especially supermarkets, as “deserts.” Some went further, branding the problem as “retail apartheid,” a phrase that implied that stores were purposely discriminating against neighborhoods because of their residents. Local government tried a host of policies to lure stores, from incentives to public browbeating; what ultimately worked was neighborhood revivals spurred by declining crime.
We seem on the verge of a new era of retail deserts. It will be harder, however, for policymakers to blame this sad reversal on racial discrimination or reluctance by firms to do business in certain neighborhoods. America’s major stores have shown themselves more than willing to invest in urban communities. A problem caused by bad public policy is driving them away. Shoppers and residents are the losers.
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