Report: NYC retailers struggling to recover from pandemic

New York City’s retail sector is struggling to recover from the coronavirus pandemic, with employment trailing other face-to-face industries also devastated over the past three years but bouncing back faster, a new report has found.

The Center for an Urban Future, which commissioned the report, wondered “whether this vital and diverse part of the city’s economy will ever get back to its pre-pandemic employment level.”

“A combination of factors is likely contributing to the retail sector’s stalled employment recovery, including the rapid growth of online shopping, the increasing adoption of automation by retailers, the slow return of office workers, and the sharp drop in the city’s population,” the report stated.

Although the city’s overall economy has all but fully recovered the jobs lost during the pandemic, with private-sector employment down 0.8% from pre-pandemic totals, the retail sector has 11.1% fewer jobs than it did in February 2020, the report found. By comparison, restaurants are down 5.7%.

The worst hit retailers include department stores, (down 16.7%) as well as sellers of clothing and accessories, (down by 26.9%), and sporting goods, books, hobby and other merchandise stores, (down by 14.1%).

Andrew Rigie, executive director of the New York City Hospitality Alliance, said restaurant jobs are recovering faster because there’s a social experience at an eatery that can't be duplicated at home. Not so for retailers.

“The pandemic made us be socially distant, but restaurants are where you come together to socialize, so people will go out for that person-to-person experience at a restaurant versus a retail shop," Rigie said. "You’re only going there if you’re looking to buy something."

While Long Island’s retail sector hasn’t recovered all the jobs lost during the pandemic, it has proved more resilient than in the city.

Locally, retail employment remained at 6.5%, or 9,800 jobs, below pre-pandemic levels as of February 2023, according to state Labor Department data. Compared to the city’s 11.1% gap, the Island has had an easier time in building the industry back up.

The Island had more than 141,000 retail trade jobs in February this year. 

Shital Patel, labor market analyst for the Labor Department, said the pandemic pushed many retail operations to the breaking point, but the struggles faced by brick-and-mortar retailers are “long term” and predate the onset of COVID-19.

“Even prior to the pandemic we had seen a decline in retail, particularly with some of the larger retailers like Sears and Kmart,” said Patel, who tracks employment out of the state’s Hicksville office.  

The biggest issue facing retail businesses has and continues to be the growth of online shopping and e-commerce operations, she said. And of the subcategories in the sector, clothing and clothing accessories stores have remained the most affected locally, she said.

Employment at brick-and-mortar clothing retailers remains 2,500 jobs, or 15.9%, below employment levels in February 2020. In the city, the gap is larger at 26.9%.

“That industry had been losing jobs for the two years prior to the pandemic, especially,” Patel said. “Many of them were struggling to stay in business.”

Patel said given that retail employers on Long Island and in the city both face competition from e-commerce and factors like the growth in automation, a likely reason for the Island’s stronger recovery may have more to do with the effects of remote work.  

The critical mass of office buildings in Manhattan brought with it more foot traffic and consumer spending. But with fewer workers needing to commute to the city’s business centers, retailers there are likely seeing less business and needing fewer employees.

Sarah Kaufman, interim executive director of the NYU Rudin Center for Transportation, said the mass transit levels should be maintained, particularly because those who are employed count on transit to get to and from work.

“Although fewer workers are employed in the retail sector, it’s important to remember that many of these employees continue to rely on public transportation. Not only do they depend on reliable service for their livelihoods, but they also must travel at non-traditional hours, when service is less frequent."