Bucking the myth: There is no upside to the downturn

In tough economic times, you’d think 99-cent stores, pawnshops and thrift stores would be thriving. They’re not.

Behind the counter of 41st Discount, a 99-cent store on 41st and Telegraph, stands store owner Omar Alrahimee, surrounded by phone cards, incense oils, microwave popcorn, “God Bless the USA” bumper stickers, and cigarettes (his best selling item). He holds up a stack of bills he hasn’t yet paid. “Today is the 12th, I have not paid the rent, I used to pay on the first, now it’s the 15th or 20th,” he says.

A family walks through the door, the mom pushing a stroller, asking Alrahimee if he takes food stamps. He does. He has owned 41st Discount for almost 10 years and says he has never seen business this bad.

“Business is slow, nobody has money right now,” Alrahimee says. “Instead of a 99-cent store, this store needs to be a 40-cent store.”

Down the street, Gevertz Jewelry & Loan Co., a pawnshop on 51st and Telegraph, is having the same problem – no buyers. The shelves are sparse, but the goods being sold are high quality and in excellent condition: a new Klein bicycle, guitar amps, binoculars. The store’s owner, Ken Gevertz, says because nothing is selling in his shop, he’s more selective in what he buys.

Right now, the only thing he is taking off seller’s hands is their jewelry. “We’re buying commodities – gold, platinum, silver, and selling them in bulk,” he says. “We call it ‘scraping,’ essentially pulling the dollar value for the metal.”

And he doesn’t think there will be an upturn in the new year: “My forecast,” he says, “is doom and gloom.”

This week the United States House and Senate passed President Barack Obama’s stimulus bill, but the outlook for consumer spending still doesn’t look good. According to a monthly Bloomberg News survey released last Thursday, consumer spending hasn’t consistently declined for this long since 1946. Consumer spending fell the last two quarters of 2008 and is projected to continue falling through the first two quarters of 2009. This lack of spending affects all retail shops, whether they’re re-sale or new.

Thrift stores are one of the re-sale markets doing better than others right now. Linda Payne, the manager of the American Cancer Society Discovery Shop on 41st and Piedmont, has worked there for 11 years and says her traffic has picked up.

American Cancer Society Discovery Shop

“We have had spurts of spending, but it’s not consistent,” she says.

But, where spending may be up, donations are down. The back room where clothing donations are sorted and put on hangers is empty; Payne says it’s the cleanest the room has been since she began working there.

Clausen House, a thrift store on Telegraph and 48th, also has had a boost in spending but a decline in donations. “I go buy things cheaply from garage sales and estate sales,” says Brian Chavanne, Clausen House’s manager. “If I just relied on donations, we wouldn’t have much to sell.”

Consignment stores, on the other hand, have more clothes than they know what to do with. Deloris Davis, owner of Sophisticated Lady Consignment Boutique on Piedmont Avenue, says a lot of people are trying to sell.

One consigner brought in designer Armani clothes. Davis asked if she really wanted to get rid of these items, “I’m forced to, I need the cash,” said the consigner.

The problem is no one is buying. “If you are losing your house, you aren’t going shopping anywhere,” says Davis.

December was the worst month in the history of Sophisticated Lady’s sales. As Davis folds and then re-folds a shirt laid on the counter, she looks up and says, “February is usually the worst.”