Nfld. & Labrador

Mounting rents and city taxes have downtown St. John's businesses scrambling to overcome slump

Some businesses are imploring residents to shop local this holiday season.

Impending closure seems ever closer for some St. John's storefronts

The owner of a downtown eatery said downtown St. John's businesses are facing a "dire" economic outlook. (Malone Mullin/CBC)

For Leon Chung, it seems everyone is shuttering up shop these days.

The Reluctant Chef left Duckworth Street in February after five years in business. Three months later, the restaurant and piano bar Fifth Ticket called it quits, citing hard times.

Last week, Bad Bones Ramen said it's taking its hot noods elsewhere — the rent for its Water Street storefront is just too high — and fine-dining eatery Bacalao announced it's up for sale.

Meanwhile, fees are only climbing: the City of St. John's announced a commercial tax hike last week, leaving other restaurants and retailers — some already grappling with crippling overhead — ​afraid for their livelihoods.

Chung, who co-owns Water Street board game cafe Mochanopoly, took note of the closures and implored St. John's residents to support downtown enterprises in a Facebook post earlier this week.

It's the main solution, he says, to the impending tragedy of a downtown wasteland scattered with vacancy signs.

By his count, "seven businesses have closed [during] the last 10 months," he told CBC News. "That's [an] alarming rate. So I think the next couple of months is probably the time that we gotta do something about that."

That "something" included his rallying cry: spend your money on entertainment venues and small retailers, or one day soon there might not be many left.

Chung said it's hard times for his customer base, as unemployment and rising bills mean people have less to spend on leisurely outings. "Everybody's suffering right now," he said.

This Christmas seaon has been slower than normal, Chung says. (Malone Mullin/CBC)

But others are spending in big box stores and buying from Amazon, he said, leaving the downtown in a tough spot. 

"Come down to downtown. Enjoy the scenery, go to the stores, come have some coffee instead of going to big corporations," he said. "Stop shopping online."

Creative solutions

Aside from basic sales, there's more that could be done to help ailing owners, Chung said, pointing out that accessibility poses a problem for seniors and small children and discourages potential customers.

More ramps, parking options and snow clearing would help, he said, such as the city's new pilot project that bans early-morning parking in the core, leaving room for snowplows.

Absentee landlords who aren't invested in the city also pose a hurdle, he said.

"We're lucky to have landlords who are very aware of the situation, and they work with me," he said. "But I know some business owners who are not so lucky. Their landlords, they're giving them some horrible contracts."

Not all retailers share Chung's gloomy outlook. 

Posie Row owner Anita Carroll, interviewed in her bustling four-storey shop that rents space to smaller retailers, points to the vigor of stalwarts on the downtown scene — and even the success of newer ventures.

Anita Carroll is finding ways to overcome high rent and online competitors. (Malone Mullin/CBC)

"Downtown has always had its ups and downs, but I think right now we have pretty healthy downtown," Carroll said. "It's part of the retail industry for businesses to come and go. Not every business is going to make it."

The collection of businesses in the Posie Row building took a novel approach to cutting down overhead, banding together to create a vertical market for craft and specialty items. The move slashed operating costs, but they too are battling online behemoths.

Sales are slightly lower than projected this year, Carroll said, thanks in part to the practice of "showrooming," where people try out products in real life and then buy what they like online, sometimes at a discount.

"There's a business here who said there was a woman that tried on a pair of shoes, and actually took out her phone and ordered them right in the store," Carroll said. "This is local business, that's not their purpose."

Flexibility is key for businesses in a small town, Carroll said. (Malone Mullin/CBC)

But when it comes to inevitabilities, like rising taxes or rents, she says a nimble merchant will find solutions.

"You have to take it in stride," she said. "Those rising costs can sometimes be devastating for a small business ... But everything in business is a problem that just needs to be solved."

Her fix for showrooming: stocking unique products that can't be ordered on Amazon and putting her own inventory on the web. "You just have to figure out ways around it," she said.

Chung's solution? Keeping money circulating locally.

"Supporting your local business is a very symbiotic cycle," he said. 

"When you support local businesses, we're creating more jobs, we're helping with tourism. It goes back to the economy."

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