Square Businesses Survive Meltdown

Even though most of the nation’s largest retailers reported a sharp slump in sales for October, local businesses seemed poised to weather the economic storm, buoyed by the reliable university customer base and the Square’s consistently strong foot traffic.

“Harvard Square is a little different [from other business environments] in that people, students, academics, business people—they still have to come here because business continues and school continues,” said Denise A. Jillson, executive director of the Harvard Square Business Association. “People need to eat, they need to shop, and they tend to continue to support and purchase and be entertained in Harvard Square.”

Shops and restaurants said they were grateful for the support that local shoppers provide during the chilling economic climate, and noted that sales—for the most part—have not reflected the dramatic decline in consumer spending nationwide.

“I have to say that thanks to the loyalty of our customer base and the real emphasis on buying locally, there is no question that sales are down somewhat, but not the sharp retail decline reported [elsewhere],” said Jeffrey Mayersohn ’73, owner of the Harvard Book Store. “We do one year comparisons on a daily basis, and our sales are down somewhat, but on particular days, they are actually ahead of where we were last year. It’s a mixed picture.”

Paul MacDonald, owner of Leavitt and Peirce—the 125-year-old tobacco and specialty shop on Mass. Ave—said he was confident that his store’s unique offerings and high-quality service would keep it afloat during the economic storm. He speculated that the actual weather—or even the parking situation in Cambridge—may have a greater effect on his sales than macroeconomic conditions.

“We had a really good October,” said MacDonald. “Sometimes you hear these economic forecasts, and it just doesn’t matter. The things we sell, these ‘affordable extravagances,’ people will still have their occasional five-dollar ice cream cone or eight-dollar cigar.”

But he also acknowledged that his store increasingly depends on the University for customers, and that increased economic stress and rising unemployment could deter some customers who live farther away from the Square.

“In the old days, people would come into the Square to shop, but now we depend on people who are already in the Square,” said MacDonald. “I don’t know who lives on the outskirts of the Square anymore.”

Like most retailers, MacDonald counts on a strong holiday season. But he predicted that some businesses could find themselves suffering this year.

“After the holiday season, there’s a huge drop-off and you have to borrow money from the bank,” said MacDonald. “Some businesses will find they won’t be able to.”

Store managers for larger retailers such as Urban Outfitters and restaurants such as Bertucci’s were not permitted to comment on their business this fall, but owners of smaller restaurants including Felipe’s Taqueria and b.good said that while their sales were holding steady or were even higher than last year’s figures, their costs had risen dramatically in recent months.

“The costs side is out of wack, it’s through the roof,” said b.good co-founder Jon Olinto, who noted that the price of beef had risen from $3.25 per pound to over $4 in the course of three months. “Even though it only seems like 80 cents, that stuff adds up really, really quickly—a burger isn’t just the beef. We work on low margin of profit and economies of scale; we rely on selling a lot of sandwiches, so it has a huge impact on us.”

Felipe’s owner Tom Brush also noted the extraordinary price spikes of everything from dairy to flour products in the past six months, but said he has seen a softening of costs in recent weeks. While he said Felipe’s has always tried to keep its prices “as reasonable as possible,” he said he has noticed a change in eating habits lately.

“We’re not losing any customers, but those customers that do come in are a little more thrifty,” said Brush. “Some of those customers that come don’t get the extras, and instead of a bottle of soda, they’ll get a cup of water. People are trying to become more value-conscious.”

Despite these trends, HSBA director Jillson said she was confident that the economic storm would pass.

“Even on a rainy Friday morning, I’m looking at Brattle Street and there are hundreds of people walking up and down,” she said.

“We’re cautiously optimistic that when you call and check on us next year, we’ll be able to say that we really did weather the storm,” she added.

—Staff writer Peter F. Zhu can be reached at pzhu@fas.harvard.edu.