Behind the Lights

East Harlem Goes Wholesale

A few avenues east of La Marqueta, an East Harlem relic that is home to vendors selling Puerto Rican trinkets, meat and codfish, Costco opened its first warehouse in Manhattan, selling everything from Louis Vuitton handbags to jumbo sized packs of toilet paper, Spam and Hidden Valley Ranch Dressing.

“If properly handled, this place would be jammed packed, it should be! Why would they conjure up a huge enterprise within walking distance?” said Bernard Limschuotz, one of only five vendors left at La Marqueta, who sells codfish, milk, and eggs.

With 63 years as a vendor at La Marqueta, Limschuotz remembers the days when the marketplace was so crowded with shoppers it was difficult to navigate. Today, the scene is different with ample space to walk and not much to see.

Residents of East Harlem have had mixed reactions to the arrival in their neighborhood of the first members-only, big box wholesale retailer, where members pay either $50 or $100 annually to shop.  Some business owners are excited about the increased traffic Costco will bring to the neighborhood, as well as the steep discounts, and do not feel threatened by its opening because most residents of East Harlem cannot afford to shop at Costco.

Jim Sinegal, the CEO of Costco, said the typical member in the U.S. is a higher-end customer with a household income of about $77,000, during an interview aired on Nov. 14 on CNN’s Your Money.

According to The Furman Center for Real Estate and Urban Policy’s State of New York City’s Housing and Neighborhoods Report 2008, the median household income in East Harlem for 2007 was $30,697, significantly lower than the typical Costco shopper.

“If I can afford it, that’s what I’m looking for, if I can’t afford it then I’ll just continue on to Pathmark…you can only go so far with a daughter in college,” said Nancy Callejo, a long time resident of East Harlem.

Callejo, who is now on Social Security after being injured on the job, isn’t alone.  According to NYC’s Department of City Planning, in 2008, over 40 percent of the population in East Harlem received some form of income support such as public assistance, supplemental security income, or Medicaid.

Although Costco would not disclose the number of new memberships acquired with the new warehouse, there was already a significant amount of existing members in the area, according to Robin Ross, director of corporate membership for Costco in Washington.

Ross came to New York City for a few days to help out with the opening and although attendance and profit statistics were not available, he said they were very happy with the turnout and expected a lot more customers to come in over the opening weekend.  Despite nearly 3,500 customers attending the VIP preview the night before the official opening, shortly after 8 a.m., there seemed to be more Costco employees standing around enjoying the space than actual customers shopping.

Jeffrey H. Brotman, the chairman of Costco, expects annual sales at the East Harlem store to exceed $2,000 a square foot, nearly double the average, according to an article printed in The New York Times on Oct. 20.

To meet those numbers Costco must rely on customers from outside the neighborhood that has the highest percentage of subsidized rental units and had nearly a 30 percent poverty rate in 2007.

Esteban Dorado, manager of Pasteles Capy, does not feel threatened by Costco because he believes he has something that Costco does not offer to their customers – homemade quality products with personalized service. The small glass windowed shop with only three barstools used to serve breakfast, but ceased when Dorado realized he wanted to focus on baking as it was more profitable. With over 25 years as a famous franchise in Mexico, Pasteles Capy’s first New York City bakery on 116^th Street, been serving the Mexican community in East Harlem for almost two years.

“We’ve been through some similar situations in Mexico, when the big companies come…it’s been tough, but it doesn’t effect us a lot,” said Dorado. He added that the neighborhood could benefit from more people visiting, even noting that more people may visit his bakery.

Aurelia Velez, who has spent over 30 years working at La Marqueta, does not seem as optimistic about the future of small businesses in East Harlem.  Since 1936, La Marqueta has been known as a marketplace of vendors selling an array of Latin and Caribbean music and foods.   Today, the marketplace only has five vendors left and a sixth vendor that was due weeks ago in the front and center space never showed up.

Velez watched La Marqueta lose business as supermarkets began to flood the neighborhood, offering ethnic groceries that were once exclusive to La Marqueta.  Velez admits she couldn’t survive on the profits she makes selling primarily codfish out of her stall in the market, and predicts the market will only live for another two to three years if business continues at such a glacial pace.

“We think its going to be good for the community and I guess the best thing I can say is come check it out…we know that Costco isn’t necessarily for everybody but we think we’re going to bring better pricing to the area, we’re going to bring lots of choice for people to look for a place to shop, so we think its going to be a plus for the community,” said Ross in response to criticisms that Costco isn’t doing anything for the residents of East Harlem except kill the neighborhoods charm.

With intentions to revive the market while helping start up and expanding food businesses, the City will build an approximately 4,000 square foot shared commercial kitchen inside La Marqueta, according to a press release by the New York City Economic Development Corp.

“For some reason the city is not renting, so it’s going to remain this way…If this place were full of merchants, full of merchandise, I think it would do much, much better,” said Limschuotz, who hopes for more merchants but like Velez believes they are all on their way out.