The Real Deal New York

The Last of the Mohicans: How NYC’s holdout video stores have hung on


By Sarah Gross | September 30, 2011 06:29PM

In 21st-century New York, watching a movie no longer requires leaving the apartment. Thanks to the likes of Netflix and On Demand, a seemingly inexhaustible supply of films and TV shows now appears at the touch of a button.

But what about those who want to pick out a movie at an actual video store? These days, that’s becoming more and more difficult. The number of video rental shops fell 17 percent in the city from 885 in 2002 to 731 in 2007, according to the most recent U.S. Census data.

Movie rental giant Blockbuster filed for Chapter 11 in 2010. And, many mom-and-pop video rental stores have closed, too, as a result of online competition, following in the footsteps of other contracting industries like bookstores (see Borders) and music shops (see Tower Records) that have also shuttered in the last few years.

Steven Baker, a retail broker and president of Winick Realty Group, said New York’s sky-high rents add to video stores’ problems. Of those that are still around, “most are at the end of what were long-term leases, which are below market rents,” he said.

But Faith Hope Consolo, chairman of the retail leasing and sales division at Prudential Douglas Elliman, said independent video stores may actually have an advantage. “While the massive chains are struggling, niche stores — those actually run by videophiles — are surviving,” she said.

Plus, many of the remaining stores “are on side streets to begin with, so there may not be as much competition for the space,” Consolo said.

This month, The Real Deal checked in with some of the city’s video stalwarts to find out what keeps them going, and how they’re holding on to their real estate while so many of their compatriots have gone under.

World of Video

Greenwich Village

World of Video at 51 Greenwich Avenue has been in business for 38 years. The owner, Linda Samuels, started it with her brother-in-law, Charlie Grappone, when she got tired of paying late fees at the video stores she frequented.

With shabby-chic seating, nostalgic décor, and a 3D sculpture made of DVD cases, World of Video looks like a throwback to the heyday of video rentals. “A lot of people come in for the social atmosphere, the way bookstores used to be,” Samuels said. Some are surprised to find a video store that’s still open. “A lot of them come in and say, ‘Wow, this is so retro!’” she said.

But in some ways, she said, the changing technology has helped her business. World of Video was previously located in a 3,000-square-foot space above the Village Vanguard at 178 Seventh Avenue. But about five years ago, it stopped carrying as many movies on VHS, and DVDs take up a lot less shelf space. That meant Samuels could downsize to her current 1,500-square-foot space.

And for true cinephiles, Netflix and On Demand don’t offer enough variety. “There’s a lot that you can’t get,” she said.

It’s these passionate movies buffs who seem to be keeping stores like World of Video — which has over 30,000 titles — in business.

Still, keeping the lights on isn’t easy, and Samuels said she makes minimal profits with the store. According to a recent report from Newmark Knight Frank, retail space on Greenwich Avenue now rents for roughly $100 to $125 per square foot.

Samuels declined to comment on her rent or say who her landlord is, other than to credit him, in part, with the store’s longevity. “He hasn’t found anyone else who wants to pay a higher rent — let’s just put it that way.”

Alan’s Alley Video

Chelsea

Alan’s Alley Video at 207 Ninth Avenue in Chelsea is hanging on by a thread, according to owner Alan Sklar, who said he doesn’t know how much longer he can stay in business.

Sklar opened his 1,600-square-foot storefront 23 years ago, after a childhood spent watching movies (he grew up on a block with a movie theater). But nowadays, he struggles to pay his monthly rent of $12,000, and advances in technology have caused him to lose hope as well as money.

These days, he said, “you can watch movies on the train, on your phone. It’s crazy.”

Like World of Video, Alan’s Alley manages to eke by, thanks to a loyal customer base that turns to Sklar and his staff for their knowledge of movie history.

Plus, Sklar has devised new revenue streams beyond the traditional movie rental business. The store also has a copying and fax service, for example, and an ATM.

And, it works with TV stations and programs like the “Today” show and “Inside Edition,” which often need movie clips. Ad agencies are also a source of business for Sklar, since the mock-ups they produce for clients often involve movie clips.

“Very often, [we’re asked to] pick the best movies [to] illustrate something,” he said. But he doesn’t charge for the research or consulting — just the rentals.

As for how long he’ll stay open? “There’s always the possibility that we could sell the collection” of 40,000-plus titles, said Sklar wistfully.

In the meantime, he doesn’t replace people when they leave, and the store air-conditioning that broke last summer is still waiting to be fixed.

Heights of Video

Brooklyn Heights

Heights of Video (formerly Mr. Video III) at 84 Clark Street has been around for 25 years. Like other video rental stores, this one has seen hard times lately, but that didn’t stop new owner Rafael Perez from taking the reins in January of this year.

Perez first started working at Mr. Video in 1994, as a high school student. He later became the manager. This winter, previous owner Joseph Pell felt that “the business didn’t have much left to keep going,” Perez said. “This just made me rise to the occasion, so I made him an offer. I took a pay cut to become an owner of a dying species.” He declined to say exactly how much he paid, but said that it was “in the five digits.”

He knew it wouldn’t be easy. In recent years, the store has cut costs. “We learned to do without three workers at the counter,” Perez said. The store also scaled back on DVD sales to focus on its core business — rentals.

“We learned that the business had to go back to the roots of what it was founded on,” he said. Plus, “we’re good at recommendations, so it brings people back to the store time and time again.”

The strategy has seemed to work. “We watched our franchised competitors go bankrupt despite their overwhelmingly large selection,” he said.

The store boasts standard video-shop decor, with shelves of DVDs and old movie posters on the walls, and it sells candy and posters to generate a bit of extra income, Perez said.

He’s optimistic about the future. “We know we can reach the top again,” he said, “[by] mom-and-pop standards, anyway.”

Royal Video Exchange

Prospect Heights

In 1986, Mike Gidiuli opened Royal Video Exchange in a 2,500-square-foot location at 242 Flatbush Avenue. Three years ago, due to sagging business and burgeoning rents, he moved across the street to his current 1,100-square-foot, bare-bones storefront at 317 Flatbush Avenue. The store has stacks of DVDs but little else.

He said he signed a seven-year lease and, for the time being, business is adequate.

According to a recent report by CPEX Real Estate Services, asking rents for retail space in the area range from $50 to $64 per square foot. He declined to say what his rent is, but said the smaller store allows him to spend less money on rent, payroll and utilities.

“Our expenses are less than before,” he said.

Gidiuli said he also has some advantages over giant Internet chains. Royal Video carries adult movies, which Netflix, for example, doesn’t. He rents his movies cheaply, too: A film costs only $2.30 for 24 hours.