Financial crisis hitting everything from antique dealers to dog accessories
October 06, 2008
The lawn in front of Hamptons Antiques Galleries, with a sign advertising a “tag sale,” was an antique bargain-hunter’s dream. People examined the items on the wraparound porch: a set of “Chinese famille jeune style porcelain candlesticks” that had been reduced from $295 to $150 and a still life of roses reduced from $995 to $475.
Inside, the well-appointed showrooms were much more subdued.
“I expect to close. I just can’t afford it anymore,” said the gallery’s owner Michael Ruffino, who said business had gone down 85 percent in July and 50 percent in August and September. And his rent was just $2000 a month, cheap by Hamptons standards. The galleries were affected because many Hamptons owners rented out their houses this summer, said Ruffino.
“Rentals don’t buy furniture and antiques.”
Ruffino will close in December and focus full time on his other store in Stamford, Conn. Second homes, it seemed, would be the first casualty of the economic downturn for the rich.
Settled by English Puritans, the series of towns that make up the Hamptons remained quiet whaling and fishing communities until the late 1800s, when they began attracting New York City money. Waves of artists made their weekend homes here throughout the early and mid-1900s, but in the 1960s and 1970s, the Hamptons went national. The artists turned into movie executives, and the houses turned into mansions. Since then, the sleepy Eastern tip of Long Island has been the second, third or fourth home of globe-trotting movie stars and financiers such as Steven Spielberg, Billy Joel and Christie Brinkley.
Over the last decade, in an age when the media often fawned over excessive wealth, they turned their eyes on the Hamptons and feasted when an intoxicated Lizzie Grubman rolled over several people in her SUV in the parking lot of a nightclub in the summer of 2001.
The Hamptons did not settle down after Sept. 11, as New Yorkers sought an escape from the scarred City. During the 2000s, investment bankers came in droves to build bigger and bigger houses.
The crowd from the city even imported some of their favorite eateries to the area. Nello, the famed Upper East Side restaurant, one of the city’s most expensive, opened Nello Summertimes in South Hampton. You can start off with a $90 lobster appetizer followed by a taglioni pasta with shavings of black truffles for $200. The bottom feeding Dover sole sells for the bargain basement price of $85. A mojito is $35, and a Ketel One and soda goes for $27. The price for a large bottle water: $18.
A store manager at Nello said the prices for cocktails and bottled water remained the same despite the recent downturn in Wall Street’s fortunes.
Investor Ron Baron set the record for a $103 million 40-acre house in East Hampton in 2007, when the upper echelon of home prices there were skyrocketing. As recently as last year, the Hamptons had seemed untouchable.
“The housing market all over the United States is down, but not here, because this is where all the rich people want to be seen in the summertime,” George Simpson, president of Suffolk Research Service, told The Washington Post at the time.
But on an autumnal Saturday in early October, there were small signs that the place where hedge fund money went to play would be impacted by the crash of the financial markets.
Part of the problem for Ruffino, the antique store owner, is that Hamptons part-timers like Geroge Capsis are renting their homes.
Capsis, the owner of the WestView newspaper in the West Village, where he lives during the week, was trying to rent his Hamptons house for the first time on this sunny Saturday afternoon.
Like many here, he had a connection to the finance world. His daughter-in-law cleared derivatives, but he was not very sympathetic to the plight of the fallen finance titans.
“Out here in the last five years, they’ve been building McMansions for Wall Street, for the new stockbrokers,” he said with distaste.
Just about everyone said this financial crisis was the worst their businesses could endure and were already wary after a slow summer.
Collette’s Home Furnishings and Consignment, which is behind Hamptons Antique Galleries and sells high-end furniture and housing accessories, was also packed with marked-down items and busy-looking people hunting for bargains.
The store had been getting more consignments from people in the area, said Deborah King, who was working in the store, so she was cautiously optimistic about Collette’s business prospects.
“We’re the kind of people who are going to do well in this economy, but it has been quiet.”
Wall Street’s misfortunes have affected King directly. Her husband retired from Bear Stearns “years ago” but his retirement account was impacted by the company’s fall this year.
“We went through our shock back in April.”
As a Hamptons local, she noted that many of the people who she grew up with went to Wall Street and today did not know what their future held.
She pointed to a sign prominently featured outside of the store’s entrance that said “STOCK.”
Alluding to the Hamptons’ impending financial troubles she said in a schadenfreude-istic chortle, “We put this out here because we think it’s going to sell.”
The price was $75.
At around noon, the restaurant Pierre was a little less than half full. Still, its owner, Pierre Weber, a middle-aged Frenchman with silver hair in a pressed pink shirt and khaki shorts, exuded an overall calm.
“Let’s go in my office,” he said, pointing to a bench outside the restaurant.
He shook hands and said hello to most of the people who walked by.
Pierre serves traditional French food — “you don’t need a dictionary to read my menu” — such as roast chicken and boeuf au poivre.
“I’m very lucky to have a good base of customers.”
But Weber had lost 30 percent of his business in the last two weeks and had already substituted some less expensive menu items to attract customers.
“Instead of having a sirloin steak, I’ve changed to a flank steak.” The flank steak, with shallots and fries was $26 compared to the $32 sirloin. And instead of a tuna tartare appetizer for $18 to $20, Pierre was serving escargots for $12.
This is no time to hang on to expensive menu items or overcharge, said Weber, and his customers appreciate it.
“They say, ‘Thank you, your prices are much more affordable,” said Weber. “Greed is not good because people see it.”
Like many in the Hamptons that day, Weber seemed unphased by the economic downturn. His restaurant also endured a hit during the lead-up to the Iraq War, when the American government was scolding the French for speaking out against its war. A few customers gave him a hard time as a Frenchman, but he weathered it. Still, he had not encountered a downturn like the current one.
The “prices of houses went up so much,” said Weber, like “Capitalism went berserk.”
Across the street, Hamptons Hound, a dog accessories store with salon-grade dog shampoo and leashes of every color of the rainbow, was empty, except for shop worker Victoria Phoenix.
Her dog Skye, a Rhodesian Ridgeback with a light stripe on the back of her silken fur, was wandering around the store. Every so often, Phoenix chased her down and stroked her calmly.
Despite the bad business of the last week, Phoenix was not worried about Hampton Hounds, because people “are always going to spoil their pets.”
“They may not buy a $1200 bed,” she gestured down at what looked like a designer mini-Italian leather couch, “but they will still buy a $200 bed.” Still, Phoenix had reduced the $1200 bed from $1650.
She crouched down next to Skye and started nuzzling the dog and looking into her eyes.
“We’ll turn the heat down lower, drive less, but we can’t give up our organic veggies,” She said to the dog. Then she turned away from her and looked up. “I don’t think anybody will.”
She expected there would be more of a crowd at 4 p.m., when the store’s weekly “Yappy Hour” takes place. Owners drink wine and tea on the outdoor patio behind the store, while their dogs feast on organic food.
“Here,” she offered a sheet of paper, “Desiderata,” a poem that she gave to shoppers.
One line stood out: “Exercise caution in your business affairs; for the world is full of trickery.”
At the Suffolk Transit bus stop, Lenore Villa, a live-in housekeeper at a nearby estate good for detail but does not work in sentence, maybe restructure and work in, paced nervously as she waited to pick up a parcel from the Jitney.
She complained about the influx of illegal immigrant help to the Hamptons in recent years and the financiers who eagerly hired them. The hedge fund managers did not treat their help well, she said.
“It was all like a get-rich-quick thing. They’re not used to having people under them, so they thought they could boss them around.”
The Suffolk County Transit Bus was twenty minutes late as it trudged toward the stop in a sea of Mercedes Benzes, SUVs, pickup trucks on oversized wheels and convertibles. There were not very many people riding the bus: two Hispanic men, an older woman from Eastern Europe and an acne-covered teenage boy with a long skateboard and a copy of Anthony Burgess’ “A Clockwork Orange.”
A row of barbecues in front of a housewares store, all of different colors — red, blue, silver, black — gleamed in the sun as the bus whirled by.
About 15 minutes later, it stopped in East Hampton, where designer chains such as Intermix, Rugby by Ralph Lauren, Lily Pulitzer and Mulberry had invaded Main Street in the last couple of years.
There was a running tally of the plastic cups with either the name Obama or McCain on them in the window of Valerie Smith’s Monogram Shop on Newtown Lane.Thousands of people had bought them in the past several months since the poll started, but inside, the store was empty. A package of four notepads that said “Groceries” sold for $55, and a bundle of napkins that said “Have you seen my contractor?” for $18.
Smith was preparing for a tough winter. She had already canceled shipments.
“I got an e-mail [from a supplier] that said ‘we’re ready to ship the 1000 dollar cashmere sweater with a velvet collar,’ and I said, ‘keep it.’”
Only the $3 plastic cups seemed to be selling.
Nicholas, a psychic in the Hamptons, who does not use his last name professionally, had recently been busy with old and new clients. He said his clients range from a VP of an investment bank that he told would be purchased by another bank four months before the takeover occurred to people who invested in the Hamptons real estate. The real estate market would rebound eventually but “some people I can’t help,” he said.
Nicholas recently predicted that John McCain would win the presidential election in a landslide.
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