(Feb. 17, 6:14 p.m.) NEW YORK — The effects of the recession have found their way to Northeastern retail stores.

While bad economic times have harmed foodservice sales, distributors say the retail segment, while still viable, hasn’t escaped damage.

Roni Okun, owner of Morris Okun Inc., quoted a television financial analyst who said if people can eat it, smoke it or put it in their medicine cabinets, those industries are almost recession-proof.

That doesn’t mean shoppers’ purchasing will remain unaffected.

“Because the average customer may be more careful in what they buy, you may see a decline in volume,” Okun said. “They (consumers) just won’t grab. They’ll plan their meals. I think people will be real careful. They will stick to basics.”

Tom Cignarella, Okun’s president, said orders by small retail chains remain steady.

“Like everything else, the produce economy has been affected,” he said. “It hasn’t gotten hit as hard as everyone else, but it is still being affected. People are putting their priorities in place and are buying only for their needs.”

Smaller orders

During the Thanksgiving, Christmas and New Year’s holidays, Cignarella said he saw smaller orders, customers buying essentials only.

Ira Nathel, president and vegetable buyer of Nathel & Nathel Inc., said he’s selling the same amount of product to his small mom-and-pop and other independent retail customers.

“The retailers are doing okay,” he said. “If anything, they may be doing better.”

The race to lower expenses has hit retailers.

“What happens is everyone is watching and really trying to sell their products as cheap as possible on the retail level to get the retail sales,” Nathel said. “They’re trying to squeeze us because they want to make their margins. But we’re sticking to our guns and try to buy the best product available. We compete as close as we can on price.”

Sometimes you can come close on price, Nathel said, and sometimes a distributor has to tell the customer that he has to pay a certain amount of money for a better product.

Retail sales remain strong, distributors report.

“Our retail business is still solid,” said John Garcia, president of Krisp-Pak Sales Corp.

Few large chains

Known for having many consumer choices and options, most of the larger U.S. retail chains haven’t found a strong foothold in the city of New York, especially on the island of Manhattan.

Aside from the Austin, Texas-based Whole Foods Market Inc., the big chains such as Shop-Rite Supermarkets, Edison, N.J.; the Great Atlantic & Pacific Tea Co., Montvale, N.J.; Stop & Shop Supermarket Cos. Inc., Quincy, Mass.; and, increasingly, Wegman's Food Markets Inc., Rochester, are in suburban areas or in states surrounding the New York City area.

New York’s smaller grocery stores are largely independently owned. Manhattan and many of the boroughs have only a handful of chains, such as New York-based Gristede’s Foods and Larchmont, N.Y.-based D'Agostino Supermarkets.

High-priced real estate, lack of parking in most places and population density hasn’t been favorable for expansion of the bigger retail players, said Matthew D’Arrigo, vice president of D’Arrigo Bros. Co. of New York Inc., and co-chairman of the Hunts Point Terminal Market.

“The major chains can’t sink their roots into this real estate because their business model is too big of a model,” he said. “They need more space than they can find.”

While many other Bronx distributors decry the slowdown in foodservice sales, D’Arrigo hasn’t seen as big a decline as some companies because its sales focus on the retail sector.

About 70% of the company’s sales are to retail customers, D’Arrigo said.

“Our business is retail-enhanced,” he said. “In a person’s budget or disposable income, fruit and vegetables would have to be one of the last things they cut back on based on budgetary constraints.”

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Tom Cignarella, president of Morris Okun Inc., stands in front of his store's display of celery, eggplant, lettuce and other items. Produce sales haven't been as hard-hit as others sectors but still have been affected. "People are putting their priorities in place and are buying only for their needs," he says.