Related: • Online Shopping and Sales Taxes • A Mall Grows in Brooklyn

Somebody used pepper spray at the biggest Toys ‘R’ Us in the world, the one in Times Square, and since this anti-riot chemical, made from cayenne peppers, can cause temporary blindness, some 3,000 shoppers were evacuated. Many did not stay out for long. “I was scared,” a nine-year-old told the Daily News. “Now I want to go back in for toys.”

The incident occurred, after all, on the weekend after Thanksgiving, the busiest shopping weekend of the year, in the city where people come from around the world just to go shopping.

Then last week, Wal-Mart, the world's largest retailer and a symbol to its critics of all that is wrong with the big chain stores, announced plans to open its first outlet in New York.

Shopping has long been recognized as a quintessential New York activity, but it is far more important to the city's economy than most New Yorkers realize. Only Wall Street, some say, is as central to the city's financial health as the retail industry, which provides billions in tax revenue and an increasing percentage of the city's jobs.

But the arrival of chain stores, along with the rise of Internet shopping (see related story), have altered the retail industry in New York. Wal-Mart is not planning to open its New York store until about 2007, but many other chains have already established a very visible presence, including Target and Home Depot, and a giant Ikea has been approved for the Brooklyn waterfront.

SHOPPING CAPITAL OF THE WORLD

New York City has been a shopping capital for a century and a half. Department stores were invented here; the first one debuted in 1862 at Astor Place. Retailers such as F.A.O. Schwarz and Tiffany's later moved north to the area from Union Square to 23rd Street, which became known as Ladies Mile and featured such opulent stores as Siegel-Cooper, with its marble staircases and a pet department that sold panther cubs. By the 1890's, a tourist guide could proclaim, "all America goes to New York for its shopping," and this became even more true at the turn of the century, when R.H. Macy moved further uptown to 34th Street, with a half dozen grand emporiums to follow.

The era of the city department store lasted until the middle of the 20th century. That is when a new form of shopping emporium was invented – the suburban shopping mall, which killed downtown shopping districts across the country, and helped put many New York department stores out of business.

New York recovered in the 1990s, with the advent of expensive boutiques in Soho, on Madison Avenue and in the Upper West Side; a much-publicized 1990 guidebook was entitled "New York On $1,000 A Day/Before Lunch." In 2000, according to the Independent Budget Office, stores in New York grossed $21.9 billion in sales.

Following a sharp decline after September 11, 2001, Soho has rebounded this year, with the opening of a Bloomingdale's and an Apple store that some liken to a singles bar, others to a theme park. A new shopping mall -- the Time-Warner Center -- brought an array of chain stores for the affluent to Columbus Circle.

If some of the new stores seem specifically tailored for New York, most reflect what could be considered the third wave of New York emporiums -- transplants from suburbia.

MORE JOBS, FOR LESS PAY

More than 260,0000 New Yorkers worked in the retail industry (excluding bars and restaurants) in 2003, accounting for about one-twelfth of all workers in the city.

Retail workers tend to be less educated than city workers as a whole, and years ago might have found employment in manufacturing. But factory jobs in the city have declined sharply, while the number of retail jobs has risen.

The average retail worker in New York, according to the Fiscal Policy Institute, earned a little less than $30,000 a year in 2003. Nearly two thirds of full-time retail workers do not have health insurance benefits provided by their employers.

And these retail jobs pay less and less. (pdf format)

While the figures do not distinguish between chain stores and others, the drop in wages coincides with the move of chains to the city. About 70 percent of metropolitan supermarkets are unionized, providing workers with health benefits and pensions, but most big retail stores, such as Target, K-Mart, and CVS, are not.

"The quality of jobs in retail is really spotty," said Bruce Herman of the Center for Workforce and Economic Development.

CHAIN STORES

While some entrepreneurs launch their own businesses -- Fifth Avenue and Smith Street in Brooklyn, for instance, have both seen a spate of new stores selling fashion and unusual home accessories -- chain stores account for much of the expansion in New York's retail industry.

Many shoppers hail the chain stores, saying they offer the kind of products and prices that consumers once had to go to the suburbs to get. But others fear these multinational businesses have destroyed local establishments that once formed the economic backbone of the city and gave it much of its character. Book chains, for example, have helped wipe out cherished local independent bookstores such as Rizzoli's and the Endicott. Rents in malls, as well as demanding specifications written into leases, tend to exclude local businesses of all kinds in favor of chains.

Over the past decade, chain stores have replaced locally owned shops on the Upper West Side. "Midtown Manhattan keeps creeping further north. The big-box stores are replacing the mom-and-pop stores that were our mainstay," Assemblymember Scott Stringer told the Post.

Home Depot has opened two branches in Manhattan, complete with escalators and a concierge. Not even sex shops are locally owned. The first U.S. branch of Myla, an upscale British chain selling erotic wares, opened on Madison Avenue this fall.

There is a surreal aspect to the mushrooming of the chains. Often two Starbucks sit a block from one another. In 2002, Cingular Wireless announced plans to open 200 stores in the New York area. "It's a branding issue more than anything else," Bradley Mendelson, a real estate broker working for Cingular said at the time. "Everybody knows AT&T, and everybody knows VoiceStream. Why do they know them? Because they have stores on the street."

Along with high rents, chain stores seeking to enter Manhattan face community opposition and the search for suitable space. To make things easier, Mayor Rudy Giuliani in 1996 proposed changes to city zoning that would have allowed stores under 200,000 square feet, the size of the average Ikea, to be built in manufacturing zones without approval from the City Council. But the City Council overwhelmingly rejected the proposal.

The council has approved individual big box stores, including the Brooklyn Ikea. And some of the stores do not need the council's acceptance. In response to Wal-Mart's possible move to New York, Councilmember Christine Quinn announced that she will propose a bill requiring that the council review plans for any big box store above a certain square footage.

THE BOROUGHS' BIG BOXES

While most big retailers dream of Manhattan, many settle in the boroughs, where there is more space, less cost, and lots of eager shoppers. Last year, real estate broker Chris Conlon estimated that there might be one mall for every 50,000 people on Long Island, compared to one for every 300,000 people in the boroughs. While the figures are rough, they do indicate a gap that stores want to fill.

Shopping malls already thrive in Staten Island, Queens and Brooklyn. The Queens Center, which opened in 1973, has had sales per square foot that are triple the national average for malls. The Old Navy at Atlantic Center in Brooklyn has been among that chain's most successful stores. In its first weeks of operation, the new Target at Atlantic Terminal (see related story in the Community Gazettes) "far exceeded our expectations," a store manager told the Times.

Seeing such results, more retailers are coming to the boroughs, including the Bronx. This summer, River Plaza in Marble Hill opened, bringing the Bronx its first Target and its first Starbucks. The borough is "not a well known market, but retailers are beginning to figure it out," David Rosenberg, a real estate broker, told Newsday.

Michael's, a Texas-based chain of crafts stores, will open in Woodside Queens early next year -- and then move on to Manhattan. "Our approach has been to gradually push in further and further to the city," Douglas Sullivan, Michaels's executive vice president for development, told the Times. "That's how Wal-Mart used to describe the strategy . . . surrounding a city and then entering it."

NEW YORK WAL-MART

And now Wal-Mart itself is preparing its foray. The retailer reportedly confirmed last week that it wants to open a New York store in an area of Rego Park that already includes a Target and BestBuy. For years, Wal-Mart had tended to stay away from big, expensive cities because of high labor expenses and the cost of space for its sprawling one-story stores and huge parking lots.

But that did not stop many New Yorkers from forming an opinion about the store. Wal-Mart, with its non-unionized workforce, inexpensive imported merchandise, and willingness to sell guns and ban books, symbolizes what many people dislike about giant chain stores. Opposition emerged almost immediately.

Assemblymember Brian McLaughlin, the president of the Central Labor Council, said the store would come to Queens "over my dead body." An aide to Queens borough president Helen Marshall reportedly expressed concern over gun sales and allegations of sex discrimination by the company. And some community leaders worried that the stores could destroy existing businesses.

Critics charge that Wal-Mart keeps prices low by underpaying its workers and not giving many of them health benefits. This, some groups charge tends to drive down wages and benefits in other businesses.

That helps explain why urban communities sometimes rise up against Wal-Mart as David against Goliath. Earlier this year, the Chicago City Council vetoed one planned Wal-Mart. While supporters trumpeted the new jobs they said the store would bring to the city, opponents said the jobs would not be good ones. And opponents blocked a Wal-Mart in Inglewood, California, near Los Angeles, when they got the issue put on the ballot.

It remains unclear what Wal-Mart will have to do to get its New York project approved. Whether the New York City Planning Commission and City Council get to review the store depends on the zoning of the site and Wal-Mart's specifics plans, such as parking facilities, according to the Department of City Planning.

ARE CHAIN STORES INEVITABLE?

Not all chain stores succeed. The Wiz electronics chain closed. In 2001, the Gap shut six Manhattan stores. A Waldenbooks and a Gap on Montage Street in Brooklyn Heights are now abandoned storefronts, though other chains may move in. The proposed merger of K-mart and Sears, both with outlets in the city, could result in stores being closed.

And some individual merchants will always strive to offer something different. Unusual stores remain dotted throughout the city, with many in ethnic neighborhoods that serve as magnets to people eager for that spice, vegetable or piece of clothing that reminds them of their heritage."New York is a place of specialty shops," said Joshua Russ Tupper, a member of the fourth generation to run Russ and Daughters, which sells smoked fish, caviar, exotic cheeses and other treats on Houston Street.

Jamaica, Queens, once a victim of decline, now lures shoppers, most of them African American or Caribbean, from as far away as Detroit. They like the clothing, the prices, the crowds, and the stores that sell products geared to the black community that they may find hard to get at home. Of course, Jamaica could fall victim to its own success. Last year both Old Navy and The Gap opened in the neighborhood.

For More Information:
Retail Council of New York State. Represents 5,000 stores throughout the state

NYC Retail Trade Sector: Labor Market Profile Fiscal Policy Institute

Unionization and Poverty The Case of New York City Retail Workers (in pdf format)

The Economic Impact of Wal-Mart: An Assessment of the Wal-Mart Store Proposed for Chicago's West Side Center for Urban Economic Development, University of Illinois at Chicago

New York's Missing Megastores City Journal

Erica Pearson contributed to this article.