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Cutting Their Loses: As sales plunge, some shop owners opt to pack it in 

After a couple of years watching merchants come and go, Bend Downtowners Association Executive Director Chuck Arnold has come up with a term to describe

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After a couple of years watching merchants come and go, Bend Downtowners Association Executive Director Chuck Arnold has come up with a term to describe people who jump into the local commerce game with more inspiration than perspiration: recreation retailers.

These are the folks who open up personalized dog sweater shops and stores that sell 100 kinds of balsamic vinegar and nothing else.

And no matter what the economic climate around them, these shopkeepers come and go as regularly as the spring rains in Central Oregon.

But this year things are different, vacancy is on the rise in downtown and recreational retailers aren't the only ones sinking in Central Oregon's stagnating economy. As the recession drags on and unemployment continues to climb, some of the area's better established retailers are throwing in the towel after watching their sales plunge over the past year.

After seeing sales dip almost 30 percent between 2007 and 2008, Mike and Kirsten Goldstein knew that their boutique home furnishings business was in trouble despite a nearly 25-year track record. In late February they announced that just two years after taking over the business they would be closing Rising Star, an iconic business know for its off beat and urban-hip home furnishings. Within a week or two the obligatory neon "Liquidation Sale" banners popped up alongside the metal sculptures and recycled patio furniture that passersby are accustomed to seeing at the corner of Colorado and Bond streets.

Mike Goldstein came into the venture with a strong business pedigree having worked as vice president of operations at Deschutes Brewery and before that at Tillamook cheese. Goldstein said he and his wife shopped around for a business opportunity for some time before settling on Rising Star. They liked it because of the strong community support and identity that it enjoyed. And everything looked fine for the first couple of months. The housing market was still cranking in Central Oregon, even if signs of the coming bust were starting to appear. By November things started to soften, said Goldstein. They never really recovered.

Rather than keep going until they squeezed the last dime out of the business, the couple decided to call it quits while they had the resources to pay off their debts.

"I have a lot of respect for the way they've gone about this. They've had a lot of integrity in the process and the people they were impacting," said Linda Quon, a friend who worked as a marketing consultant to the Goldsteins.

Quon is one of several people whose own businesses will take a hit, however, small because of Rising Star's closure. It's one less client for her small marketing firm, Quon Design and Communications, which she runs out of her home with her husband. From the cleaning business that used to come in once a week to the graphic designers and photographers who put together the shop's signature print and television ad campaigns, there are others too, who will feel the loss of Rising Star.

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Mike Goldstein estimated that Rising Star spent roughly $100,000 on local advertising last year and another $35,000 on production costs. The company also donated cash and in-kind contributions to local charities including the Central Oregon Environmental Center and the Family Resource Center where he is a board member.

The company will go from a peak of 10 employees down to a workforce of one, depending on whether they can find a buyer for the modest futon mattress manufacturing business that Rising Star maintains.

But even that element of the business, which is marketed as a locally produced and environmentally friendly alternative to mass produced bedding, is in jeopardy in a soft market that is flooded with cheaper foreign imports.

"When economy is tough people have to make tough choices," Goldstein said. "They get a mattress from Asia as opposed to one that is made out of pop bottles," he said, referring to Rising Star's practice of using soy-based foam and recycled plastic from pop bottles in its handmade mattresses.

Just a few blocks away Gloria Smith is shuttering her small women's clothing business after a similarly difficult year. She said a combination of health issues, stiff competition and a flagging economy forced her to re-examine the future of her store, En Vogue.

Smith said she started to notice that things were slowing down for her store last spring after eight years in business. By the end of the year she had let her two staff people go in an attempt to cut all unnecessary costs. After six months of courting another buyer, a sale fell through and Smith decided to close. She has spent the past few weeks liquidating almost all of her inventory. She is open by appointment only this week, and then will decide what to do with the rest of her inventory. Smith, who owns her Franklin Street building, said she plans to keep open her adjacent salon, and remains hopeful about a recovery for local retail. But she won't be a part of that, if or when it happens.

"People are still opening up shops. I sold all my racks and fixtures to another store. That tells me that things are still happening, positive things. We just have to start looking at those and appreciating them," Smith said.

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Downtowner's Arnold said that while things have certainly gotten tougher for downtown merchants amidst the recession, he isn't seeing anything like a total retail collapse. Vacancy rates are up, but they're still hanging below the double digits downtown, Arnold said.

He looks around at some of the stores that have closed and sees a variety of reasons, not all of which are directly related to the recession.

And he points to other stores like Hot Box Betty and Lulu, which are more than surviving, if not thriving, in the current economy.

"These are people who know what they're doing, it's not recreation retail," he said.

But the strong survive model doesn't always explain who lives and who dies in the cutthroat retail world. Sometimes there just isn't enough money to go around.

Jennifer Redfield has three decades of retail experience in Los Angeles and Central Oregon and runs a small women's boutique clothing store on Brooks street. She opened with the idea that you could provide up-to-date fashions direct from Southern California at Central Oregon prices. And she has a small storefront filled with sparkly silver high-heeled shoes, designer jeans, cotton dresses, and tee shirts to prove it.

And the model worked pretty well for four years. But last year she saw her sales drop by roughly half. She let go her two part-time employees last fall and started brown bagging her lunches to save money.

"I don't believe in the $85 tee shirt. And that's what our concept was. And it worked, but you have to have foot traffic," Redfield said.

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