Add another anecdote from across the nation in a metropolitan area that technically didn't see recession until March 2009: I owned a small retail shop that relied on primarily discretionary income. Like the ladies purse store, I catered to primarily middle class and some upper income women. The shop was lovely, accessible and prices reasonable.
I had been in business since 2004 but noticed unsettling trends in my traffic numbers and sales data beginning in roughly December of 2007. I changed up the mix of my stock to address the data that I was seeing (bigger ticket and the more extravagant items were idling, basics and lower priced items became my bread and butter) but even with those changes I was managing to tread water rather than progress or grow meaningfully. I cut my hours (like the OP observed in Brooklyn) because I couldn't afford the help that I needed to service a full time shop. I was a solo act that worked pretty much 6-7 days a week to stay open for 4.
I aggressively managed the shop from week to week based on my numbers with targeted marketing and sales but still was simply treading water. Then came Black October 2008 when my numbers fell off of a cliff. I was shocked. Even with all the bad economical news I wasn't prepared for what happened to my traffic and sales in October because traditionally October and November were my very best months, we really weren't feeling the effects of the housing crisis and fresh cash had been infused into the system in the form of a state energy rebate and the Permanent Fund Dividend.
I called a couple of other retail business confidants that I trusted to tell me the truth and they were reporting similar drops in both traffic and sales.
To end this long saga: I looked at the numbers going forward from November 2008 through February 2009 to extrapolate and project high, low and median revenue possibilities to definitively decide whether to renew my lease which was due to end in May, notice to be given in March.
Though I was a very good tenant, my landlord was not willing to negotiate a lower lease rate or significantly alter it's terms to help ease the pinch I was feeling so rather than take a risk of going into debt and/or work for pennies a day at best I had a sale and went out of business. (The space is still empty though in prime move in condition and I knew it would be.)
Based on what has happened in the past few months I'm glad I quit while I was ahead. It was not an easy decision.
We are seeing the "Inventory Reduction" and closing sales that started locally with retail furniture and one large clothing chain that went bankrupt, emptying large anchor spots in local malls. Smaller businesses from tourism to retail are all clamoring for business with "super" sales and specials. It's sad to see but it's probably a necessary evil to cull the weak though it will result in less choice (and possibly higher prices) once it's all said and done for consumers.
My shop was essentially one canary in a vast coal mine of local and small business. There are many sitting on 5 year or longer term leases that either have to make do with working 24/7 to stay just above (or below) the rim of the canyon or prepare to be on the hook for that lease. Some I know are up to their eyes in debt to keep their shops open. Some are doing fine I suppose. The thrifts appear to be packed. But what does that tell us?
Your Brooklyn neighborhood sounds lovely as does the food. Hopefully things will turn around sooner rather than later for the sakes of those folks still struggling to stay in business and provide local color and flavored service.