NEW YORK — Business might be bad, but small retailers here are working to fight back.

This story first appeared in the November 10, 2008 issue of WWD. Subscribe Today.

As the economy moves through the recession, many independent retailers are suffering. That’s why a group of about 60 store owners in Manhattan have banded together to start S-3, or Shop Small Stores, an organization on a mission to educate consumers about the importance of supporting small, independent retailers.

The group was founded by Fern Penn, owner of the SoHo boutique Rosebud. Penn was soon joined by two other local shop owners, Rita Brookoff from Legacy and Linda Pagan from The Hat Shop. Penn said high rents are having an adverse impact when combined with lower sales.

“Slashing prices by 70 percent is not the answer,” Penn said. “We have to make the customer understand that small stores lend character to a neighborhood and character to the city, and provide personal attention and expertise.”

Representatives of more than 25 Manhattan stores, with many from SoHo, attended the group’s first meeting in January, including Selima Optique, Sacco, Koos, Legacy and Wendy Mink jewelry. After the third meeting last week, nearly 60 retailers were on board, including a SoHo children’s boutique, Bundle, Olive & Bette’s and even a NoLIta-based cafe, Divalicious Chocolate.

Members of the organization have designed bright yellow decals with the S-3 logo for store windows and are distributing postcards with the names and addresses of participating stores. A May Madness event is planned with a Thompson Street block party. Store owners are encouraged to offer a partylike atmosphere in each of their stores for the month of May, ranging from upbeat music, serving refreshments or just decorating the store with yellow balloons or streamers, since yellow is the color of the S-3 logo.

“We want to make the month of May a joyful one where people can come to our stores and have fun, shop and help support the economy,” said Brookoff, who has been running her Legacy store for more than 30 years. “We need people to spend in our stores and support us because without us, the fabric of New York will not be the same.”

S-3, which hopes to become a model for a citywide umbrella organization, is trying to get local officials involved.

“We’d like to have the city help us out with more tax-free days to get consumers back to spending again,” said Penn.

Recognizing the plight of such retailers and similar small businesses, President Obama offered a fresh aid package last week with steps to get credit flowing to small companies. Obama said small businesses were responsible for about 70 percent of the new jobs created in the last decade.

“Every other store down here is closing,” said Larry Davis, manager of Selima’s SoHo store. “It’s pretty bleak. It’s happening everywhere: SoHo, Madison Avenue.”

Members of S-3 plan to share information and resources.

“People come in all the time asking where they should buy this or that,” Davis said. “All the retailers will work together to cross-promote one another.”

Betsy Imershein, a consultant who is advising the group, said she’s looking at Shop Brooklyn, an initiative rolled out by the borough president’s office in December, for ideas.

“Shop-local movements around the country have been incredibly successful,” she said. “There are tax benefits for chains that can afford bigger rents, but none of that money stays in the community. With small stores, the sales go back into the community.”