After an upbeat year of business, tougher

times have hit Paulette Callahan's jewelry and art store.

In September, Hurricane Gustav closed the city down, and then

the nation plunged into the economic crisis that's frayed

consumers' nerves.

Callahan needs business to pick up this holiday season to better

justify the high cost of rent in what she calls an up-and-coming

stretch of Magazine Street, the Uptown thoroughfare that became one

of New Orleans' main retail drags after Hurricane Katrina wiped out

malls in August 2005.

The small businesses, ranging from clothing and gift shops to

antique dealers and specialty stores, are trying - in some cases,

struggling - to stay ahead of the area's evolving retail landscape.

Many malls outside the city are back in operation. Macy's, which

closed after Katrina, has renewed its interest in the market,

recently opening large, suburban stores. It has not reopened in the

city.

The small-shop character could be just the thing to keep

Magazine Street going, University of New Orleans economist Janet