Blanche Denmark, 50, has just said goodbye to yet another friend as she sat down wearily on the store counter. "It's like a funeral. I know I'm not going to see them again," she said softly. "I really hate to leave."

But she had no choice. Her employer, the S. S. Kresge Co. store at 11th and G Streets NW, a durable downtown landmark for 68 years, closed its doors two weeks ago and became the most recent victim of the city's downtown urban renewal program.

Redevelopment began seven years ago when the city purchased for $17.6 million all the properties on two square blocks bounded by G and H, 11th and 13th streets. Only buildings belonging to the Chesapeake & Potomac Telephon co., Washington Gas Light Co., and Columbia Federal Savings & Loan Association escaped acquisition.

Urban renewal officials envisioned demolishing the old two- and three-story, turn-of-the-century buildings and surrounding the Metro Center station at 12th and G streets with nine-story buildings containing offices, a hotel and small businesses. Cureent store owners, many of whom have been in the blocks for years, have lived under the shadow of the wrecking ball ever since.

KMart, Kresge's parent company, simply became tired of living with uncertainty about when the city would order the store to move, said former manager Paul Casey.

"This way we made the decision to close. The city could have taken the store on 90 days' notice at any time," he said.

During the seven years of uncertainty, other smaller businesses have moved, but when Kresge joined the exodus, shoppers lost a bargain center, the remaining small businessmen lost the blocksh major attraction, and the city lost a downtown institution.

Blanche Denmark lost a job that was 15 minutes by car from her Northwest home. She was transferred to a Wheaton KMart store, an hour's drive from her home.

Kresge left behind a barber, two drugstores, two restaurants, a costumer and il other merchants.

"The uncertainty -- if I had'nt dyed hair, it'd be white," said Couret Hubbard, the feisty 76-year-old owner of the Jack Mullane costume rental shop, who had done business in the 700 block of 11th Street, around the corner from Kresge, for 50 years.

"It's like having a good supper tonight and not knowing if I will have breakfast in the morning," she said, her small frame bundled in a heavy black coat. She sat in her small shop, surrounded by racks of costumes ranging from replicas of colonial dresses to World War I German military hats.

"It's like quicksand," she added.

Waiting for redevelopment has left the area with an abandoned look.

Forty percent of the small shops are vacant. In other buildings only the first floor is occupied while upper floors gape with vacant windows. Large holes mark the sites where other buildings have been demolished.

The desolation is intensified because the merchants cannot paint and repair stores or take advantage of sales by wholesalers because they cannot stockpile inventory. They might move before new stock arrives or have to sell a large shipment that arrives a few days before the eviction letter.

"We're supposed to be buying for next fall, but I haven't bought for spring. I donht know if I'll be here," said Sol Amanuel, owner of A&N Trading Co. Inc. at 714 12th St. NW.

"It's very difficult to do business this way," Amanuel said. "The phone man was just here. You have to take out an ad nin the Yellow Pages) for a year. If I have to leave in 90 days. I'm stuck with a $400 ad. People will call here, and I'll be out of business." The Yellow Pages provide his major advertising source, he said.

The businessmen said their landlord, the city's housing department, provides them no definite information.

"Rumors are flying, but rumors have been flying since they bought us," said Jack Rosenberg at the George W. Spier Inc. jewelry store, 1237 G St. NW. "Nobody gives us specific information, and that is the worst part of all."

Housing officials, who are located a block away, said they have no idea when they will evict the tenants. The Oliver S. Carr Co., has received approval from the city agency to draw up redevelopment plans in September for the blocks. A Carr spokesman said no new construction will begin on the blocks for at least two years.

The remaining merchants see the end coming closer. Their neighbors -- on the southwest corner of 12th and G, the third urban renewal site in downtown -- received eviction notices De. 1 and must move by March 1.

The Kresge closing surprised and dismayed many longtime customers. "It was a shock after Neisner's closed," said Maurice Harrison, a Woodward-Lothrop employe. Neisnerhs, a variety store on the southeast corner of 12th and G, closed earlier this year after declaring bankruptcy.

"We have nothing left. Running over here (to Kresge) was like running to the grocery store. They had everything you wanted, including food," Harrison said, standing amid empty shelves and cluttered merchandise that testified to the success of a month-long clearance sale that preceded the closing.

"You could get bargains here," said a Northwest woman, a customer for 20 years. "The majority of people in the District are not wealthy. People like to feel that they can go someplace and get a bargain... It's sad to lose Kresge's."

"That closing inconvenienced a lot of the elderly people because they came, and ate breakfast and lunch there," said the manager of a neighboring drugstore. "The same people came every day because it was inexpensive. It's like an old friend disappearing."

"It drew people to the block," said James H. Mishovitis, owner of two eating places, the nearby Bell's restaurant and Gastons sandwich shop in the 700 block of 12th Street.

Amanuel recalled what happened to him 15 years ago.

For 25 years he had his shop on Pennsylvania Avenue NW, "but they threw us out because of the FBI building. We moved here 15 years ago, and nine years later the city bought us out for urban renewal. They just don't want the little man downtown," he said.

Emanuel Simonaro, the 78-year-old neighborhood barber, readily agreed. "The little man has little chance down here. When they close me out here, where will I go with $500 to $600 rents? I'm not going to work for the landlord," he said.

"You see all those empty stores?" asked Simonaro. "I used to close at 6. Now I close at 5 because it's dark and there is nobody around."

Rosenberg, at the jewelry store, has a picture of his block taken five years ago during the heyday of the subway construction that crippled business on both blocks.

There was Dave's sandwich shop, Miller's furs, Snyder and Little Shoes, Mayfair rugs, Jordan's Piano Co., Brewood's Printing, Rosendorf-Evans furs and a men's clothing store. All of them are gone.