I've been thinking a lot about why some small retailers manage to stay afloat (and even thrive) despite competition from monolithic corporations but others simply deflate like tired old balloons. Certain categories of independent business--food and beverage, for example--tend to do better than others (pharmacy, grocery, hardware). I think the common denominator among the stores that succeed is that they make themselves a destination, rather than merely a place to buy goods.
I've been to a lot of knitting supply stores in the past week, and the ones that appear most buoyant are those that have tables and chairs so customers can sit and knit, and chit-chat, and solicit advice from the staff; many of them also offer knitting and crocheting classes. They are more than stores--they are gathering places for people with common interests. The same is true of the bookstores and music shops that have managed to weather the rise of Wal-Mart (now America's number one seller of compact discs) and the proliferation of big box "category killers" like Barnes & Noble. They have retained their customers by offering the things the big boxes can't or won't--author readings, book clubs, CD release parties, and in-store concerts. (On the flip side, one of the reasons that Barnes & Noble and Borders have so successfully smeared the competition is that, with their big comfortable chairs and their in-store cafes, they are also destinations.)
Restaurants, bars, coffee shops, fitness studios, and the like have a built-in advantage over other types of business, because they are, by definition, social spaces in which an activity (other than perusing and buying goods) takes place. Service-based businesses (plumbing, graphic design, dentistry, auto mechanics) have a similar advantage, in that skills and knowledge--rather than parts--are the real product for sale. Independent retailers, however, have to work harder to be competitive. And since they can rarely afford to match the big boys on price, they must make up for it in atmosphere, expertise, events, and community.
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From the nerdy side of things, the only mom 'n pop game stores that stay in business for over a year do exactly the same thing: set up tables where people can come in and play board games, and the store sells snacks and drinks to keep revenue flowing.
Additionally, connecting with their regular customers is another great way smaller stores stay in business. If they make an effort to get to know you, then you may feel a bit of guilt when you go shopping at a different store.
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