Small shops are using their smallness to gain business over big guys like Wal-Mart. NYTimes has a story (free registration reqd) on how small retail shops are using new marketing tactics like internet presence, advertising in newer mediums etc with a whole lot more focus on Customer service to gain customers.

Small retailers around the country are using a host of marketing tactics, from the usual extra emphasis on customer service to putting out free cider and cookies. But their most important step may be that they are trying to make the most of their inherent advantages over larger competitors.

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In addition, store owners say they often hear directly from their customers about new products and then quickly see how the items sell. A year ago, Mr. Choron said, customers began telling him how much they liked an electronic dice game called LCR. So, he started stocking it. A week later, it sold out. He reordered, and it sold out again in a week. Now, he said, he keeps a steady supply of the game by the cash register. “You’ve got to pay attention to the feedback,” he said.

Small retailers also have an advantage over bigger competitors in other areas, particularly customer service. This year, said Mandy Putnam, vice president of TNS Retail Forward, a retail market research firm in Columbus, Ohio, “Stores are upping the ante with more personalized customer service, particularly if they’ve depended on that for sales in the past.”

And who wins amongst all this competition, customers. :)