Small Business Owners Share Best Strategies to Compete with Big Box Retailers

One of the oldest and most common roadblocks for small retailers has been how to compete with big-box retailers. Put simply, how can your small business get the attention of customers when they can easily purchase products through giants like Target, Walmart and Amazon? In addition to facing this old David vs. Goliath situation, small retailers are already under pressure from tariffs, rising inflation, and weakening consumer spending.

The financial pressure has even affected large retailers this year. Roughly 15,000 retail stores closed in 2025, according to a report by Velocity Merchant Services (VMS), a nationwide payment processing provider. Large retail companies such as Joanne Fabrics declared bankruptcy, while popular companies such as Party City and Kohls were forced to close hundreds of locations.

Despite these challenges, however, small retail businesses have continued to deploy specific strategies to gain new customers and keep their current customers happy.

Rather than give our readers generic answers to the question of how small retailers can compete with big-box retailers, Biz2Credit, through a service called HARO, decided to ask actual small retailers both in the U.S. and abroad what their most successful strategies are to stay competitive. Owners of small retail businesses gave varied answers. Surprisingly, few of those answers had to do with specialized pricing or discount sales.

Does Promoting High Quality Products Help?

According to Matthew Tran, founder of small global footwear brand Birchbury, the answer is overwhelmingly yes. He said his two most successful strategies to compete with big retailers is to build a program to reward loyal customers and promote the high quality of his products.

“We run a points program where customers earn 50 points per dollar spent and get an early 15% off all new shoes at 2,000 points,” Tran said. “During last November and December, returning customers made up 68% of our sales because they saved points from summer and fall. Big stores send endless emails with 20% off codes that train people to wait for sales. We went the other way and gave our loyal customers a first look at limited stock 2 weeks before everyone else.”

Tran also explained that he heavily promotes the fact that his business uses durable and sustainable materials to make his footwear rather than the fake leather and cheap foam that many large retailers use, resulting in footwear that lasts.

“After including a product lifespan tool in every listing, we observed a 33.4% increase in sales last 2024 holiday season,” Tran said. “We explain that $240 spent once is cheaper than one pair at $60 but spent four times. It's economically wise, and it also helps reduce trash in the environment.”

How do I Find a Niche?

The key to competing is finding a niche, and the best way to do that is by figuring out what your business can do that large retailers can't, said Michael Nova, founder of Nova Custom Label Printing. He said he carefully analyzes what his company can offer that his large competitors such as FedEx, VistaPrint and Staples, can't.

“This is the key to competing with larger retailers,” he said. “You need to find out how you can offer something to your customers that the big boys are not offering, whether that means being better had something specific or offering something that they don't. In our case, we offer personalized service, including same day printing service on items that the above retailers cannot offer, like specially die cut labels and stickers.”

He also emphasized that offering personalized service and a high level of staff expertise goes a long way towards ensuring customer loyalty.

“We emphasize the friendly, personalized service that we provide as a small business vs. the impersonalized service that they provide, where you are literally just a number,” said Nova. “Instead, we treat each customer as an individual, with kindness and empathy to build long-term customer loyalty.”

How do you Find Target Audiences?

A'lshah Whitaker, head of Charisma Home Decor, said the key to competing with large competitors such as Crate & Barrel and Home Goods is to focus on creating a personalized niche within specific target audiences. That's why Charisma offers concierge level service and offers specialized products such as hand painted glass vases and custom switch plate covers.

“We market to a target audience within a target audience,” said Whitaker. “Most home decor companies target homeowners who love decorating their homes. But we narrowed our audience down to a sub-category: homeowners who love decorating their home but also love art and crafts.”

Whitaker also emphasized the unique way the company optimizes its website pages by using specialized keywords. This helps the business attract the specific types of customers it's seeking.

“We focus on long-tail keywords,” Whitaker said. “Instead of trying to rank for standard industry terms such as ‘handmade home decor' or ‘creative home decor,' we utilize longer keywords and phrases such as ‘gifts for art lovers,' ‘creative home decor pieces,' etc. Although these keywords tend to have a lower volume, they're more specific and allow you to get in front of your target audience faster.”

How Can I be More Personable?

One advantage that small businesses have over larger rivals is the ability to offer personalized service. For example, calling customer service at a large company usually involves having to spend several frustrating minutes dealing with AI-generated electronic options menus, while small retailers usually have human beings answering phone calls. Jennifer Yancie, founder of Jeyancie Beauty, said her skincare and wellness business wins customers by building trust through personalized service and niche marketing.

"Small retailers win by being more personal, more agile, and more trust-driven than big-box stores,” Yancie said. “During peak seasons, we focus on hyper-targeted niche marketing instead of broad discounts, targeting customers who value quality and values over the lowest price. Personalized email campaigns, SMS offers and limited-run bundles create urgency without competing on margin. Educational content around product benefits and ingredient transparency builds shopper confidence and reduces decision fatigue.”

Rebecca Shaw, founder of Better Than Etsy, a platform for handmade product sellers, agreed. “As someone who's been a small seller for years & who's now building a marketplace for other small sellers, I honestly don't think we should try to compete with big-box stores at all. We can't outscale them, but we offer something they never will, personality, connection, honesty, and real customer care. People are fed up with buying the same mass-produced products. They want items made by real people with real stories behind them. That's the advantage.”

Customized Service is Major Advantage

While going head-to-head with large competitors can be daunting, one advantage that small businesses have is agility - the ability to offer customized solutions to customers that large companies can't. For Matt Little, founder of lighting company Festoon House, better customer relationship management is his company's biggest advantage.

“My experience building Festoon House proved that obsessing over competitors is a distraction because the customer is the only entity that deposits money into your bank account,” he said. “Our design first customer support channel that we created allows potential customers to submit photographs of their venue, and we provide them with a customized lighting plan within 24 hours. A large retailer would never be able to replicate the personalized level of customer service provided by our design first model as the way a large retailer makes money is based on minimizing the amount of time spent interacting with humans and standardizing their logistical processes.

“Our average order value was up 42.5% in the most recent holiday season because we resolved the installation issue before the customer made a purchase. This type of model is successful because it eliminates the mental effort or cognitive load required from the customer and replaces it with the guarantee of results.”

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How Can You Be More Authentic?

Offering authentic products combined storytelling and product education is what separates small businesses from big box retailers, said Rodo Vasilaki, founder of Tofillo, which sells Greek inspired herbs, teas and essential oils.

“Big-box retailers sell products; small businesses can sell meaning,” said Vasilaki. “In our case, customers aren't just buying herbs, they're buying Cretan tradition, a wellness ritual, and a story

Vasilaki added that partnering with carefully selected venues also drives his business and gives him a leg up on large retailers.

"Collaborations with boutique hotels, cafés, and wellness studios help customers experience our herbs in memorable moments. Big-box stores sell items; small businesses can create emotional connection.”

Carefully Find Your Niche

According to successful small retailers, competing with the larger competitors has less to do with getting into pricing wars or offering discounts, and more to do with finding your niche audiences. Another key is doing what your larger competitors can't - offering personalized customer relationship management, pitching unique products to carefully chosen audiences and offering product education and storytelling will ultimately drive sales and separate you from the big-box retailers.