Even a well established small retailer can feel threatened by a large discount store moving into the neighbourhood. It only gets worse if a niche single product specialist that sells one of your best moving items arrives also.

The discounter offers lower prices than you can hope to match and still survive. The other offers a specialisation and depth of product knowledge that is outside your scope of operations. It doesn't matter whether the products involved are groceries or toys, when it happens many small retailers can see the effort of their years in business going out the window and they simply give up the fight.

There are, however, those with determination to stay on and compete with these threats. And what's more, some do a lot better than just survive - they actually come out the stronger despite a massive increase in the level of competition.

What they don't do is cut their prices. That's a sure-fire way of hastening their exit. Smaller retailers simply can't hope to match the pricing levels of the big discounters or the reach of their advertising. There's no point in even trying.

Where they start their fight back is with a commitment - they resolve that they will find a way to manage. If you're going in to fight, then enter the battle believing that you're going to win. That doesn't mean believing the unbelievable - that you'll put the competition out of business for instance; it does mean that you should make a commitment to finding a way to keep your own business alive and healthy.

If you want evidence that it can be done, just look at any big shopping mall. Even though the big stores are magnets for customers and even though they often sell many, if not all, of the products sold by the smaller tenants in the centre, still those small businesses continue to operate. That's proof that small shops can survive beside big ones selling the same line of products.

The very fact that big stores do attract customers means the number of prospects in your area will increase. More shoppers in your vicinity mean more opportunities for you to sell something. Now its time to consider how you can restructure your operations to take advantage of the new volume potential you have.

Start by doing some homework on what the competition is offering. The last thing you want to do is to try to sell exactly the same thing at a higher price. You need to differentiate yourself on the basis of something that's got a special appeal to consumers. What combination of the products you sell will have greater appeal to consumers than what's offered at the big place up the street? What products can you add to your range that aren't available there?

There's one thing most big retailers don't have and that's knowledgeable personnel. If you're selling something that customers may need to ask questions about, you've got a real advantage. Take hardware or tropical fish as just two examples. Your expertise can go a long way towards offsetting the appeal of a discounter that can't begin to bring your depth of knowledge to assessing exactly what will suit the customer best or to offer the same level of post sales support you do.

Give consideration to introducing new services around the products. Many small retailers have never offered home deliveries of what they sell, but this can be a big factor in competing against the large retailers who don't offer such a service.

Servicing and repairs are other areas you can leverage. A small retail jeweller can often replace watch batteries while customers wait, offsetting the big stores that provide this service on a next-day basis. Many big retailers depend on the manufacturer to service the products they sell and need to send them away for servicing or repair. If you can do it on your own premises and get it back to the customer quickly you'll start to build loyalty and appreciation.

Customer service is another area where the smaller retailer can beat their bigger opponents every time. If your team is interested, friendly, helpful and knowledgeable you'll appeal to the vast majority of shoppers in any district, and pull them into your place of business to experience 'old fashioned' customer service.

You may also have to offer a guarantee on what you sell that's better than what's on offer from the competition, but just like service on the spot, this can really bond customers to your store. Big retailers put a lot of money into appearance so there's no way you'll get away with premises that don't look first-rate. The same goes for the appearance of your team. It might be advisable to put them all into uniforms to ensure that they appear neat and tidy at all times.

Never doubt that you can compete with a big discounter or a highly specialised outlet that moves in nearby. You will definitely have to do everything you're doing currently and then some, and you'll certainly have to do everything better. But with the inducement to review and improve your operations that a competitor can provide, you may someday even be thankful for that big discounter moving in up the street.