Conventional wisdom says that once mega-retailers such as Wal-Mart, Home Depot, Starbucks and other mega-brand juggernauts roll into town, mom-and-pop stores on Main Street are bound to get crushed. That's news to Trish Wolfbauer. The 26-year-old entrepreneur says business at her Roseville coffee shop has never been better since java giant Starbucks came to town. The fact that two of them opened within miles of her Trixi's Coffee shop only helped get Macomb County residents hooked on gourmet lattes, espressos and cappuccinos. "Now that Starbucks is around, more people are willing to pay $4 for a cup of coffee," Wolfbauer said.

According to Ms. Youssef, Wolfbauer's experience is increasingly the rule rather than the exception. The key, it seems, is adapting or to be more specific, specializing:

Independent specialty stores, boutiques and cafes are surviving -- and even thriving -- in the shadow of the retail giants through a mix of personal service, specialized skills and unique products. They fend off the mega-stores by catering to a specific clientele or carving out a niche that's small enough to keep the big retailers out. A 2005 survey of small-business owners found that 52 percent of those already in business changed their tactics and either retained their market share or actually increased business when a Wal-Mart, Target, Kohl's or other "big box" retailer opened nearby, according to DollarDays International Inc. of Scottsdale, Ariz., an Internet-based wholesaler to small businesses.

The critics of the big boxes mega-retailers believe - and would have us believe, too - that retail giants cast long and dark and ominous shadows. Increasingly there is evidence that small firms with strategies are learning not just to survive but actually thrive in the silver shadows of the giants:

One tactic small operators can take is to avoid competing with the powerhouses altogether and focus instead on offering service and merchandise that the big businesses can't. In some cases, a small business can ride the big stores' coattails, such as servicing items sold by the big-box stores. "You can go to Wal-Mart and get a clock and it does the same thing, but they can't do what we do," explained Mai Pin, whose family runs the 30-year-old Roseville Clock Shop. The store -- within a mile of a Wal-Mart -- sells clocks ranging from $20 to $2,000, but 80 percent of its business is repairing and servicing broken clocks.

From the strategic management point there's no mystery here. What the Ms. Youssef reports about the importance of differentiation are the fundamentals of strategy. It's Strategy 101. The mystery is why big box critics in general and Wal-Mart critics in particular so desperately desire to not know this. To be fair, every firm that tries to differentiate won't do so successfully. But that doesn't seem to be what's nagging the critics or what provokes such willful ignorance on their part. What exactly, I wonder, is the name the illusion under which they labor, under whose shadow these critics live.

Tags: wal-mart | WalMart | retail |

Disclosure: Marshall Manson of Edelman PR, one of Wal-Mart's PR firms, brought the Detroit News article to my attention.