America's Best Independent Retailers

Great location, fantastic selection, competitive prices. These are the oft-cited qualities that help one retailer prosper while another fails. But there are other, often larger forces that not only keep a store in business, but ensure that its customers return on a regular basis. In his new book, Retail Superstars: Inside the 25 Best Independent Stores in America, author George Whalin profiles 25 successful retailers and discusses why they've withstood the test of time, some for over a century.

To be considered for the book, stores had to be profitable, have been in business for at least 25 years, and distinguish themselves in some way from their competitors. Whalin, a retail consultant, has visited hundreds of retailers across the nation for the past 20 years. He found that the best stores often employ similar practices.

Customer Engagement

To start, the stores engage their customers. By walking the aisles and talking to shoppers, the management team gets a sense of what the customer wants. This gives it an edge when ordering inventory, and making the store a place where shoppers want to return.

Whalin points to Gallery Furniture in Houston, Tex. as an "extreme example." The furniture store displays only merchandise that is stocked in its warehouse. So when you buy something, it's delivered to you the same day. And although the selection is limited, the guarantee of timely service creates a loyal customer.

Operating an independent retail store during a recession is tough, regardless of its customer engagement and loyalty formulas. One of Whalin's superstars, golf supplier In Celebration of Golf in Scottsdale, Ariz., recently closed its doors to focus exclusively on its golf course management business.

When Recession Hits

Some of the same things that make indies competitive in good times can turn against them when things are bad, according to Whalin and other industry experts. The level of in-store service that customers expect from a local independent compared with chains is expensive to provide, especially with niche stores that demand a high level of expertise among its staff. Those retailers need to sell at a premium price to subsidize that service.

During a recession, penny-pinching customers may eschew that premium for cheaper goods, says Bryan Ashelman, managing director of Alix Partners, a business advisory firm based in Detroit, Mich. He recommends that independent stores look beyond their customer service to keep shoppers in the store. "In normal times, it makes a lot of sense that if you know the product well, you'll maintain business," he says. "But it's a risky proposition to assume that will always work." He suggests cutting costs that customers don't see—such as by reducing hours of operation and payroll.

Whalin highlights Bronner's Christmas Wonderland in Frankenmuth, Mich., as a retailer that's avoided a plunge in sales despite the recession. He says the company, which sells only Christmas merchandise, attracts nearly two million customers yearly—and not just during the holiday season. Whalin attributes the turn-out to the flamboyant displays throughout the store. The rationale behind the decor is that even if shoppers aren't ready to do their Christmas shopping, they still have a reason to go to the store. Bronner's also sells window dressings to other companies throughout the year to keep cash coming in.

Whalin says the key to Bronner's success lies in its willingness to stay true to its core offering. He points to Toys 'R' Us, which recently introduced a food and household items section in some of its stores, as an example of a company that is losing touch with its main draw. "If it's appropriate to branch out, it can be a great thing," he says. "But companies that do things completely different than their main business endanger themselves."

Flip through this slide show for profiles of Whalin's indie superstars.