One thing that smaller chains can do to strengthen their market presence is affiliate with other companies in trade organizations, says Harold Lloyd, a retail consultant who is also a franchisee of Friendly's restaurants in Virginia. "You can take the biggest dog down when you get together," he says.

Store renovations, something smaller operators might shy away from, are also important. To facelift a store every four-to-five years, the average cost is $7 per-sf, Lloyd says, and waiting every eight-to-10 years can skyrocket to $42 per-sf. "You don't have the right to build a new store until all of your stores are an eight on a 10 scale," he says.

Meanwhile, a combative relationship with vendors, which retailers often have, is going to get a store owner nowhere, Lloyd says. The reason many larger outfits prevail is as a result of good vendor relationships. "These are the people who bring us to the dance," he says. "These are the people who bring us stuff to sell. Whining about vendors is silly."