There is no doubt that many small retailers have had a tough time over the past couple of years as it has become ever more difficult to get consumers to part with their money – something which is especially true when it comes to their discretionary spending on things such as crafts.

It has been said that if you got all the economists in the world and lay them end to end, you would still not reach a conclusion regarding the future of the economy, so speculating about it is certainly not time well spent. After all, there is nothing you can do about the current difficulties, whichever way they go, and it is far better to focus your thoughts on how you can drive your business forward.

Small retailers often see themselves at a disadvantage to major players and while there is clearly little chance that an independent shop owner will ever be able to compete with the multiples on price, there are many ways that they do have the upper hand, particularly with regards to knowing and forming relationships with their customers.

Independent businesses can build bonds with their shoppers that larger stores simply cannot replicate and this is hugely advantageous when it comes to developing closer connections with their customers – something demonstrated by the many studies showing that an individual's overall experience of a store is one of the greatest influences over whether they choose to return.

Engagement with the consumer can also offer a significant opportunity for competitive differentiation, so think about how your shop stands out from all the others and what you offer that no-one else does? It's absolutely vital to understand and communicate why shoppers should visit you, rather than your competitor. And let’s face it, if you don’t know, you can be sure the customer won't either.

Knowing your client base is a fundamental aspect of making a sale and certainly a critical component when it comes to upselling and cross-selling. For the former to be effective, the customer needs to be able to justify the extra cost. This means you will have to demonstrate that spending more will deliver significantly greater benefits. Remember, if the shopper only sees a higher price, it is very unlikely you will be able to encourage them to trade up.

Cross-selling is most successful when related items are merchandised together. These could be products that are generally forgotten; batteries with gadgets are a good example.

A common error is to feature stock that appeals primarily to the owner, rather than the customer and it's important to remember that your products must reflect your shoppers' needs and not your own preferences.

If your shop is simply seen as a place to buy supplies, you are missing out and will find it tough to compete because it is likely that the same or similar products can be bought at comparable or lower prices else where. It is therefore essential to make your shop a destination, as this will give you a much more competitive edge. By this, I mean creating an environment where potential customers will choose to visit even if they don’t have a specific purchase in mind and think about before your competitors simply because they enjoy the experience.

Richard Ilsley is a founder of Synogis and has advised a wide range of companies on sales and marketing issues around the world. He is the author of the management book Best Practice and regularly contributes to publications and seminars.