The pace of their expansion is often dictated by the number of trustworthy relatives they have available to manage new units. Their success rests more on the level of service they provide than on the price or selection they offer. Many customers are willing to pay a little more for a better level of service. The reputation of the local merchant often has deep roots. Large chains, on the other hand, have to finance expensive advertising campaigns to cultivate the desired image to a new market.
Local retailers are sometimes willing and able to pay higher rents than chain stores.
Part of the reason may be that their sales per square foot are better because of the higher prices their service levels allow them to charge. Perhaps because they are so attuned to the market, they are able to project sales volume more accurately than chain real estate directors and thus can see the inherent value in a particular location that a chain might miss. In many cases, local merchants will demand fewer leasehold improvements than chain tenants. Often, they command less free rent prior to opening, and they are far less likely than large chains to argue for changes in the standard lease. Owners should be wary, however, of standard lease forms signed and returned by local merchants with very few comments.