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To compete with Walmart/Sports Authority/Home Depot etc. the independent has to compete on something other than price. Obviously, the ones that survive and often flourish provide service that is valued by the customer. In the tackle business, there is a real opportunity to differentiate based on service and some do that well, some do not.
I don't know the specifics on the shops in discussion here, but I do know that Mike's reputation for customs rods brought me in from a distance and it is a well deserved reputation! My local shop, Belsan's in Scituate, provides much more than price competition, hence they get my business.
I think fishing can be a bit like wine in that it is intimidating to the newbie to go in to a shop full of sharpies and ask questions. A local liquor store has an owner that is very helpful and knowledgeable with wine without the attitude and as such has built a very loyal cutomer base depsite much larger stores nearby....
Again, a general comment as I don't know the store in question...
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