This is the holy grail question for all us retailers
I run a shop which is completely fair trade and dedicated to that issue though we do also sell some non fair trade environmentally friendly products (mostly cleaning products & toiletries) but we are always looking to replace the latter with equivalent fair trade products. We are not specifically a gift shop as we sell a big range of foodstuffs and cleaning products as well as jewellery, handcrafted homewares, accessories, incense, etc but we are often classified as a gift shop through want of any other useful classification when advertising.
Just some comments and questions from my own experience.
Who was there first, you or the other business, if it was the other business why did you choose to move into that shop? Some business people propound the theory that there is no such thing as competition, for example if you run a pub it may actually be useful to be near other pubs because that brings people to the area and if they don't like the music or whatever in one pub on one evening well they can just go to one of the others. So having several pubs near to each other makes this an area where people come for a night out knowing they'll always find something to their taste in one of the businesses. I think it is a theory which has some validity, for example it is always more interesting to shop in a village or small town with many small businesses and you are more likely to make the effort to get there than if there is just one interesting small business. On the other hand smaller shopping areas can probably only support one business of one particular type especially if most of the custom comes from the immediate area rather than from people travelling in. The first such business may have the established custom and if they continue to offer interesting stock they may continue to command most of the custom.
Do the people running the other shop live very near their shop and have strong local links - stronger than yours for example. People do go into shops to see their friends. Some older people go into shops where they are absolutely certain there is a chair just inside the door where they can sit down and get their breath back and know that staff will hasten to serve them without them leaving the chair if they don't want to.
What makes a shop obvious and attractive is a very complex business. Most shopkeepers will tell you of folk living nearby who pass your shop every day but only noticed it and came in yesterday with expressions of astonishment at having found you even though you've been trading there for 20 years or so. Three years ago a property owner built onto existing premises just across and up the road from us. The new shop premises were next to a school on one side and next to a curved row of businesses on the other. To utilise the available space most effectively on the land available the new shop sort of stuck out between the school and the existing row of businesses. Personally I'd have said you couldn't miss it, especially with some nice window displays, as if you didn't see it (you'd need very bad eyesight I'd have thought) you might well trip over it instead. The premises were taken by people wanting to run a gift shop, their first venture into retail. After a few weeks they were up on ladders putting bunting around the apex of the one storey building trying to attract attention to it. Then came an obviously expensive professionally printed and installed banner on the upper wall of one side of the shop. Unmissable I'd have said, yet I can't tell you how many times I've said to people (who I know live locally) sorry we don't specialise in candles but the xxxx gift shop does why not try there, only to be met by a blank gaze and 'what gift shop where?'. I'd take them onto our entrance ramp and point out this shop jutting out on the other side of the road to be met by amazement. Some honest folk said 'I walk down this road very day and I've never noticed that', one customer said after the other shop closed 'no wonder when they were so hidden away' but they weren't hidden away.
I've had to move my shop three times for a variety of reasons over the course of coming up to 20 years. Each move has meant that slowly but surely we've had to make substantial changes in what we stock. Oddly enough when we traded in quite a poor area but where there were also quite a lot of students plus young professionals in their first house or flat we could sell a certain proportion of really expensive things as they were valued by some of our customers who'd make what they regarded as an investment in something which would be in their home for the rest of their lives. When we moved to a better off area more people could afford our products but the sales of the odd really expensive investment type item pretty much disappeared overnight.
You say you've avoided the ethnic look. The question is what do your potential customers really want? If they want the ethnic look....? Young people in particular often really like it. I stocked, with great misgivings last season, a sika for the first time in many years. They used to be big sellers long ago, now one of my suppliers has returned to offering quite an expensive one. It was purchased by a slightly bewildered mother for her student daughter who couldn't take her eyes off it.
