So you thought you had to worry about Wal-Mart, Target, Home Depot and Lowe’s cutting into your territory? Well, you still do, but for reasons you might not expect.

The big guys and even the medium-size guys are downsizing, shrinking, rescaling—whatever you call it, they’re invading the neighborhoods where smaller retail stores used to dominate.

In a way, you can’t blame the big guys. They’ve done their homework, as this story in the Sacramento Bee (free registration may be required) points out: “Retailers know you’re pressed for time. They’re pressed for profits. Their solution for both: smaller stores carefully stocked with the stuff you’re most likely to buy.”

Think about it. How many times have you stopped at Trader Joe’s instead of Vons because you know you can find what you need in a hurry, without circling the parking lot to find a spot? Or have you gone into the local Ace hardware store instead of traipsing through Home Depot? A lot of consumers do just that because they know that even if they have to pay a little more, they’ll get quality items and decent customer service.

Even if you’re proud of your store’s reputation for great service and targeted merchandise, it pays to be vigilant. The big chains usually have big advertising budgets, so they can let lots of people know about their new, smaller stores.

How do you continue to differentiate? By doing what you do best. Continue to keep the customer service level high, the merchandise mix well-stocked, the convenience factor well-known (consider offering to feed shoppers’ parking meters, for example, or matching any discount store’s prices on select items).

And, as I’ve said before, decide whether you really want to stay in your present location. Moving into a high-traffic area such as Bank Street in Decatur, Alabama, is paying off for the boutique merchants there. Even if the big-box stores set up shop nearby, you can work with your neighboring retailers to set your district apart through advertising, promotions, events such as sidewalk sales, etc.

Don’t be afraid of the big boxes and their smaller offspring. I always say retailers should study their best practices. Now it seems like they’ve been studying the best practices of small retailers all along.