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Ben Thompson's Stratechery site is a constant source of inspiration. Last week he was tackling the development of Amazon and speculating that it could sell lots of products at a loss by adopting a Costco model. "Consider Costco: last year the wholesale retailer had net income of $2.3 billion on sales of $114 billion to its over 81 million members; the total sum of membership fees was $2.5 billion," he wrote. "In other words, Costco’s 11% gross margin didn’t even quite cover the cost of running the business; the difference, along with all of the profit, came from a “tax” levied on Costco customers." For retailers in the UK unhappy with paying a "tax" to news wholesalers to get their newspapers and magazines, this makes uncomfortable reading. The UK's regulators, now the competition commission, have gamed the system so two companies can make a profit out of "carriage service charges" for wholesaling newspapers and magazines in exclu...

The answer to every strategic question is “it depends”. The trick is knowing what it depends on. If the answer to a question isn’t “it depends” then it’s not a strategic question. This is Mazzeo’s Law, a business school rule that its author and two fellow professors tested out on independent businesses across the USA in a series of road trips. Their book, The Roadside MBA , aims to provide real world lessons for entrepreneurs, start-ups and small businesses. Michael Mazzeo, Paul Oyer and Scott Schaeffer write up visits to 45 small businesses to provide lessons across 10 subject areas ranging from hiring staff to battling the big boys. The businesses range from a fitness centre for older women to a company that makes air socks and everything in between. The book’s strength is that it is a collection of the wisdom of people just like you, running a small business and making a profit. In Reno, Nevada, they visit Christine Kelly, owner of Sundance Books and Music. How do you comp...

Luke Johnson, the entrepreneur behind Pizza Express and former head of Channel 4, is a compulsive reader and he warmly recommended Made in America by Sam Walton. For years I resisted the chance to read the story of the man who made Walmart and boy was I wrong. Quite simply this is a brilliant manual on what you need to do to be a successful independent retailer. In one chapter on thinking small, Walton says: “I always wanted to be the best retailer in the world, not the biggest.” In 1960 in a newspaper article called Success Story of the Year it described how he and his family and managers had built up a nine strong chain of variety stores. He told the paper that nine was as big as it could get as it was as many as he could supervise. Most readers don’t need to worry how he moved beyond nine to become the biggest retailer in history (he did this by hiring and inspiring great people). What they need to recognise is that Walton remained a great independent retailer till...

Demographics suggest that as people get older and as households get smaller, then local convenience stores will prove more attractive for more shoppers. On the surface this is good news for local shops but don’t kid yourself that the multiple grocers have not got designs on this sector. Authoritative figures from the Institute of Grocery Distribution released earlier this month show that the convenience market is growing faster than the grocery market, up 6.3 per cent in the past year to £30.9 billion. Better news, the IGD says it will grow strongly over the next five years to £41.2bn in 2015. A good market to be in. Yes, says Tesco, which is adding 521,000 square feet of selling space in the convenience channel this year in 213 locations and expecting to grab just under £640 million of extra sales. With Waitrose and Sainsbury also active in providing “convenience options”, how much of this £10 billion growth in the next five years will be available to you? That depends on how se...

Clearly the answer is Tesco and Sainsbury, who are leading a big increase in investment in new stores and extensions to existing stores, according to building industry analyst Glenigan. It has tracked £350 million of investment in 60 projects by major supermarket groups in the first quarter, more than double the £150m of contracts awarded in the same quarter in 2009. Almost all of these projects will come into the market over the next 18 months - suggesting the supermarkets are banking on a recovery in shopper sentiment in 2011, suggests Allan Wilen, economic director of Glenigan. What is clear is that they are backing themselves to be successful. The really interesting question is whether they are going to be slugging for share against each other as Nielsen data for 2009 and the first quarter of 2010 shows that convenience stores are out-growing the supermarkets. A good time for optimists armed with a good business strategy.

Mike Southern in his weekly column for entrepreneurs says the best way to improve your guanxi is to always treat people like you would want to be treated, to help people wherever possible and to always tell the truth. Guanxi is a Chinese word that equates to well-being and true status. Money is what you have in your bank account, Mr Southern says. Wealth is what you have if your money suddenly vanishes: your knowledge, your reputation and network. For local retailers, as with all business people, these are useful ideas to benchmark what you are doing. Don't just think of it in terms of shoppers that visit your stores. Think of it also in terms of your suppliers and competitors.