Robert Spector is author of the book The Mom & Pop Store: How the Unsung Heroes of the American Economy Are Surviving and Thriving. In this interview, he shares why he thinks small, family-owned firms are making a comeback and are poised to lead our economic recovery.

Several of your past books have focused on the Nordstrom Way of customer satisfaction. How can small businesses apply this model and use it with the qualities that give them competitive advantage, versus large companies?
The advantage that small, mom-and-pop businesses have is that they know their customers, and their customers’ likes and dislikes. They have the ability to go that one or two steps further to really solidify their relationship with their customer. Bigger chain stores tend to view consumers as statistics and not as flesh-and-blood customers.

One of the parallels between Nordstrom (which began as a single shoe store in 1901) and a mom-and-pop store is that Nordstrom buyers and department managers are required to spend a few hours a week on the sales floor with the customer. In a high-tech world it’s important to have good software for your inventory to tell you how many units you sold of a particular item and whether you need to reorder, but it doesn’t tell you what you didn’t sell because you didn’t hear the customer ask for it.

For the owner of the small, independent business, that’s what they do. They’re in business to listen to the customer. If you’re close to your customer you have a give-and-take kind of relationship where you can make adjustments in your product selection, of if you’re a restaurant, in your menu, because you’re getting that feedback. So the whole idea is, be as close to the customer as you possibly can, and then cater and customize to him or her.

You worked in a family-owned, mom-and-pop store growing up in New Jersey. What are some lessons you picked up from that time that are still relevant today?
Being honest with your customer. My parents owned a butcher shop, and while these days you can see the weight of whatever is being cut on both sides of the counter, back then the readout of the weight was only on one side, the merchant side. So if a customer had a question about the weight of a particular item, my father and my uncle would invite her to come to the other side and look at it herself.

Honesty is so important because when you have your own business, you can’t hide behind a corporate entity. It’s you out there, so it’s in your best interest to have a good reputation. And you have to do what you say you’re going to do.

What is the greatest challenge facing small, family-owned businesses, and how can they overcome it?
The biggest challenge is to stay relevant to your community and what you’re offering them. In retail, if you’re staying the same you’re falling behind. You need to shop your competition – what are they carrying that you’re not? So you have to constantly be looking at what you offer your customers and ask, is that what they’re looking for?

There’s a tendency to keep things the same when you run a business. And certainly there are a few businesses that can handle that, and can remain icons of a bygone day. But I wouldn’t recommend it because the retail graveyard is full of stores that decided to maintain their charm and never change, and then people stopped going there, or their customer base got old and died, and they failed to attract a new generation of customers.

If you do pass on the business to the next generation, you have to let that next generation do what it thinks it needs to do in order to survive. If you don’t believe in what they’re doing, sell or go out of business rather than die a slow death.

In The Mom & Pop Store you argue that very small, often family-owned businesses are “poised to make a comeback.” Could you describe what you mean by this, and how this shift came to be?
There are a couple of reasons for this. One is what’s happened to the financial state in this country. In retail specifically, most of the big chains are either going out of business, downsizing or putting the brake on expansion because business is not as good as it was. That opens the door for independent retailers to, for instance, get a presence in shopping malls. These day when mall developers are looking for stores, they’re unable to get the usual suspects, the Starbucks of the world and the J Crews. So a lot of them are looking at local businesses to fill in those spaces. Now that’s happening in both shopping malls and in downtown, urban areas because landlords need to fill the space. So they’re willing to work with retailers in terms of rent and terms.

I also think that because of the recession people have lost faith certainly in big business, and in government. So what you’re left with are the people who are our neighbors in our communities – the people we see every day.

Also, there’s an interesting thing going on with people who are being laid off. People used to say, “One day I’d like to open up a (fill in the blank) kind of store.” Well, one of these days has arrived. For people who’ve been let go or who have lost faith in their job, this is a perfect time to be an entrepreneur.