Local businesses are hurting according to one local Waipukurau business owner, and that's not because of local bricks and mortar competition.  No, his major competition is now the internet.  Let's face it, all market research is now done on the web.  People have done their research on the net before they even walk into your shop.  I'm afraid that this is not going to change in the near future either.
My advice is to formulate a plan that will allow you to leverage the internet and all it has to offer.  If you can't beat 'em, join 'em!