With his store stocked with handmade jewelry and hard-to-find home furnishings, Tim Vancha is optimistic about the holiday shopping season.

Vancha, who owns Surrender, a gift shop in Chicago, doesn’t sound at all uneasy when he talks about business, unlike many of the country’s big retailers who have had an uninspiring season so far. He said his sales are running 10 percent to 15 percent ahead of the 2003 holiday season, when business was already up a huge 30 percent to 40 percent.

Independent retailers like Vancha have found ways to thrive in an industry that’s increasingly dominated by big chains like Wal-Mart, Home Depot and Gap. Using a mixture of unique merchandise and superior service – and even an emotional connection with customers – these stores find that retailing doesn’t have to be a struggle.

Toy retailers have to differentiate themselves from Wal-Mart – or find themselves in the same tight spot as Toys R Us Inc., which despite its own size has lost market share to the big discounter.

Linda Ambrosino, who owns G. Willikers, a toy store in Saratoga Springs, N.Y., as well as stores in nearby Albany and in Kennebunkport, Maine, describes her inventory as “a more unique kind of toys, powered by children’s imagination.”

“I cannot beat them (Wal-Mart) pricewise, so I stay away from anything mass market,” she said.

Some independents find they have another edge: an emotional bond with customers.

Josephs Jewelers, with three locations in the Des Moines, Iowa, area, is a 133-year-old, family-owned business that uses its deep roots to build its business and maintain long-term relationships with customers.

“We’re very active in the community from a charity standpoint,” owner John Joseph said, explaining that he believes customers will support a business that gives something back to its neighbors.

At Simply Scandinavian, a shop in Portland, Maine, co-owner Mary Grant said, “We’re not just selling the products, we’re selling the whole experience.”

Grant said her store’s Scandinavian goods, which include pastries and other food, offer shoppers a level of comfort.

“That’s why folks keep coming back,” she said, noting that her business has grown largely by word-of-mouth endorsements.