Something to do with orientation — be something they’re not. 

I buy a lot from Amazon primarily because I live in a place where there isn’t that much retail. But I always try my local stores first, and if I find it there, I buy it there.

So from my standpoint, they don’t compete.  Turns out, that’s a good key to success, and not just for bookstores (athletic gear is another), as Leo Mirani points out in a recent post at Quartz.com:

The reason? There is very little difference between big, impersonal chain stores selling books and a big, impersonal website selling books. Independent retailers, on the other hand, have a lot to offer that Amazon cannot: niche coffee, atmosphere, serendipitous discoverability of new titles and authors, recommendations from knowledgable staff, signings and events, to name a few.

Actually, there’s a lot of difference “between big, impersonal chain stores selling books and a big, impersonal website selling books,” much of it having to do with being disappointed. But that’s a topic for another post.