Ultimately, other than the owner having a good "head" for business, the bottom line in what we like about our local LQS is atmosphere. Yes, we want a large selection of fabric, notions, patterns, etc., but do we really shop at the store that offers all of that and no warm fuzzies? If I feel comfortable in a store, I'll go back again and again. If the selection isn't always there, I sometimes supplement by shopping online, but continue to support my LQS, even - gasp - by breaking out of my color comfort zone!
When you stop and really think about it, the LQS is not the only type of store that is suffering because of the economy and the big box stores. Think of all the gas stations, mom and pop grocery stores, small pharmacies, and hardwares that have closed due to the big comglomerates. We need to flex our spending power to keep those stores that we really like in business. I'd much rather shop where most of the staff know my name and even my kids' names, because sometimes they run errands for me by going to the LQS. For me to shop at my LQS, it's an all day event because it takes me an hour to get there. We used to have one right here in town, but I only went there twice and did not have a good experience either time. So for me, if I owned my very own LQS, customer service would be top of the list. Without that, you can have all the bells and whistles there are, but you won't be getting my business.