Though this approach isn't appropriate or accessible for all B&M's, I do know of one tobacconist here in Ct. that has survived by the "expansion" principle, moving the character of the shop to something that will allow it to survive. This shop is the "Owl Shop" tobacconist in New Haven, Ct.
The Owl has been in business for many, many years. First started by the St. John family I believe. The sister shop to the one in Mass. at one time, they are separate entities and have been for years. The Owl was one of the "Mecca's" of smoking for a long time. Their clientele was treated to a shop with thousands of pipes and cigars, and a list of house blends that was a mile long. Celebrities and stars, along with people from every walk of life frequented the shop, and the Owl mailed tons of tobacco to it's regular customers all over the world.
Times changed, ownership has changed (maybe 10-12 years ago), and the income from what was a thriving business declined with fewer pipe and cigar smokers. The new owners had a vision of what they wanted to do.
Today the Owl Shop is no longer the home of thousands of pipes. There are the house brand pipes, no longer made by the once prestigious brands that once manufactured them, but decent pipes. There are a few cursory Jacopo's, maybe a Mastro or 2. The dozens of tobacco brands that once lined countless shelves are gone, and now you can find only Dunhill tinned, and some McClelland. The house blends that once numbered in the range of 60 or so is now down to about 12. There are plenty of cigars still, and they do a good business in them, too.
BUT...
They scaled down their tobacco business and slowly expanded their side businesses. They now offer a full coffee bar with full size, hand drawn espresso, cappucino, and other coffee/teas. They have attractive "snacks" available, such as biscotti. They have cafe tables on the sidewalk, a TV over the new bar (full liquor license now), lots of seating at the bar and at a few tables. A lounge area set off from the bar area where one can sit in a comfortable chair and smoke one's pipe or cigar, or enjoy their drink. They are thriving!
I do miss the old "Owl Shop" and talking with Mrs. St.John, and the staff are all gone except Joe, who is a great fella and a source of knowledge regarding pipes, tobaccos, and cigars. He's been there since the 60's, and I will hate to see him retire. I miss the character of the old shop, but now accept the new one, and I understand that without the changes they most likely would not have endured. As I sit there now I find myself feeling not only the melancholy of the loss, but also some bit of pleasure that the shop is still alive, and looking like it will serve up pipes, tobacco, cigars, drinks, coffee, and a good time to folks for many years to come. A trade off, sure, but one that has given the shop a new lease on life and kept it viable in the era of the war on tobacco...
Hopefully the B&M's can survive by diversifying and other strategies so that the new generation will still have the opportunity to experience what a real tobacconist visit can be, and have memories that will last a lifetime.
Randy