Short answer: compete on the things a warehouse structurally cannot do, curation, immediacy, expertise and being part of the neighbourhood.
Do not fight on price. You will lose. Every hour spent trying is an hour not spent on what you can win.
Curation is a service. People are exhausted by infinite choice. A shop that has already chosen the good ones is doing real work for the customer.
Today beats tomorrow. Nothing online can hand someone a gift this afternoon. For anything urgent or last-minute, you already win.
Be findable when someone wants something now. "Gift shop near me open now" is a search you can win and a warehouse cannot.
Events bring people in. A launch, a trunk show, a late-night opening. People who came for an event buy, and they come back.
Where the plans fit. Independent shops usually start on Small Business for photos and an offer, and move to Professional Services as foot traffic becomes a real channel. See current plan prices.