WARWICK-Faced with federal, state and local taxes, insurance, license fees, salaries, rent and other rising costs, local merchants say it's amazing that many small businesses are able to survive. And it is even more amazing, they add, when small retail shops do well in spite of competition from discount mega stores and giant shopping malls. In the Village of Warwick, with its gift and antique shops, merchants have the advantage of offering unique items not usually found in department stores. The village also is about a 40-mile round trip from the nearest mall and shoppers must consider the time and expense of traveling as well as the inconvenience involved to purchase an item that is also available locally. And there is the possibility the same long trip would have to be repeated if the merchandise needed to be returned or exchanged. But Warwick merchants also feel that they can offer their customers services that can't be found elsewhere. "We're like Cheers,'" said Deborah Blomfield referring to the popular TV show. "We know everyone and they know us." Blomfield, past president of the Warwick Merchants' Guild and co-owner of Port of Call home furnishings on Main Street, said that she will often visit a customer's home to help select a piece of furniture or to solve a problem with something she sold. Developing long-term and satisfactory relationships with her clients can lead to new business. "When someone is looking to match furniture they purchased from us years ago, I know exactly what will work and I can be much more helpful," said Blomfield. And throughout the years, she has learned to stock quality items in all price ranges that appeal to customers in this area. "Unlike chain stores, we're not selecting home furnishings and accessories for the national population," she explained. "We know what is most suitable for our customers living here in Warwick." Mayor Michael Newhard, owner of Newhard's gift shop expressed similar sentiments. "It's taken us years to learn which products are most popular with our customers," he said. "And even that varies with the changing demographics. When we first opened no one knew or cared what a coffee press was. Today, it's one of our best selling items." To compete with the Internet as well as the malls, Michael McDermott, owner of The Bookstore, offers special discounts and other incentives. Although he can special order anything, he tailors his inventory to the type of books that are popular with his customer base. McDermott argues that when all things such as shipping charges are considered, he is able to compete favorably with large outlets. "More important," he said, "I offer the best service." Most Warwick shops keep a customer wish-list, either written or stored in the owner's memory. That system is essential to the success of The Toy Chest. explained owner Sue Loughren. "Our clerks know every child and what they like," she said. "We know their birthdays and, based on previous purchases, we can usually recommend the right gift." Loughren added one more reason for the store's popularity. "We have a friendly atmosphere," she said. "People love shopping here." Barbara Laurence, who now chairs the Warwick Merchants' Guild, has often expressed another reason why local residents continue to support Warwick businesses. "They realize," she said, "that our merchants always support local charity and community events. And the money they spend here is one way to say, Thank you."