Sainsbury's is good but could be better - what the independents don't have is good fruit, veg and fresh meat, so makes sense for Sainsbury's to make a virtue of these, but the couple of times I have been they've either sold out of interesting stuff or perhaps don't stock these in the first place. They seem to have an awful lot of spuds! I also think it is pointless to sell baking tins and wine glasses which is just taking up valuable stock space, likewise magazines. However in general I really welcome them being there, it is so convenient and increased footfall in the area is great.
The Indies should really be re-thinking their game, they can't just go on just doing what they are doing. I'd spruce the places up as has been suggested and limit stock to what Sainsbury's don't do well - spices, deli stuff, sauces, good beers and wines. Have great customer service, offer to home deliver even. I'd also have leaflet-ed the area before Sainsbury's opened to say "all this and more is at your local independent store" and do some advertising and a bit of aggressive marketing. They can't just look out of their windows balefully at all the customers going into Sainsbury's, I'm very sorry to say ..