Dotted across Melbourne, small retailers are mixing commerce and community in a way the larger retail strips can't – and it's paying off handsomely.

There is scarce data on rental and vacancy rates but anecdotal evidence points to low vacancy rates, lower rents and long-term stability in tenancy.

The hallmark of  success is often a lack of road traffic, commercial or chain stores and an intimate or cosy vibe.

Gift and bookshops rub shoulders with artisan cafes and bakeries and fashion. Many villages are also located in affluent areas, helping to propel them not just as a local convenience, but as a "charming" destination.

The west has Yarraville but villages are more common in the east and south-east: Hawksburn, Albert Park, Toorak, Mont Albert, Domain, Middle Park and Mailing Road in Canterbury.

Across the Yarra, North Carlton's Rathdowne Street is surrounded by lush trees, popular cafes and a mix of boutique bookstores, fashion and gift stores.

Meg Lawton owns North Cafeteria in Rathdowne Village and says the "one-stop shopping" and being able to avoid bigger shopping centres is appealing to visitors.

"We've got all basics covered. People come here for breakfast or a coffee, then they visit the butcher or get their fruit and veg. It feels like home around here," she says.

Lemon Baxter agent Paul O'Sullivan says villages benefit from their "real community feel" and support from local residents.

"People living in these areas love going to their little community strip; there might only be half a dozen shops but all the operators are very good at what they do," he says.

Fitzroys' Steve Brookes says high-profile retailers are eager to secure leases as an alternative to setting up in the city or big shopping centres, where reports of exorbitant rents have either forced some businesses out or scared them away entirely.

Country Road-owned Trenery recently took out a lease in Albert Park Village, a trend that upmarket brands Husk, Seed and Mecca Cosmetica have already adopted.

"Local villages in inner-city locations are now extremely popular and are considered by some retailers to be more prime than major retail strips," he says, adding that the agency has a "sizeable waiting list" of boutiques wanting to move in.

O'Sullivan agrees, saying the opening of Emporium and a flood of international retailers means villages are becoming upmarket alternatives.

"They're becoming destinations specific to people who don't want to travel into the CBD. They set up in these little villages and they'll probably pay a quarter of the rent," he says.

As villages go from strength to strength, their larger counterparts continue to suffer. Knight Frank data released in August shows that more than 50 per cent of Melbourne's biggest strips recorded an increase in shop vacancies in the past 12 months.

Almost 10 per cent of Camberwell's Burke Road shops are vacant, while Bridge Road, which has been on a downwards trajectory since the invasion of DFO and other discount centres, recorded yet another increase in empty shops, and vacancy is now 19.3 per cent.

By comparison, Mailing Road and Hawksburn villages, which are in the same part of town as these same struggling strips, had no vacancies at the time of going to press.

In Hawksburn, Beller Commercial is selling nine stores, with the average rent being $39,000 a year plus "strong annual rental increases".

Knight Frank research director Richard Jenkins say all retail is doing it hard at the moment, but some, such as the humble village, are doing better than others.

"No one's immune to the retail downturn. I think what we have seen in villages is if you can meet the needs of your local community, you'll fare pretty well."