AI hope you escorted her out! That is very wrong on so many levels. She's obviously spending too much time trying to knock out her 'competition' (the quotes b/c you are obviously out of her league), focusing more on your business then her own. I think everyone following this post realizes she wont be in it for long, her recent actions have proved that!

Yes, people play dirty, she's going overboard! I probably would have tripped her as I escorted her out, don't do that ;) I feel for you! Your the professional, just keep doing what your doing, branch out. People aren't going to want to go somewhere where the owner is bad mouthing the competition, I wouldn't, it's childish and will ruin her.

I also donated cakes to every organization in town, work with the other vendors in your community not against them. I live in a small town as well, and other small business owners will respect what you do. I've had other businesses offer to carry my cards in their store and they now invite me to vendor fairs and bridal shows.

I am so sorry you have to deal with someone bad mouthing your hard work, try not to let it affect you.

AWhat a joke this girl is!

Thanks girls. I have no clue what I have done to make her single me out. You would think she would target the more well known bakeries in her area of town. However, it does make me feel good that my little bakery can intimidate her so much.

I have just been trying to take the high road and not let her know that I am on to what she is doing. When her worker walked in I simply channeled CC and said "No. Just no"

I am so glad I have this forum to vent through. Its one thing to talk to my husband about it. Its another to talk to people that know how I am feeling.

She actually walked in and asked to leave fliers for her bakery? Just like that? Wha...?

You should have taken all the fliers and thrown them in the bin, preferably while she was still in your store 

My last shop was in a high foot traffic, downtown business district. We sold sandwiches and stuffed breads so lunchtime was crazy busy. A new deli owner from down the street sent his girl to stand in front of our door with a large sample platter. At first I was stunned. Then I whipped around from behind the counter and went outside. I was fuming and told her to leave. Poor thing, I really scared her, but tough. 

Sound like you don't need to worry about her lies.  If business is already increasing it might be that people are quiestioning what she is saying after having tasted her dry product.  It will actually turn even more on her as people who know your products start telling other people what a joke she is.  Word will get out without you badmouthing her and you will come out looking even better for having taken a professional stance.