Shift in Google's Favoritism?

G favoring larger, broader sites?

[siteseo]

We have a very niche-type store that has traditionally done fairly well in G. Before I got involved we were 12th for our main (one-word) keyword. After doing some onsite optimization and requesting tons of links from relevant sites, even getting into DMOZ, we steadily moved up as high as 6th in G. In the last few weeks we started slipping back down - 4 positions down in the last 2 days alone - to 13th.

Now, 11 of the 12 sites that are ahead of us all have one thing in common - they're all huge mega-stores that don't specialize in any one area. They may only have one page of product that relates to our category, yet they are outranking us. They have little or no inbound links to their page, so their relevance is coming from their homepage and spilling down to their subpages. One of the sites only has ONE of this product to offer (not to mention FIVE variables in the URL) - infuriating, because we have HUNDREDS of this particular product throughout our site.

We have over 5,300 pages indexed by G - only 2 of the 12 sites beating us have more. We have more backlinks than over half of them. We're #1 for all of the allin: searches. We have decent TBPR (I know - means squat). The ONLY big difference is that all of these sites are in the Yahoo Directory and we're not yet (but will be within a few days), and that they're broad in nature (lots of product categories).

I'm wondering if anyone else has observed an apparent shift in G in recent weeks, toward favoring larger, less niche-type sites? The theory could be that a large site is less likely to be a crappy/sp@mmy site, or that sp@mmy sites are typically "nichey". Both of these theories have major flaws in them, of course.

Is anyone else's niche site being pushed down by bigger, broader sites?