Nara City has done a good job of preserving its old merchant quarter, known as Naramachi (“Nara Town”). The tight, Edo era streets are home to museums which celebrate the history of the city, as well as a great range of cafes and independent shops selling souvenirs, clothing, and handicrafts.
These are located inside historic machiya townhouses, with distinctly narrow footprints which were intended to save on taxes for the merchants who owned them. If you want a closer look at what these sort of shop-house combos were like to live and work in, then head to Koshi-no-Ie or Nigiwai-no-Ie: two well-preserved examples which are open to the public.
The current form of the area as a commercial district only began development in the 15th century, before which the entire area was dominated by a temple. Gangoji Temple still remains, but the advance of the salesmen has slowly but surely pushed its influence back, and now only a few of its buildings remain.