I live in a small town, so that anecdote is not lost on me. We have a Wal-Mart, two grocery stores, two drug stores, discount stores, clothing stores,two hardware stores, two electrical supply stores, a bakery, a few barbers and numerous speciality stores from jewelers to electronics shops.
With all due respect, your local situation, while understandably negative, is not indicative of the rest of the nation.
You say that you believe in capitalism, yet you claim that it's someone else's fault when stores can't complete. If they can't compete, then they do not deserve to exist. When Wal-mart moves into town, local shops are finally put to the test, are they truly offering a good service, or are they simply schlepping product out the front door?