That phase can pass though. Specialty shops have sprung up in our town. Customer service is the way to beat Walmart.
only if people are willing pay a 10-20% increase in price. which right now many people still are not.
That is not really true with Wal-Mart. In many instances, one can actually INCREASE business that it moves into because it consolidates many customers into a single area. The key with Wal-Mart is that smaller shops can no longer survive if they are fleecing their customers, providing a crap product or are unwilling to adapt to the new situation. I find it funny that so many demonize Wal-Mart because of their supposed anti-business nature when they do nothing of the sort in small towns. Everywhere I have been, there have been many small businesses surviving quite well around Wal-Mart. NONE of them sold cheap crap products. As the last poster pointed out, customer service is one way of competing (and handily beating) them is through customer service. Another is through selection as Wal-Mart has tons of cheap, plastic crap but they have very little that is non generic or quality constructed. Another is through specialization. Sure, Wal-Mart has a sporting goods section but few fisherman will go there if there is a tackle and bait next door.
In the end, regulation only serves to drive the mom and pop shops out of business and encourages Wal-Mart to be the only store in town because they can afford the cost of complying with regulations where mom and pop cannot. The idea that regulation helps the small guy compete is nuts. All it does is ensure the big guys have no real competition. In a free market with less regulation, the very nature of a large business and the bureaucracy that goes with it can make smaller businesses far more competitive. Technology certainly lessens this gap but unnecessary regulation only ensures that the only edge the smaller businesses have is moot.