Big, despite what the flaming leftists tell you, is not inherently bad nor is small inherently good. A smnall business that is inefficient, mismanaged and does not respond to the market is nothing more than a government office.
We've got a little hardware store nearby. Their prices are very high but they've got a bunch of little old retired men who know where everything is and provide wonderful help on little projects. Great. But, the owner's wife is the only one who can staff the register and the only one allowed to answer the 'phone. It takes a miracle to get out of that place. Sure, it's a small business but it can compete on very limited terms. When it fails (although, it's been there for years and seems to be doing OK) the blame will fall on Walmart.
It is the unions, of course, and their employees and lackies in Congress and the media leading the Walmart witch hunt. These are the same unions that drove the cost of domestic products so high that other providers were able to seize a position and then the whole market.
I see this difference in grocery stores in my area. What costs me $3.29 at Safeway, Albertsons, or QFC, costs me $2.50 at Fred Myers.
Funny, when a new grocery store came to an area we used to live in, we were happy because they were so much cheaper than the rest. We told an older friend of ours how good the new store was and she responded with, "I've been going to A&P every Thursday morning for 25 years and I ain't about to stop now."
We had a local Albertson's in Oklahoma that was great ... prices were a little higher than other stores, but the selection was excellent, the store was well run, the employees were cheerful and helpful ... I probably told the manager about two dozen employees and situations that kept me shopping there. They must have had a great regional management staff, because other Albertson's in the area were good, too.
The lesson is that retailers live or die by how happy the customers are, and that's how it should be.
While searching the Internet I found the bankruptcy statement from the owner of the business my husband used to contract out to. He stated that competition with places like Best Buy and the like had been the reason he was out of business. When I mentioned this to my husband, he thought it was funny. The reason this man lost his business was that even though his business had boomed he had not treated it as a growing business, but as the mom and pop business it had been years ago. He was still trying to rely on word of mouth, rather than spending more money on advertising. It was poor business decisions that ruined his business, rather than the success of other businesses.
The hardware store you mention is probably like the one where I shop, they are selling service. They can tell me how to do or fix almost anything around my house and then sell me the tools to do. I like that. Walmart doesn't do that for me.