Simply false. There are more new small businesses starting up every year that compete with Wal Mart than you could imagine. Admittedly, some are more "niche" than others, but that has always been the key to success. Apple didn't try to build a supercomputer---it went for the part of the computer market IBM didn't address.
Wal Mart cannot be competitive in everything. It's book/magazine section, for example, while huge nationally, is pathetically small in choices, and will never compete with traditional book stores or chains. The paranoia about Wal Mart is really sad.