Do some research on towns that dissolved much of their retail after the big box stores moved in, provided low prices and then, when the market was not good enough consolidated to larger regional areas.
Your wife might not have been worried in an economy where there is room for everyone but as money tightens, value add retailers are closing by the day. In Lex, which has throughout history been recession proof we have lost four department stores [Dillards, Shillito-Rikes, Penneys, Goody's], a 100 year old clothing chain, Winn Dixie, A&P, and more small stores than I can count in just the past 36 months.
I fully understand the need/want to buy a good value. The concern is that as the market consolidates to minimal suppliers, and much is offshored, the economic impacts are irreversible. We are already seeing much of the results as we have millions of manufacturing jobs erased and nothing to replace them. Much of that is a direct result of offshored manufacturing and folks like Walmart who buys much of their stuff from China.
Global economy. Social Darwinism. People hate change. All of these things are/were inevitable.
If the local sole-proprietorships really added value, they'd have been able to stay in business. Apparently they don't, or people are SO broke there, that they'll just run into local stores for expertise then buy at Wal-Mart anyway. Or they don't need the expertise, which means (again) the little shops added no value.
The few you mentioned - in my experience - add no more value to the shopping experience than Wal-Mart does. They sell the exact same items (especially grocers), for more than Wal-Mart, and don't offset that gap with anything else of value. They act as if they feel entitled to customers just because their doors swing open and they have things people need on the shelves.
If people want to keep on calling Wal-Mart evil for taking the simplest available value proposition and relying on scale to ensure profitability, so be it. But it was an inevitability. If it wasn't Wal-Mart, it would have been someone else. This is our great experiment at work.