The Washington Post reported on how the conventional wisdom that Wal-Mart is the bane of small mom-and-pop businesses is being shattered in the wake of a new Wal-Mart opening in Landover Hills, Md., a close-in Washington suburb in Prince George's County, Md.
The article cites research showing that in urban areas Wal-Mart has not driven out small competing businesses, as it often has in rural and more distant suburban areas.
It seems that Wal-Mart can drive up the amount of customer traffic in an area, which can actually benefit neighboring businesses, even if they are in direct competition with Wal-Mart.
So if you know how to distinguish yourself and play up your business's strengths–such as service–in areas where Wal-Mart is weak, you can compete with even the biggest of the big boxes.
I should also note that while probably denser than most suburban environments, Prince George's County is not that different from the "sprawl" found throughout the country. So I don't think we're dealing with a unique case here.
Another interesting part of the article looks at how Wal-Mart is actually going out of its way and spending money to help local businesses in Prince George's:
Wal-Mart has donated several thousand dollars to help four independent businesses near the store advertise in local newspapers. It also produced radio spots to air over the store's sound system. Wal-Mart selected the stores with help from local officials.
Photo by Wal-Mart.