Does the Internet Accelerate the Wal-marting of the US Economy?

On the way to O'Reily's Etech, the train was late coming into the station by half an hour- which was a good period to knock through all the necessary calls. I don't know why it was late but I suspect it had something to do with the freight train that cruised down the tracks at a leisurely pace at about the time our scheduled passenger train was supposed to be there.
On the way out of the station I picked up a copy of the Southern California Computer User from the rack in the station. These tabloid computer papers have all gotten thinner over the last 2-3 years as the hardware has become commoditized. It is a quick flip through the 50-odd pages, all the way back to the last page where I ran into James Mathewson's Outfitter column. This week he wrote about the Wal Mart economy. In this column, Mathewson echos a growing chorus of voices about the wal-martification of the American economy. He writes "All I know is that the Wal-Mart economy is not sustainable in the long term. Sooner or later, it will hit the wall."  What are the opposing arugments to this? Mathewson writes of local merchants, and the impacts upon them. Lots of questions raised, but no answers.
I think the direction of internet search is a part of this equation also. search engines with the power and scope of Google, Yahoo, AlltheWeb, and highly probably Microsoft give power to consumers  to digest lot and lots of data. Purchasing data empowers the consumer to make a smart decision - for the same identical item, the lowest price is always available to the savvy search engine user. Let's not forget the search engines' aggregation of catalog data  - content that has been crawled with a robot and re-purposed to  suite the engines' mission. But what of the local merchant? It's extremely painful for them to service this market. As I've written before, unless the local merchant goes with a Walmart business model - that is of high-volume and low margins, they may as well not try to compete. The argument that many posit is that local merchants are positioned to service the local business because they are closer to the consumer. But the problem with that argument is the frequency with which the consumer wields the on-line pricing as a club to get lower pricing over the counter.