This is true, but it is self perpetuating in many rural regions across the country. Here in Mississippi there are more examples of it happening than not. Cleveland is a perfect example. The city officials there are so insane it's just down right silly. They refuse to let any outsider do business there (Wal-Mart is, but they will always get what they want). There are three "home-town" hardware stores there, but people sneak away to Lowes in Greenville regularly. And guess what, they eat at chain restaurants while they are in town to shop too. Thus creating a better economy and higher population for Greenville instead of Cleveland (what they do with that economy is a different story). Starkville used to be just like Cleveland (forcing people to go to Columbus by comparison), but it has seen the light and is progressing at a healthy pace in my opinion. If you understand city economics, its healthy to have the big guys in town because that brings the traffic and revenue in to support the local merchants. Can't have lions without gazelles and vice versa, so to speak.
As far as SC goes, Academy or high rent didn't put them out of business. Their inability to adapt to the market and economy did. When Academy came to town they should've reevaluated their business plan and provided what Academy doesn't, thus creating their own niche within the sporting merchandise market.
