The low prices outweigh the loss of the businesses that have higher prices. That is, in a pure capitalist sense.

If a business can´t provide a better or cheaper product/service, then they are less efficient than Walmart, and thus the existence of Walmart makes for a more productive capitalist economy.

Of couse though, competition is a good thing. And right now Walmart is hard to compete with. The only way to compete with them is for small business owners to rally support for a boycott. They know that when Walmart moves into their neighborhood, they´re toast.