@JessicaLynn - You are right you usually won't see a cost reduction when buying locally. Large scale businesses can absorb costs and spread expenses throughout the company. A local business simply doesn't have as many resources as a larger business does.
However if it comes down to buying something "cheap" at Walmart or at a more expensive price from a local business I'll go for the local business every time. I certainly sleep better at night knowing my money is going to support my local economy and not some evil corporation.