How long should we go out of our way to protect horse and buggy manufacturers?
I say that as someone who runs a business focused around increasing customer engagement with local businesses in small towns, but honestly it would take a monumental effort to save so many of these "general store" type of businesses that a small number of people paying the "local" tax on commodity goods isn't going to cut it.
Local mom-and-pop stores need to be looking for ways to differentiate from their mega-competitors. It's possible, and many stores are doing it successfully. But hardware stores? Selling bolts? Their only customers are people who don't use Amazon (older/rural) or people who need that bolt right now and are willing to pay 2-3x retail price for it. Especially in a pandemic where Amazon/Walmart are allowed to be open with few restrictions, but mom-and-pop has to close.
Successful small business going forward has to offer something Amazon/Walmart can't copy. Authenticity, experiences, memories. Escape rooms were a huge success story, creating axe throwing and fowling and other group activities, and often those places opened their businesses in the empty stores of businesses that couldn't compete with Amazon/Walmart and went out of business. Live music is another place Amazon can't compete with. A beautiful river-front promenade with park benches and an ice cream shop and a coffee stand and a vendor selling popcorn from a cart with some people getting ready to launch their kayaks while others are fly fishing, Amazon and Walmart and big box stores and strip malls can't compete with that. That's downtown, small, local. That's high profit margin.
Rather than clinging to the past where shopping local meant paying high prices on commodity items, we should be looking forward to a future where shopping local means "I can't get this anywhere else". That takes innovation. Grocery and bolts aren't innovation, they're commodities.