it's not just the subsidies that tilt the scales, its also efficiency of scale with the chains being able to do more/cheaper because they are a big chain. and it's really hard to fight that, or even argue against it because it is more efficient.
the only thing a small local could do to compete on that front would be able to exploit local features that the chains don't know about -- tailoring inventory to local taste, making deals with other small local producers -- but once you start doing that it's more like the local is evolving into a different niche of 'serve regionally-specific needs' while the bigbox is 'serve generic needs'