Dollar General and Dollar Tree are now battling for control of Family Dollar Stores, but there's one company that could be watching warily as this all plays out: Wal-Mart.

On Monday, Family Dollar confirmed it received an acquisition proposal from Dollar General for about $9.7 billion or $78.50 per share. That's a bit richer than Dollar Tree's earlier offer buy Family Dollar for $74.50 per share. And no matter who takes it home, consolidation in the "dollar store" industry could turn the screws on Wal-Mart.

The world's largest retailer is already feeling the heat from dollar stores. In a recent note to investors, Jeffries analysts Daniel Binder wrote:

"Dollar store industry consolidation may not help Walmart…. If Dollar General makes a bid for Family Dollar and ultimately acquires the company, it will have the opportunity to improve the Family Dollar store operations and comp stores sales. When the best dollar store in the business takes a turnaround and makes it better, everyone else has to work that much harder, including Walmart."

To be sure, the combined revenues of Dollar General, Dollar Tree, and Family Dollar are still far from Wal-Mart's massive sales numbers.

According to Gina Sanchez, founder of Chantico Global, a consolidation in the dollar store business is one more worry for the world's largest retailer.

"The fundamentals for Wal-Mart aren't great," said Sanchez, a CNBC contributor. "Along with those really high sales, they've also had really high expenses lately, particularly in their ecommerce space where they've been losing their shirt to Amazon. And they're also competing against Target. This 'dollar' consolidation, whether it's Dollar Tree [or] Dollar General that ends up acquiring Family Dollar, is yet another point of competition. The competitive landscape is getting harder for Wal-Mart."

Also hurting Wal-Mart is that wage growth has been fairly modest. Since 2008 recession, private industry wage growth has remained under 2 percent on an annualized basis, reducing the amount of money most people have to spend at places like Wal-Mart. (Meanwhile on the other side of the wage equation, Wal-Mart is the largest private sector employer in the United States, with 1.3 million employees domestically and 2.2 million worldwide).

"Wages just simply aren't rising enough, and they have been disappointing in terms of their sales," said Sanchez. "That, combined with higher expenses, just isn't a great combination. … I'm actually pretty negative on [Wal-Mart]."

Richard Ross, global technical strategist at Auerbach Grayson, says that shares of Wal-Mart threaten to make good on the company's famous promise, "Always Low Prices."

"Wal-Mart is in big trouble," Ross said. "This is not a stock you want to own."

Ross, a "Talking Numbers" contributor, is particularly concerned that the stock is down about 6 percent since the start of 2014 while the S&P 500 is up by around that much. "That's very poor relative strength," lamented Ross.

Also worrying Ross is a head-and-shoulders pattern he says has been forming over the past two years. The neckline of that pattern is right where the 150-week moving average is, $71.29 per share.

"That's very ominous," Ross said. "I think we test the neckline of that pattern. … That's another 5 percent down from here. A bigger break would be a violation of that 150-week and the neckline. That could send you down to $60" – a roughly 20 percent decline from current levels.

In response to concerns about the impact of these potential mergers, Wal-Mart commented:

"We don't comment on mergers and acquisitions. We like our position as it relates to small formats. Our focus remains on our business and what we feel works for the company. We are focused on running our business and running it well, and we believe we're in a position to serve our customers wherever and whenever they want. We think our small format stores offer a winning combination with fuel, fresh, frozen and pharmacy, and that they put us in a good position in the small store sector."

To see the full discussion on Wal-Mart, with Sanchez on the fundamentals and Ross on the technicals, watch the above video.

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