I think that in the next few years the cycling industry will change dramatically as things evolve and the world becomes more tech-savvy. I think that the retailers and to a larger extent the wholesalers had hoped that the internet retailers would go away, but they haven't. What I see emerging are 3 models; the super duper store e.g. ivanhoe cycles, bike hq, gold cross. biiig shops which can place monstrous orders to take the bulk discount, the concept stores propped up and partially owned by the wholesaler, and the workshop.
I have read through this entire thread, and there are a lot of points I agree with, some I have taken on board with regards to the running of my own business. Some are realities that there is no answer for as yet, and I leave those points for greater minds than my own. But in this age where everything is negotiable, expendable income is becoming non-existent and people are becoming web ninjas, customer service is the only way forward. The retailer is not winning on price, but they can provide service which a computer screen can't. The ones who haven't figured that out yet are dying slow and painful deaths. They can't get away with being on the wind trainer with the oxygen mask on ignoring customers who are in the shop because it is training time and they have an Ironman in 6 weeks, they can't rant and rave at customers who come back a week later and ask about unconfirmed changes that a mechanic has made to a set of custom wheels, and the removal of parts supplied by the customer.
However, the customer also has to realise that this service should not come free - every calorie of energy and every drop of sweat has a price, and this price keeps the lights on, food on the table. I've never seen a bike shop owner drive a mercedes, but I have seen plenty of people haggle a salesperson down to the very bottom dollar, then load their bike which they managed to get for cost plus a little bit into their nice new range rover.
Full disclosure, I am the proud new owner of a bicycle workshop and fitting studio in Sandringham. I don't stock any bikes, however I do source bikes for people based on bike fit - ie you come to me, we do a bike fit on a size cycle, and I work out what is going to work the best for you, your goals, your budget etc. Where I can I try to source from within Australia, but the reality is that in some cases I can source bikes from overseas below the Australian wholesale cost. Since my loyalty is to my customer, who is paying me to find them the best price on the best possible bike for them and I also don't make any margin on the sale of the bike itself as I only charge a flat fee for my time, I don't really care what they end up on or where it comes from as long as my client gets what he/she wants. I am a highly qualified bike fitter, with the SICI advanced level certification, and I am, if I do say so, a very good mechanic as well.