I think the biggest thing that MEC is doing right is customer service and bang for your buck.
I've noticed that so many local bike shops have become clique-ish. Catering only to road/bmx/mountain or whatever riders. Sales staff can range from helpful to uninterested to downright rude.
I haven't once had a rude or unhelpful staff experience at MEC. Their gear isn't top of the line, but it's usually durable and affordable, and they have a stellar return and replacement policy.
Their prices are pretty good as well. Distributors in Canada generally overcharge, and if MEC can jiggle the system, maybe it might spur other shops to lower their prices, and stock better gear.
I think the key point we have to remember is that all this appeals to people who don't want to drop huge amounts on bikes and bike parts, and need guidance.