Silly wabbits...
Bike shops don't make money selling BIKES(at least not much anyways), the money comes from selling parts and accesories. That's where the bigger margins are.
No one opens a shop with the idea of becoming the next Bill Gates. If your LBS guy drives a BMW chances are there are "outside forces"(e.g. family money, previous career savings) at work. Most LBS owners are bike geeks, just like you and me! They generally have a passion for the sport and want to be a part of the cycling community. When was the last time you saw Supergo or Pricepoint sponsor a local tour, ride, or race(unless you live near one and then I suppose *they* ARE your LBS)?
It's a common misperception that all mailorder is always cheaper than the LBS. I can flip through any number of catalogs(Performance, Nashbar, CC, Excel) and see that our prices are the SAME and sometimes lower on "regularly priced" items. Our customers pay tax, but skip the shipping charges.
They can try stuff on, have items installed, pull stuff out of the box and actually touch the goods before laying down cold hard cash.
Perhaps the biggest reasons to patronize your local LBS are the intangible ones. If your LBS is a good one, be good to it. Many of our customers just like to come hang out and talk "bike". They often ask for advice before making a purchase. They like to share race/crash/vacation pictures and stories with us. They use our parking lot as a place to meet for group rides. We pump up their flat tires, sell them Clif bars "on credit", and refill their water bottles if they stop in during a ride.
There have been times in my cycling-life when I have NOT had an LBS job. I still went to bike shops, asked for advice, went on group rides and plunked down full-retail(knowing what cost was)because I understood that the owner still had rent/utilites/salaries/taxes to pay.
Sorry to write a book, obviously I feel passionately about the subject. I do think there ARE appropriate times to use mailorder(clearance items that are below "cost", items that are not available locally), but generally I'll choose to keep my money "local".
Thanks for listening(and no I don't shop at Wal-Mart. Don't get me started on Wal-Mart...)