Retail is changing but it still gets down to the value proposition offered to customers - unique products with great service = high margins and satisfied customers. However, it will get much more competitive than less. For example, I have an App on the iPhone 4 where I can take a picture of a barcode on an item at a store and it will find the merchandise in other local stores and on the internet with prices. The gloves are off and retailers will have to adjust.
Somewhere, one has to factor in one's time, fuel and other costs if one is driving from store to store trying to find the best deal, etc.
As an analogy, we have a toll road 1/2 mile from our home. Expensive tolls - it costs a couple of dollars to get just a few miles to the interstate, but it is fast, close and convenient. I have neighbors who will go several miles out of their way to avoid the tolls, using more gas and more tire wear, etc., and go on a local road with at least 10 stoplights and spending a lot more time, simply to avoid the $2.00.
Which is cheapest? Considering time and other factors, for me, the toll road is cheaper.