I don't think you appreciate how expensive it is to maintain a big inventory. Owners look at it like money sitting around gathering dust and losing value. I see your point, but retail is a tough gig at the best of times. The real reason LBSs are scared of online retailing is because there's VERY LITTLE they can do about it if the customer is only focused on the cheapest price.
The shop where I am is extremely large. We have over 43,000 separate items skewed. And we stil lhave to order stuff.
People have no idea. Plus, I enjoy when people not in a particular business or activity feel compelled to offer advice.
Forty three thousand items and we still have to order with a warehouse and five tranfers a week for bikes, accessories, and parts.
BTW...you know how you go to an on-line catalogue and your order is delayed or it takes longer than you think? Guess what they are doing? And you are paying for shipping.