Yes, the brick & mortar retail business strategy is to take slim margins on the bikes and make the profits off the accessories & service. Mail order is fine if you have the time to wait for delivery, you know exactly what you want, and you've factored in the shipping costs. Usually when you order from out-of-state, the sales tax saving makes up for the shipping cost; even better if you can combine your orders to make up a free shipping minimum.

The premium you pay for parts & service at the LBS can be seen as a "relationship fee." If it's a really good shop with friendly and knowledgeable staff, it's worth the premium to establish a good relationship. Once they know you, they will accommodate that one big emergency repair the night before the Gran Fondo, something that's pretty priceless.

And it's pretty easy to find those kinds of LBS's. They will get the recommendations from very experienced cyclists, they are usually quite involved in the local cycling community, and when you visit the shop, the guy at the counter does not try to diminish your knowledge of cycling or its technical issues in order to try to make himself look more knowledgeable. No, but in just talking to him (or more frequently her), it becomes quite obvious that they know one heck of a lot more about bicycles than you, and you've been at this for 40 years. That's the shop you want the relationship with!

Examples from my own personal experience, living in Vancouver, Canada, I would seriously AVOID Simon's downtown, but I can recommend R+E for those in Seattle! (yeah, insert standard disclaimer here)

Luis