I have 2 (well had 2) great LBS in my area. The closest just closed his doors (Oct 2016) to retire . Started in 1978, only employed himself. Supported our bike club, too. As a hobby, I do my own work with exceptions. Replacing a headset, installing a sealed BB are out of my area of the hobby. Also, building a set of wheels, to replace my aging , original wheels from my Ciocc. Some of the maintenance projects that my LBS did for me. Chains, tubes, lube I would purchase at the LBS, as his prices were comparable to Nashbar and Performance, if you included shipping fees. I can understand, not having a large inventory, to compete Nashbar and Performance Bike. Selling bikes and maintenance was a large part of his business.
Higher end items, shoes, clothing were out of my budget. My daughter bought her latest bike (used vintage in beautiful shape) there, as he did sell used bikes, that were higher quality. He and his wife (dental hygienist ) and no kids had a nice home and 3 cars, '65 restored Mustang, Austin Mini Cooper, and late model small SUV. They still own a small cabin in ME. He was a dealer for "Seven" bikes and had a nice one, as well as a few vintage.
They sold their home and moved to Florida . By all accounts, I'd say he did well. Not having kids, he could afford a few luxury items.
He will be missed by our community.