I've had access to financial information of an indy Trek shop. Based on my analysis/review, most of the profit was from service and parts & accessories. Relating to bike sales, they had much more sales of sub $1,200 bikes than over this amount.

From a business standpoint, the big box store mentality probably works. That is until the internet completely runs all of them out of business. I firmly believe most of the profit from bike shops come from people other than those reading these forums - unless you are a specialty shop in a ritzy area. The things we care about are much different than the things the majority of the customers care about. Hence the box store approach in a small sq footage shop seems to work for now.

Mfg owned shops eliminates the need for an owner taking a somewhat high salary.