Originally Posted by
noodle soup
Purchases made late in the season(after the retail price reduction) are at greatly reduced cost,
Right, which means that shops aren't 100% taking it on the chin.
The question of the thread is who (LBS, distributor, manufacturer) is seeing their margins reduced with model year-end sales. If a shop has an overly-optimistic buyer, their margin may be the only one taking a hit when they have a stock room that needs to be cleared out at the end of the year. But at the same time, an LBS could be a beneficiary of discounted pricing from their vendors and the LBS might make the same margin that the normal wholesale/retail pricing affords (or greater, in that poster's example).
All of that is to say that the answer is: it depends, both from shop to shop and even bike to bike.
Or, to paraphrase: 60% of the time, the shop takes it on the chin every time.