Most people don't shop at LBS for good reason, the products available on the showroom floor and promoted by the sales staff don't meet their needs. I would like very much if LBS offered bikes similar to what could have been found until the 70's at any LBS in the US and still is found in Europe. But the LBS retailers have abandoned the market for bikes that they are not interested in selling, just like US manufacturers abandoned the market for small economical cars (even high priced luxury models) to the Aisian companies. At least the US car retailers don't push their potential customers in the market for "undesirable" small cars to Walmart or the department stores; the US branded dealer offer the small cars by partnering/buying the franchises for the small car manufacturers and don't let the customer leave without showing some kind of product of interest.

Background info:
I bought my 1972 Raleigh Sports 3 speed at a Philadelphia LBS new for $82; bought a new 1976 Raleigh Superbe 3 speed from another Phila LBS for $142. Obviously they would be cost more in 2007 $$ but much less than the product displayed in the OP and with no sacrifice in quality. I bought ( in 2000 or 2001) my current commute bike at a German department store for DM 286 (the equivalent of $135 at the time) equipped with Sachs/SRAM seven speed, coaster hub, front hand brake, full fenders, chainguard, kickstand dynamo lights, bell, and rear rack. I now have over 25,000 all weather miles on it. Commuting bikes do not HAVE to be high priced to be GOOD and Reliable for commuting. The last bike I commuted on in Germany (for 3 1/2 years) is similar to my current bike but equipped with a Sachs Torpedo 3 speed rather than 7 speed cost DM400 ($215) in 1999 at the local Opel Dealership which had a small bike sales shop inside. Still use that one for around town, still an excellent bike for around town. Seems every German commuter, cycling in the city, of all ages and sizes, rode similar bikes. On the weekends the club riders would make their appearances on more flashy rigs outside of town.