What are you talking about, skinny? Brick & mortar shops have been competing directly with online retailers for a long time now. They're not in parallel universes or something. Some difference in price is expected and accepted, but many bike stores choose to pretend like they're not in competition with anyone. LBS' are a bit like camera shops; there's some kind of unspoken pact to never drive each other's prices down.

If a shop's overhead is such that they have to charge $120 for something that can be sold for a profit at $67, they're not a very good retailer. Too much overheard to compete = their fault. And the overhead argument as a blanket excuse for much higher LBS prices is giving quite a benefit of the doubt anyway--it's just as fair to assume that the store would, in fact, be making money at $67.