What I would do if I was running an LDS:
1. for a compressor, skip membrane systems and other expensive crap. keep it simple and bank EAN32. charge the going rate in the area. p-p blending for other mixes may be labor intensive and i'd look at continuous flow blending, but i'd need to carefully look at TCO on how that affected compressor maintenance, etc. i think i'd rather train my customers that if they want it fast, they should get air or EAN32.
2. never deal with manufacturers who try to push a lot of inventory on you that you can't move.
3. only stock items that move. keep the inventory low. ebay anything which doesn't move. skip gimmicky crap.
4. get online and compete with leisurepro directly.
5. cater to all kinds of divers. i'd start with making sure I took care of the DIR divers, but i wouldn't have a problem with selling bungee wings, split fins or AI computers. the AI computers are going to be high margin, which keeps me in business. for online websites, i'd have different virtual storefronts for DIR divers, other tech divers, cold water rec divers, and warm water vacation divers.
6. stock and resell popular smaller mfgr stuff like DSS backplates, FredT BPs, oxycheq O2 sensors, photon torpedo backup lights, etc. all stuff which moves and doesn't sit in inventory though.
7. stock a good supply of popular books. people who read more about diving probably spend more money on diving. you want those people in your store, even if you don't make a lot of money off the books...
8. research popular dive items on the net (scubaboard) and stock them. for example, with camera equipment, cater to the oly C-5xxx crowd, and the nikon DSLR crowd. skip most of the crap.
9. carry what people want. scubapro and apeks regs, DUI drysuits, etc.
10. stock and sell bulk and at slightly-above-cost equipment like boltsnaps, cave line, bungee, etc. price competitively with online places.
11. location is important, but rents need to be low. make sure your compressor is next to a green belt rather than a highway. make sure that you have walk-in traffic to move the split fins and snorkels to...
12. for pricing, everything should be priced at LP + shipping (+ sales tax). for discounts, begin by giving them the LP prices + sales tax (should be roughly equal to LP + shipping).
For everything above, the margins are squeezed. The only way you are going to make money is by selling volume. In order to sell volume, you're going to have to attract a lot of different customers, which means you'll need a lot of selection, but that will push up your inventory costs. Initially target different diving enthusiasts and stock what they want and cater to them really well. This includes DIR divers and tech divers, but also the guys who want to be streamlined and like air2s. Once you get good word of mouth and start attracting other divers, stock what they want to buy...