I think trying to define a retailer as an LDS or an internet retailer is not always a valid distinction. I deal with a retail dive center that sells products on line as well, I'd refer to them as a DDS (distant dive shop). There is some value in touching a feeling items or trying them on, but there are a lot of items where that is not of any value. The LDS that I do business with only carries certain reg product lines and they are the all high end price points. I asked them about other lines that I had found on-line and they said they could get them special order but there would be a wait and the cost would be MSRP (they'd give me a package discount if applicable). If I ended up not liking it when it came in (I'm still buying sight unseen) it would be no different than buying it on-line.
I'm sending my regs to my DDS for service with shipping it's going to cost a couple bucks less than if I took them to my LDS, though the LDS doesn't service my computer so I'd have to go to another one. Turnaround door to door is the same, but I save 2 trips accross town (UPS from work, deliver to home).
I bought my wetsuits from my DDS because they carried close-outs and previous years models that were 1/2 the price of the new ones, only difference was color scheme. They also understand their market and have an if it doesn't fit, we'll swap it with no shipping cost. My LDS only stocks the current stuff.
There are items I will buy from the LDS like tanks. The price is the same as anywhere else and they have a fill card with purchase, so I get a better overall deal.
The point I'm making is, I don't look at it as a LDS vs DDS winner takes all. Each major purchase is a unique transaction. I search a lot of sites and talk to the folks at my LDS, try to understand the market for each item and make the best overall value decision based on the info I find. If I found something at my LDS that I decided was the right product I would absolutely give them a chance to be price competitive and would factor in the other values they bring into what that price had to be.