Well, I am all for the small LFS existing and doing well.
But for instance in Dallas, it's not mail order that is killing the LFS, it's large chain stores which are undercutting prices.
One of the nicer locally owned and operated sotres here went under less than a year ago, I have a rack of 24 gallon tanks I bought from them when they were closing. Biggest reason was that people could get all the equipment they needed from petco, or petsmart. And this shop didn't do any specialization that would help it survive, like offering services and such to customers.
The places I see surviving are differentiating themselves by offering better products, competative prices (it can be done), and thriving off the people who get fed up with the poor livestock selections and crappy service at the others. Here for isntance they ahve hourly rates to ahve thier people come out and clean and maintain your tanks for you. Not something the hobbiest would use, but something offices do, and that Petsmart doesnt offer.
I still vastly prefer to buy all my livestock local. And usually newer products I'm buying I buy local so I can get a look at them pre-purchase. But I wont say I dont hit Big Als for things like amquel and filter supplies.