In reply to gethin_allen:
Like anything it depends on the saving and hassle. Most people have limited disposable income and so have to watch how and where they spend.
I try to use both. So my LBS gets my custom for small items, bar tape etc. However medium size purchases they often can't compete. Take a cassette £40 on wiggle but from the LBS including my mate/local club discount it is still £60, as I don't need them to fit it I buy it online.
However I use them for my maintenance, cash rich time poor (I have other stuff I'd prefer to do with my time) and they charge me fairly even if I could do it myself. Sometimes it is free, sometimes it is not. But the relationship I have built with them and the bag of donuts or small crate of beer I give them every so often helps. Further to that I'll pop in just to say hi and have an idle chat.
They get why I don't buy everything from them but appreciate that I'll ask and use them when I see it as affordable.
Regarding local shops such as butchers, love to use them when possible, however given the 9-5 hours I can't get there.
In summary, there is a price point where online discount wins because it is enough money in one lump sum to spend on something else.