I'd love to know what percentage of Audiogon forum posters have actually bought anything from a brick and mortar audio dealer since they've joined Audiogon. My guess is the numbers are very low. Is this because of the higher prices? That's one reason, but I'd wager it's because most Audiogoners either don't need advice and service or don't want it. One of the main purposes of Audiogon is to provide a way for us to support and educate each other rather than rely on retailers or reviewers; that's certainly why I'm here. I'm still in my audio infancy (maybe a toddler by now) and the advice and insight I've gained here has been invaluable. I can get tens or hundreds of opinions on something whereas if I go to a retail store I'll get one. It will likely be a well thought out and valid opinion, but still only one opinion.
Cinematic_systems is right that no brick and mortar store could stay in business just selling to audiophiles. They have no value to add to our market other than providing a listening room, and most of us realize you can only truly audition at home in your own room with the rest of your own equipment. The other things they provide most Audiogoners don't need. Opinions? We get an abundance here. Prices? New gear cheaper via Internet retailers; used gear WAY cheaper here or on eBay. Service? Most Audiogoners do all their own setup and tweaking; they wouldn't have it any other way.
Are brick and mortar retailers being squeezed out? Of course they are, just like corner hardware stores are losing out to Home Depot; the entire consumer marketplace is changing. Cinematic_systems and other retailers like him will do what they have to do to survive; if that means concentrating on the "Home Theater" buyer, you can't blame them. If that means they can't offer service to the audiophile crowd, I can live with that. I'm perfectly happy here, learning a lot, chuckling at the impassioned debates, forming my own opinions, buying used gear at great prices, and having a blast both putting together my system and listening to the increasing better music it provides.