The market will always decide who stays and who goes, but if overpriced shops continue it tells me that people are willing to pay more and thats what keeps it going. Like the housing market, in time it might correct itself, or it might not. All depends on what people are willing to pay. We got 2 quotes for doing the electrical for our new house. One was $10500, the other was $8500. We went with the higer price because they would be in months quicker (we will get to move in quicker), the other place has been known to not show up when they said they would be, and the higer priced company is family friends who will spend their money local with us.
I remember watching my Dad in his buisness. He would be 6 weeks behind on work and someone would come in for a quote. If he was going to take on more work it meant working weekends and evenings. He would quote higher and some would say he was to high and if he wanted the work he better match prices with the new shop who was breaking into the buisness with low prices. In the end he was always home in the evenings to play baseball with us because he did not try to hoard buisness. Not exactly the same thing as been discussed here but if you look at all industries out there, some are high priced, some are not yet more times then not, the higher priced places stay around longer then the cheeper ones.
From all I read and hear, WSS in Edmonton is staying about the same for volume, while P&D is growing by leaps and bounds even though their prices are higher. If I was buying in Edmonton I would rather pay $30.00 more per gun knowing that I could walk in to a store like P&D and have friendly service and if I ever have warrently issues with the gun talk to the same person who sold it to me. Service counts for a whole lot. If a store is over priced and lacks service, the market will dictate what their future is.