I have done price checking between my LHBS and the big boys, and found that my local shop is very competitive. I live in a small town, (<15,000) and nearly 200 miles from the big city suppliers. I really appreciate having a source that can meet 95% of my needs. I am willing to pay a small premium for that luxury.
Our local HB club has supported our LHBS by directing most of our purchases there, and recommending them highly to other brewers. The manager of the LHBS consults with us regularly about what items to stock, and what supplies to keep on hand. This has resulted in a very good selection of grains, hops and yeast, and all of the little incidental hardware items that we need.
Sure, I shop online for high dollar / low volume stuff that the LHBS cannot afford to stock. They understand.