For the LHBS here, the price of the ingredients is competitive, more than some online shops, less than others. We have to pay 8% tax on ingredients.
However, its local. That has value. You can stop buy and get just one thing you need, whereas online you are best off waiting and grouping lots of things into a single order to save on shipping.
Also, the LHBS here is an experience. They sell commercial beer and have a nice bar with many taps. You can drink a pint, get some ingredients, fill a growler, and pick up a 6-pack all at one place.
Some of our local breweries also sell ingredients. They are cheap, but, I have never bought from them because I don't want to buy a full sack of grain and don't want to waste their time asking them to split a bag.