My local bike shop is something of a throwback. They don’t sell $2500 wheels, in fact, I don’t think they sell a whole bike that costs that much.
They sell a lot of kids bikes and a few medium-end hybrids and road bikes to the parents. Like you said, though, most of their revenue comes from service.
Before the pandemic, I was worried about them going under like a lot of wonderful brick and mortar, mom and pops have. I would buy some parts or gear from them even though I could get it cheaper on amazon just to support them.
These days, amid the COVID biking boom, I have to call at least a month in advance for a tune up. They are swamped.