Scott,
the sales tax issue is temporary. By law one is supposed to pay state sales tax even if he is purchasing the item out of state (though few actually do). Nevertheless, some states have wisened up to this issue - I believe that New Jersey has an electronic database to track out of state purchases, so that they can collect the state sales tax. It is only a matter of time until the power of computers will be harnessed by other states to collect the sales tax.
I believe that what really hurts small local retailers is their predatory pricing practices. A local store was quoting me a list price of $6000 for Technics KN7000, and offered me a deal of a lifetime of 30% off if I bought that day.
In a way, these are the days of an educated consumer. Most of us know more than most salesmen about the new instruments, and the main benefit to the consumers of having a small retailer locally is the ability to try the instrument before paying for it.
Of course, I am not talking about really knowlegeable people like George Kaye or Dan O., but the majority of the store owners who only know the prices of the instrument, rather than any technical features.
A retailer who can offer a 30 day return and competitive pricing can do very well in the marketplace - they would be able to reach users who are too far from the local store, and at the same time outbid the price gougers.
Regards
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Regards,
Alex