Depends what you mean by competing for your business, if you mean trying to absorb the costs of having a high street shop, business rates, staff costs etc there is a point below its not worth selling a camera, the internet companies do not have these overheads so go and do the maths! The sad thing is it will at some stage be impossible to go and look at the goods before you buy them which is the big plus of a high street retailer!
Sadly, that's the stage I'm at in the area where I live; no high-street camera shops in either of the two towns nearest to me.
I always used to buy my cameras and accessories (and I've bought a few of them over the years, both new and used) from local camera shops, firstly because I wanted to support local business if I could, and secondly because I found, as one of their regular customers, if I discussed things with them in a friendly and polite way, they would usually do a price-match with any other advertised UK-based retail price.
However, many of the independents seemed to get taken over by larger 'multi-store type' retailers, who eventually went out of business for one reason or another. So with no local 'independents' to support, I've had to buy 'blind' via mail-order in recent years. Consequently, when I wanted a new full-frame digital SLR a couple of years ago, I opted for the lowest advertised price I could find from an established UK camera retailer. Ironically, this was an independent retailer with a town centre camera shop in north-west England, rather than an internet-based concern, and I got good, fast, service at a fantastic price!
So my conscience is clear in that respect. However, I'd love to have a good, local camera shop, so if you've got one then treasure it, and at least give them a chance to give you a price/quote if you want to buy a new camera, lens, tripod, flash gun, camera bag, etc. and if there's only a few pounds difference then, before you go for the lowest price, ask yourself how much you'd miss the shop if it closed down? Sadly, once they're gone, they're usually gone for good.