Yeah one of the worst businesses to start up is a LGS. Kazoo pointed out another aspect - so many manufacturers screw you that way. Benelli is another one. Want to stock a couple? Well, you better pony up to buy $30,000 first, including things that will take 5 years to move, then they can make $40 off each sale!
Kimber is another one... want to stock a couple Kimber 1911's? Better pony up and buy $5,000-$10,000 of their bolt action rifles nobody wants too, as well as every-other-slow moving product they have.
It would be far, far more profitable for most LGS to just leave their money in the market than stock all sorts of slow moving small margin crap. There's two types of people in this country, fools, and damned fools, and the latter opens small gun stores.
....I can say that as a former LGS too [I'm not gunist! I have a gun friend!]