I think many people prefer to buy expensive products, if they can check and feel the product themselves. They are able read the instruction written on the packing, and they will the confident to buy the product.
Internet shops buy at wholesale price, and sell for nearly wholesale price making little profit. The internet means they dont need to pay rent for a shop, don need to hire staff, etc...I don't know how it affects retail sales though.
(ANS) I think the answer is a bit more complicated than it first appears. If a local company is keeping up with the times we live in, then they would have an internet presence i.e. their own website no matter how basic or complex.
But on the other hand if a local business doesn't have a website too then YES! they will loose out to the competition from other companies supplying the same items on the internet.
**The internet has definitely forced prices downwards. As net savy consumers can hunt for the cheapest prices with a few mouse clicks from the comfort of their own home which wasn't possible in the same way before.