Hey people buy things without knowing what they are getting into every day. People walk into walmart and buy bike shaped things every day. And for some of them, that $150 purchase is just what they needed. They ride once or twice, then leave it in the dust because they're bored with it or whatever.
Far worst to spend $1000 on that whim purchase. We know they're out there. One of my LBS's occasionally sells a custom bike that is OLD (like 25 years old) that was never ridden. They actually make custom bikes some times for people who are never going to ride the thing. Then the widow brings the bike in 25 years later wondering what it's worth.
The original buyer got an idea that he wanted a custom bike... And then he just forgot about it. It happens.

What I am writing here isn't to negate all the good feedback that is going back and forth on this excellent thread. But I want you to know that bike shops aren't failing as bad as many other businesses are. I am sure SOME are; but in some towns and cities they are flourishing. I have seen a lot more bikes in my town in the last 5 years. And some new bike shops that have lasted more than one year! progress!