Oh bunk! Bike shops don't serve an "upscale" market. The shops in my community served everyone on bikes from entry level to absurdly expensive. The one remaining bicycle shope in town stays alive on repairs and replacement parts for models not in stores any longer.
Horse manure!! I've been in MANY bicycle shops in a number of different cities, and their "bread and butter" is the upscale bike market. Sure, they sell a number of other bikes, but the mainstay of business is the serious hobby biker. They don't compete with Sears, Penney and/or WalMart for the kiddy tricycle market.