I think it comes down to information. The internet has made information sharing so much easier. For instance, if I want to purchase an expensive item (such as a home stereo) there is really no way that I would pay a Mom and Pop store. Here is why...
1. They always shoot for the higher mark-up. Where larger stores make 5% on the stereo, Mom and Pops try for 15%. Those numbers are not accurate, just using them for comparison sake.
2. Customer Service. I can get as much information as I need on the internet. Message forums (much like this one) are full of knowledge. Reviews, how-to's, and information is just a click away. Some Mom and Pops rely too much on their old school knowledge where we know how fast technology changes. Also, most larger businesses have a much faster turn-around time on repairs.
3. Feeling of comfort. I spent nine years outside of a Marine Corps base. The streets were lined with furnature stores, used car dealerships, pawn shops, and check cashing businesses. These smaller "mom and pop" places are designed to take advantage of new Marines. Examples are 28% interest rates or horrible contracts.
Now I am not saying that all of these mom and pops are bad. I frequent them as well as the larger chain stores.
I just think it all comes down to money. I will not pay extra for something just because the mom and pop stores want to charge a higher mark-up. I work too hard for my money.