well in the end, after probably too much careful comparison of prices and indecisiveness, i went to the LBS.. and those nice chaps at BREEZE BIKES gave me a discount - so in fact i only paid about £2.50 more than i wouldve done at
halfords. i think i made the right decision overall but i have to acknowledge beanzontoasts point about budgeting decisions - its generally true that buying better quality gear is good economic sense , you have to think in terms of how how long something lasts, comfort, and the fact that gear does its job and takes a battering for years...(like my wifes expensive handbags ; £100 for a nice well made piece of leather , if it lasts 10 years thats just £10 a year...HOWEVER, I think its fair to say that much of the branded gear IS overpriced, and if we're honest we cyclists (and walkers etc etc) have to have VERY understanding partners.
The other important issue to consider is that people on low incomes etc, especially kids shouldnt be excluded form such healthy activities, but the fact is, for example, i slogged for years with 2 kids and little money to achieve a comfortable lifestyle,,,until recently cycling wouldnt have been an option, except perhaps a cheap bike from the likes of halfords for xmas and probably JUST ENOUGH of the cheapest kit to be getting on with. And even now, theres no way i couldve justified £400 on a bike +the essentials without using the cycle to work scheme ; kids driving lessons, uni expenses, rising cost of everything - come on, it really boils down cost over principles for some.
Saying that, we NEED more local bike shops (mines on my route to work otherwise it wouldnt be 'local').....its a growing future market especially if the government puts its money where its mouth is on health and environment.(considered doing a LBS myself with a friend but stuck financially in rat race sadly)