One reason- whatever you stock, people will want something else. Also, manufacturers often require large commitments from dealers for annual orders, which means they need to buy hundreds of thousands of dollars worth from each- if a manufacturer has a run of products with a large number of failures, the retailer is going to be stuck with boxes they can't move and that's a good way to lose money. Even if they sell these at cost, they have lost money. Then, there's staffing the sales department with knowledgeable people, building effective displays and repairs- some of the independent dealers still have a service department, but the people working there are aging out of the business with nobody to replace them.
Think about the number of brands that are available, then multiply this by $100k, just as a starting point for inventory. A store of that size can't buy from distributors because the direct price is much better.
I looked into buying a stereo shop a few years ago, keeping the extremely small staff, the same building at the same rent, phones/internet/insurance and other monthly expenses at the same cost- the fixed costs would have been almost $150K/year without paying myself and without adding a single piece of equipment to the inventory that would have come with the business. If I could have taken in a million dollars per year, that's still a big nut for new ownership and if I paid myself $50K, which isn't enough for the amount of time, effort, stress and uncertainty, it ends up being almost $220K just to keep the lights on and that amount comes off the top. Then, try to compete with online prices.
