I'd like to add one thing: when you're out of grain, the LHBS carries it for you. You pay a price for them to hold the inventory. That's your penalty for not buying in bulk and planning ahead. When the group buys come around, you jump on 'em. If not, expect to pay more. As much as I hate to do it, I could buy a sack of malt if in urgent need.
If the LHBS has a problem with the margins, they should take it up with their distributor. I manage my company's channel partners and my company also sells direct; if we undercut our partners on price; there are serious consequences and these are spelled out in our partner agreement.
There's one price, all the way to the right side of most pricelists and it's sacrosanct--the lowest margin you can possible make off a sale. That price should be reserved for dealers only. Sounds like North Country has what we like to call a 'channel conflict' and they need to work with this out with their wholesalers.
The person that owns my LHBS is very nice but she told me she pretty much hates AG brewers and I know why. We pay 50% of her price on hops and malt, we buy very little if any hardware from them, and most of us wash our yeast. There's almost no room in that model for her to make money; unless she starts doing whopping volumes like some of the HBT vendors.