I shop locally, especially small business that compete with the big box stores. I like to support local business whenever and however I can. If I can't get what I want locally, then I try regionally....... and the area widens until I go international online.
In terms of fabric, I will buy from my LQS if they have the fabric/patterns that I'm looking for. If they do not have it, then I go online.
BTW, sales tax here is 13%. :-(