As a local quilt store and as an internet quilt store, this is my answer to this quote.
If you want a less grade of fabric, you have to go to Walmart or Joanne's. They have the purchasing power to pay less for the fabric than a local quilt store can. I was at market and asked one of the vendors who I know sells to Walmart and I asked them if they would sell me the fabric at the same price as they would to Walmart. They said no. Then I told them I couldn't purchase it because I would not be competitive. They didn't care.
Now the vendors who specialize in selling to LQS carry a higher quality of fabric, so if it's higher quality and costs us more, then our prices are going to be higher, but you get what you pay for. If you are spending 40 or 50 hours to make a quilt, do you really want to save $25 by purchasing cheap fabric???? Or do you want something that is better qualilty?
You make a very valid point.