It is all relative.
When I was first in the hobby over 50 years ago, new automobiles cost about $1,500. Now, they're $30,000. That's an increase of about 1900%.
Really low quality freight car kits cost a dollar or so, and you had to put them together yourself, buy the paint (and sometimes decals), trucks, and couplers. By the time you were done, you could easily have $2-3 invested in one freight car. By today's standards, the stuff was crap. Of course, $2-3 was a lot more money then. In fact, in 1952 when I started in model railroading, a dollar was a lot harder to come by, especially for a 10-year old kid. Today, that same dollar is worth $8.27, so the $2-3 that I paid then was roughly equivalent to $16.50 - $24.75. Sound familiar?
But I gather the real discussion in this thread is whether or not the retailer is entitled to the markup he's receiving. The short answer is 'yes'. The cost of doing business is significant for retailers, particularly those who have a traditional walk-in store with a standing inventory.
If he really is marking things up 50% over his cost, that's a gross profit of 33-cents on every dollar he takes in. Even at that, there is a lot of expense coming out of it. He has rent, utilities, wages, interest on loans, credit card fees, advertising, depreciation on store fixtures and improvements, licensing fees, insurance, shrinkage (yes, people steal), some return on his investment, and on, and on. If he ends up with a net profit of a dime from that dollar he took in, he's doing pretty well. Most do not.
Then, there's the cost of inventory. We all want to shop in hobby shops with row after row of shelves filled to the brim with every item a manufacturer makes. He might have $250K worth of inventory sitting there, and that's money that's not earning anything at all until somebody actually buys something. If an item sits on that shelf for a year or two without selling, that's money that's been tied up earning absolutely nothing.
Understanding all that does not completely eliminate my desire to try get the best possible price. If I have more than one source for the same thing, I will usually buy it from the dealer with the lower price. Hey, I'm sympathetic; I'm not stupid.
I do shun the internet as much as possible. Granted, there is money to be saved by buying online, but there are some pretty unpleasant tradeoffs, not the least of which is the eventual extinction of local hobby shops. And I have the perfect excuse for buying online; I live over 100 miles from the closest decent hobby store, and 130 miles from the one where I do the bulk of my business. Even so, I manage to get over there every couple weeks, and I'm happy to spend my money there. His prices are typically about 10% below MSRP, and I'm perfectly happy with that. I can see what he has invested in his store, and I don't begrudge him a profit. He has put his own money at risk, and he has earned it.