You said you own a retail store. How do you price your items? When I worked for an independently owned retail store, we "keystoned" our merchandise. I'm sure Khol's and Macy's mark up significantly more, for several reasons. For one, they buy in MUCH larger quantities - this means that they get their items at a lower cost. Also, they might mark up three times as much as it cost them (or twelve, or whatever...LOL) and then put it on sale to bring it back down to twice (or ten times, etc..) their cost. The customer sees a percentage off or whatever and can't wait to whip out their pocketbook for the "deal". I find it akin to the ".99" pricing thing that has gone on for decades. People will say that $30.00 is too high, but $29.99 sounds better for some reason.
Also, as another poster mentioned. They simply make more sales. I know we were in a very slow market, we might make 10 sales a day on a good day. Privately owned stores also carry a smaller selection. For instance, our store was books and small gifts. Well, if you needed clothing or bedding, you had to go elsewhere. Many times that meant the customer would rather buy their comforter, coat, and gift item all at one time. Other times, we simply didn't stock the kind of item they were looking for. Our items were almost exclusively religious, which is fine, but I also don't want EVERY item I give to people to have a picture of a cross or scripture on it. That meant that many times, I bought gifts in other places. I imagine you run into the same thing in other small stores. Not everyone wants to give sports items or a certain brand EVERY time they gift.