There is nothing wrong with a magic shop provided it doesn't become a Supermarket.
While I have never been a supporter of the idea that magic items are a freely tradable commodity and that they represent not only fungible wealth, but effectively a point buy system that is a part of character development, I do believe that a certain trade in magic items is realistic.
To wit, all of the following typically exist in my campaign:
1) Alchemists are quite common, and can be found in most towns larger than a village or hamlet. These produce small numbers of potions for the market (alongside everything from paint to medicinal cures) and have a small random stock of items on hand (typically, they know 2d6 different potions and will have 2d4 potions in stock from among the potions they know how to make). They will also brew potions on commission, provided they know how to make them.
2) Hedge wizards exist in larger towns selling simple magical items related to mercantile business and industry - things like fire resistant sail cloth, scales that detect when object placed on them is enchanted, magical bolts for the city watch's stockpile, rings that enhance craftsmanship or grant success in business dealings, or wands that cast the light spell. The vast majority of things that they make though have applications that are quite different from those normally required of an adventurer. They will also sell small numbers of scrolls, and will have a small random stock on hand (typically 2d4 random scrolls from among the spells they know). Although they are usually busy (80% of the time) with other commissioned works from regular customers, they will at times take commissions on custom items.
3) Most large temples will sell scroll containing spells/prayers for the use of pious followers. Some also practice alchemy and will sell curative potions and the like. Numbers and available quantities are similar to those of secular hedge wizards or alchemists. Generally a positive relationship is required between the temple and the customer, and they will not do business with random strangers. However, anyone who professes respect for their deity, engages in acts of worship/devotion, and who donates an appropriate sum to the temple will be accepted as a customer. Temples however generally do not work on commission unless the customer is in fact a member of the priesthood or oath sworn laity of a appropriate rank (in which cases, suitable discounts are also available).
4) In very large cities, there will generally be a small number of magical craftsman that manufacture simple magical arms and armor. They generally do this strictly on commission, and usually are legally required only to sell their goods to citizens of the city in good standing. Thus, a sword +1 or mail +1 can be purchased from legendary blacksmith, provided you pay in advance, are willing to wait, and you either have bought a citizenship or have been formally granted freedom of the city by it's ruler. If you wanted a sword +3 commissioned, you might have to journey hundreds of miles or thousands of miles to find a suitably skilled expert in such matters, and they would probably insist on the player undertaking to acquire at least some of the rare ingredients required for the enchantment as some of the items involved simply wouldn't be available as commodities.
5) In very large cities, there are antiquarians who deal in the strange and bizarre. They certainly buy items and occasionally sell them, but the sort of wares they deal in are often dangerous, illegal, or stolen. Identifying these shops is not easy, and gaining their trust is even more difficult, especially if you want to see the illegal wares. Contacts with unscrupulous elements can help. While the items that they trade in are extremely valuable, the uses they are put too are often obscure, difficult to fathom, and rather narrow and of little aid to your average adventurer.
6) At the highest level, there are a few very well equipped, very learned, very respected merchants that deal directly in magical wares. This is because magic is very dangerous, and most merchants will simply refuse to trade in it as they lack the skills to identify, use, or protect themselves from magical items. These merchants engage in and control the highly secretive international trade in magic items. Typically they travel between cities, buying items from known and trusted sellers (often temples, governments, and the aforementioned antiquarians). They then auction these items off at private auction. The time and location of these auctions are a well kept secret, and only the most respected (or at least wealthy) individuals and institutions are invited. Often, by law or custom, government officials or temples get first viewing of the offered items, and have the right of first purchase of certain items. This prevents undesirable items from getting into private hands, in the same way that most countries don't let just anyone buy a 155mm howitzer or even a 12.7mm machine gun. If the party wants to get in on this action, they generally need to obtain high noble rank and develop a positive reputation with both the merchant in question and at least one of the existing local buyers. In short, the PC's have to have a very high credit rating. At that point, 2d6 random items come onto market every few months and must be bid on. Persistent disinterest will tend to be interpreted as a sign you don't have the income to be involved in these matters and gets you uninvited in favor of buyers with more stake in the action. In the very largest markets, 1d6 merchants with slightly different personalities and areas of focus or customer bases might be active, resulting in somewhat regular auctions. One of the results of this system is unless the buyer really has a bunch of henchmen to equip and property to protect, they aren't likely to be invited even to those rare cases where a +5 Holy Avenger comes on market, and even in that case the Temple of the Shining Champion of Justice might claim first dibs and you'll never even see the item (unless you have a spy/contact in the temple or are best friends with the high priest).
It's not that 'magic shops' per se are wrong, it's just if they are not done carefully, they tend to reduce all the flavor of magic items, tend to unbalance the game, and result in situation where loot loses its mystique.
