I'm just pulling this off the top of my head, but in any city there are going to be some high level experts—few, but some. If you're going to allow "ye olde magick shoppes" to exist, maybe have them be extremely specialized by employing these high level experts.
I'm imagining letting these experts with 18-20 ranks in Craft (whatever), or Profession (whatever) make minor magic items that relate to their abilities (tailors make cloaks, cobblers make boots, etc.). At 21-22 ranks they can make medium magic items, and at 23+ they can craft major items. Of course the DC would be sky-high, and it would be up to the PCs to spend gold to bring it down, or find the rare items needed for item creation.
The stock that the artisan had on hand would be very rare, very specific and very costly. Being in business, they're only likely to carry what might commonly be in demand. An high-level blacksmith wouldn't have a holy avenger in stock, but he might have a +1 longsword—and that's it. He's not going to pour his soul, sweat, and silver into an item he can't sell.
This would work IMC because there are no wizards in my world. There are sorcerers, but they don't get the bonus feats, so item creation is usually low in priority.
Also, think of this in terms of the magic item market. How much profit is there really in selling a +1 longsword you didn't make yourself? You bought it, but probably close to market value. You're going to sell it, but you'll have to price it high enough so you can stay in business. Will ayone buy at the prices you've set?
So there you have it. Magic shops can exist, but they will be rare, and they WILL be expensive.
(unless you don't care about such things, in which case why are you still reading this?)