We have a bike co-op in my locale. They provide repairs, free parts, but perhaps more importantly, training on basic bike maintenance and space for people to do their own maintenance with varying amounts of help and advice. I've gotten parts there, for which I donate an amount of money equal to what I'd have paid for the part on eBay.
There is also a charitable outfit that runs a storefront bike shop, with used bikes for sale, parts, and repairs. They receive donations of money and bikes, and employ teenagers from the surrounding low-income neighborhood, who they train.
Meanwhile, there are also several mainstream bike shops that are all thriving. So I'd say it doesn't make it hard for the shops to compete. The co-op is doing stuff for people who can't afford much, and that the shops can't make money on anyway.
Every country and locale is unique in terms of its economics. I imagine that in many lower income countries, it's more likely that there are individual people doing low cost repairs out of their homes, or using space with very low rent.