Most co-ops are not competing with for-profit shops; they serve a different clientelle. At the same time, bike co-ops often result in more people on bikes, which leads to even more people on bikes, which is good for the bike business.
I've volunteered at a lot of bike co-ops. It's quite common for a young adult to come to the co-op for their first adult bike, then move on to a bike-shop bike when their interest in cycling grows.
Bike co-ops are a global phenomenon, certainly not limited to the US.