Bikes always seem over-priced to me - you can get a Focus or similar for 20 to 25x the price of a mid-spec bike, and no amount of economies of scale overcome the fact that the car has about 140x as much material in it including all sorts of exotic elements in even the most basic car. I fail to see how a few welded tubes, a couple of wheels, some bearings, two wheels and some springs and levers can be £800. I know 'BSOs' are bobbins, but the cost differential in using slightly better aluminium or steel, and slightly better components, does not add up to £650.
I suspect that the bike manufacturers are controlling price. Not in an illegal way of course - there will be no contract saying you can't discount the bikes without permission, but I would speculate that if you did that, you might find that when you re-ordered stock they'd not have any to send you, or your credit limit would be reduced so you'd have to pay upfront, or something like that. In doing this they are maximising profits for themselves, not the retailers. So if you are a bike manufacturer, and you can make a bike for £100, you can sell it direct to the customer for £800, or you can sell it in to a bike shop for £600 and the bike shop can sell if for £800 (of which £134 is VAT, so they would make a profit of £66, less cost of sales, less tax) I don't know what the margin is - it's probably not that tight - but I would bet that the huge majority of the profit is going to the manufacturer, and they are allowing the shop just enough to keep them in business, because they need the shops to sell the bikes to consumers. That's the only model that makes sense economically.