Perhaps this type of shop has disappeared from places like the US because the volume manufacturers now do their purchasing via more efficient B2B Internet transactions, and the prototyping community in any one location on earth is too small to make this sort of shop profitable? From a prototyping point of view, the anomaly is the presence of this shop, not its absence.
A solution might be to recreate the "techshop" experience on the Internet, in a way that gathers the "long tail" of prototypers from around the world into a number that justifies a significant investment. A virtual techshop?
Every component would have a complete mechanical/electrical simulation model available. Want to see what a component looks like? Pull up a dimensionally accurate 3D model. The model can be rendered to get a visual picture, or pulled into any CAD package to check fit or do a dynamics simulation. Electrical components should be able to fit into a circuit simulation.
It should be possible to search/browse components, including a parametric search. Since we've got 3D models, it should be possible to render a display case where you can pick up and inspect each component.
Once a design is complete, it should be possible for the system to generate a set of purchase orders, and mechanical drawings for custom parts, directly from the design data. (This is what CAD/EDA software already tries to do, but typically stops at the BOM stage rather than progressing to a purchase order.)
A dream, but dreaming doesn't hurt.