(1) The dealer is free to charge whatever he would like. But customers are also free to vote with their wallets.
(2) I view demos as a cost of doing business. Car dealers have to let people take test drives. As a lawyer, I have to spend at least 3-4 hours a week talking to potential clients who are speaking to a number of different prospective counsel.
(3) People browse stores. Yes, it takes up time, but you have a great advantage over the internet if you build a relationship rather than view interactions as transactional only. Andy at Saturday Audio Exchange knows how to do it right - he's set up many demos for me, and I buy from him whenever I can.
(4) "Too many hobbyists like to pass time hearing products. They ruin it for businesses." Just plain insulting. You should be grateful for any traffic through your store at all. You don't think that people want to hear gear they aspire to be able to afford, dream about it, work towards it? Short sighted.
This dealer is really shooting himself in the foot. Has the right to do it. I have the right to pee on my dining room table. But I don't, because it's stupid.