waynohh, thanks for that example. We all hope that it is an isolated case though without a doubt, bad shopping experiences don't help the industry as a whole. The good shops realise the value of customer service and profit when their customers are satisfied. In this case. maybe they can't compete on price all the time, though there are some great examples in this forum where bike shops are forward thinking and offer good customer service and (+ expert advice and quality servicing) and give customers pretty good reason to consider purchasing from the LBS.
Sorry it has worked out badly for you - I am afraid I don't know what your rights are and whether helmets may have an exception to the rule and legally and can't be returned - perhaps someone else can help. Store credit sounds like a pretty good compromise to me - I fear that if you can prove you have the right to return the helmet - considering your report, it is not going to be a fun process following it up - if you wern't talking to the owner, ask nicely to speak with the owner.