Well, not that I'm fully in the old school mode any more, but when I ran AD&D, I used the rules that equipment had to make saving throws in some situations, plus all the other crazy monster rust, acid, etc. problems. So yeah, the party was finding a fair amount of magic in the modules, but it was a little bit "easy come, easy go". Not exactly "easy", but you get the idea. I have fond memories of a near TPK because the party did not consider what a fireball might do to a magic carpet. Shame to make your save against fireball and then take all that falling damage on top of it.
Now in fairness, I'm cheating on this question a little, with my current campaign and own system. Quasi old school in some ways. As Ghostmaker says, it's a setting conceit, albeit built into the implied setting of the system. The system/setting assumes that between "mundane" equipment and "real magic" equipment, there is a middle ground of equipment that is better than normal, made via magical processes, but not otherwise magical thereafter. The classic +1 sword is in this system just high quality equipment that gets that +1 to hit and damage, but isn't otherwise capable of, say, bypassing certain monster defense anymore than a mundane sword is. It radiates a faint magic signature from a sufficiently advanced detect magic effect. I've also got a few "high tech" items that fit in the category even though they have no extra properties. Plate armor is an example--not something that can be made in this setting without magic, even if its technically +0 Plate.
Which means that:
- Basic mundane is bought and sold as expected.
- Middle made by magic stuff is in the "art auction, rare goods" category often, though can also be found in the proper shops. There's no "magic shop" as such, but you can buy a +1 sword from a master smith directly.
- Real magic is the stuff of legend, and fits my attitude on old school outlined above. Every buy/sell is a one-off, and thus rare, even when you can find the item.
Theoretically, you could have a metropolis that might edge into "magic shop" given that--except my setting caps out at moderate cities for other unrelated setting reasons.
Also, I think sometimes people confuse cause and effect on this question when discussing it, i.e. lost in translation. I get that others reason from "D&D rules work this way, ergo in my setting there would be magic shops." I dislike magic shops aesthetically, "therefore, the rules are adapted to make them not happen." Plus, I wanted to back away a little from the common conceit of a world in decline/recovering from apocalypse to explain all the equipment available even when no one is making it, but without playing into the "magic as high science" gambit.
That is, the first question on the presence of magic shops is, "Does the GM want magic shops?" Then make your rules fit that decision. It's not rocket science.