The problem seems to be that IMO, the typical brick and mortar high-end store cannot compete in the main area that most consumers are shopping...namely- PRICE.
This is so very true and a reason why so many specialty retailers and service businesses are having a hard time. We're conditioned to shop for the best possible deal and often forget that the service associated with the sale must be taken into the pricing evaluation.
B&M retail stores need to learn how to compete on the basis of VALUE... which means offering an exemplary level of service along with some other key differentiators. People will spend more dollars on something if they feel that they are getting a better value for that money.
The problem is that most high-end audio retailers just don't understand customer service and the importance of building customer loyalty. On the flip side most consumers don't understand or appreciate the value of their local specialty retailers.
Raise your hand if you ever auditioned a piece of gear at a dealer and then bought it online solely because you could save some money. If you raised your hand and are now lamenting the disappearance of high-end audio stores, then you can partially blame yourself.