Originally Posted by Ed in GA 
The reality is that the internet itself is the primary cause that many 'Mom & Pop' camera stores are going out of business. They can't, or won't, compete with the pricing. Internet sales have also hurt companies such as Wolf/Ritz Camera. And that, coupled with the poor economy, is the issue.
While most retailers have reported poor sales for this Holiday season, Amazon.com says it has had its best year ever. That alone speaks volumes.
I think that a lot of the smaller stores are unwilling to respond to changes like the arrival of the Internet. Case in point: my local pro store (which looks like it'll go out of business before long) has a terrible website that never gets updated. Their pricing is all list price which often is completely out of line. I understand that they can't be expected to have the razor thin margins of online-only stores, but I really cannot justify paying a 30% or more premium to support the locals. I've asked several times if they've considered having a more active Internet presence, pricing a little more aggressively, maybe try to organize some events that might bring in business etc... nope, not interested. They're doing business like they did 20 years ago and are dying because of it.
Also, I suspect that film sales (and to a lesser extent paper and darkroom supplies) probably made these stores decent money in the past. With digital you don't have the same recurring revenue -- once you sell somebody an 8 gig SDHC card you probably won't see them needing one again.
I don't doubt that even if they tried hard the Internet is hurting their business bigtime, but I think that stores like these can still exist if they try to retool their business a little.