I know this is a bit of an old topic, but I live in japan, so I'm a bit behind.
It is sad to see a book store crumble again, but I can't say I'm surprised, unfortunately.
I worked as a buyer at the Oxford Street and Piccadilly branches of Dillons in the Great Price wars of the 90s when Dillons tried to opt out of the Net Book Agreement, followed by waterstones later on.
Dillons was a chronically mismanaged entity and one irony was that once the NBA was dismantled, Dillons basically collapsed and was bought up by Waterstones. I managed to duck out a bit before the final demise. Big chain stores benefited from the end of the NBA, at first, and lots of independents went under.
I remember Borders being heralded as a shining example of how bookshops should be, but even then, I found it hard to understand how they could possibly manage to be profitable. The return on books for the stores was low enough with the NBA, but when they were forced to slash prices, it became a lot slimmer.
I enjoyed working at Dillons, they were interesting times and I got to meet a lot of my favorite authors (and some who were just fun to meet!), Kim Newman, Jay McInnerney, William Gibson, Frederick Forsyth, Patricia Cornwell, Michael Marshall Smith (we sold all 100 copies of his debut novel, Only Forward, from the Dillons Piccadilly store, I begged the publisher to get him to come to the store to sign the copies. I loved that book!).
It does sadden me to see things going a little downhill but its got to be getting more difficult to compete with the online guys as well, who probably have lower overheads and can diversify a bit more.
Some of the truth with the chain bookstores though, is that they often ended up being run by people who didn't come from a book background (at one point, our CEO was from Pepe jeans), and I think that was quite telling in their clueless and sometimes disrespectful approach to what selling books means.
Sorry for my long rambling:) This post just got me thinking about the good old bad old days. Don't let anyone tell you that booksellers are gentle folk either, I was once banned from going to Penguin Books launch parties because I had a fight with Keith Floyd.