Mom and Pop Hobby Shops
I think a big factor in the demise of hobby shops is the fact that there are fewer total modelers. I know, I know some of you guys will tell me that AMA membership is up but........
I remember in the late 60's early 70's, modelers were flying control line at nearly every vacant lot. Most of these gusy at the time never heard of AMA and had no use for it anyway. I remember if it was a large field you could find a couple of guys flying free flight.
When I was a kid we used to spend all day at the school yard flying 1/2 a planes. We were not alone either! I saw my first RC model YEARS after flying control line.
Modeling was so popular then that the local stores like Walgreens or Kmart carried fuel, glow plugs and paint!!! Must have been popular for the regular stores to carry the stuff. At that time there were a couple of hobby shops in town.
So WHAT HAPPENED?
I think that in addition to the above mentioned reasons: RC happened. More RC means GREATLY reduced visibility for our hobby. The guy driving down the street doesn't see folks flying like he used to with control line. Kids can't get to the RC field that is outside of town and can't afford the stuff anyway.
CONTROL LINE was the modeling entry point for the masses. it was cheap, easy to fly, easy to build and you could fly the planes almost anywhere. Plus they were highly visible because folks DID fly them anywhere.
Believe it or not modeling used to be as popular as computers are now!! And most never joined the AMA! Only RC folks and competition control line guys joined.