You can't race to the bottom in retail, the bottom is already taken by walmart and online stores (like amazon). You can't be cheaper or more convenient, you need to offer something they don't. For bookstores that means you have to have good selection, a good environment, author signing/speaking events, and so forth.
The retail apocalypse is not being driven primarily by lack of revenue, there's plenty of meat on those bones for companies to survive on in perpetuity, and many continue to thrive. Rather it's being driven by poor business decisions. Hedge fund driven leveraged buyouts that load down retail chains with enormous levels of debt. Complicated expansion schemes designed to enrich some particular set of owners or executives at the cost of business health. And so on. B&N is just another example of how retail chains have becomes playthings for the business elite. Business fundamentals are irrelevant. The fate of the business itself or the workers are irrelevant. All that matters is how many golden eggs they can cut out of the goose's body before it dies.