Their basic problem is that they rent huge, expensive stores, then increase the prices of merchandise 40% or more of what it costs at Amazon. This is less about a changing market and more about bad business practices.
Their best bet would be to open their own publisher, then make exclusive deals with writers and editors, books only they sell in smaller stores that they own now. There are a huge number of writers out there who cannot now get published.
A big problem is that of having enough people to read manuscripts, and that should be part of the publishing agreement, that once an author is published, he has to electronically edit three other manuscripts by other authors before he can publish again. To avoid theft, when a writer submits a manuscript, it is kept on file for when next the editor publishes, to detect any plagiarism.
There ARE huge numbers of people out there who can't get published. As one of them, I assure you it's because most of them haven't written anything worth reading. Go check out the self published category on Amazon, read a few of the 99 cent books there. Shudder.
A big problem is that of having enough people to read manuscripts, and that should be part of the publishing agreement, that once an author is published, he has to electronically edit three other manuscripts by other authors before he can publish again. To avoid theft, when a writer submits a manuscript, it is kept on file for when next the editor publishes, to detect any plagiarism.
This is... well. The skillset to be a good writer is entirely different from the skillset to be a good editor. The best editors I've seen admit they can't write. The best writers don't have an editor's insight into how to spot a character issue or rework a dangling plotline.
And you've somewhat confused the slush pile and the editing process. The "slush pile" is the colloquial term for "giant mass of manuscripts hopeful writers send to a publisher". Theoretically, the publisher reads through them and pulls out what doesn't suck. Realistically these days, a writer submits to agents, not publishers, and the agents go directly to editors.
Regardless, most of what you'd get submitted would be utterly unreadable. Everyone thinks he can write a book. Most folks don't bother to do the work that's actually required.