I see a lot of mom and pops don't make good business decisions and it is a tough retail space to begin with.
I think the hardest decision to make is how much you actually want to directly compete with your local GS. Most places I see that deal in the current gen titles typically advertise heavily that they'll "pay more than the chain store!"
Of course, this means they're going to have to sell the newer games quick (in most cases) to make any profit. If not, or they just get oversaturated with new stuff, they end up either taking huge hits while trying to remain competitive as the price goes down, or they appear to be "ripping off" their customers with their "high" prices. Those "high prices" in some cases are just their cost that they're trying to get back from games they "paid more" on.
I agree with the general sentiment that mom & pop stores definitely have to focus more on the retro stuff to stay afloat. But if they are going to pander to the current gen, they should focus more on what GS doesn't offer in this department, like in-store repair services, case/controller mods, and maybe even imports. GS already has a lot more money and inventory backing them, the last thing that small stores need to do is focus on getting the newest games and flipping them for minimal profit just to pay more and sell for less than GS.
As for the online vs offline argument, I probably buy more online, but it's simply because I don't have many local options. I'd much rather pay a small amount more to check the games condition in person and have an actual person accountable for a faulty product. Also, I really like looking at shelves and shelves of games and picking up stuff i've never heard of before. Some of my favorite games i've bought just because I saw the box art and it looked neat. I would've never found most of these if I were just shopping on Amazon.
