It's a darned shame to see an established business go under. But then, as Bill correctly pointed out, the investments to return in a model/hobby retail business are huge, and that's before overheads/fixed costs are included.
As with much of the retail business, escalating property rents (often translated as greed!), local authority rates, and the dramatically rising costs of the product(s) have had a large negative impact. Just look at the prices of some kits these days, and worse, those kits which have been around for many years, but the price is equal to 'modern' kits. It's only supposition on my part, but the very large price increases (of kits) over the last four or five years may well be to account for lower sales, as the young, 'pocket money' market turns to anything but creative hobbies - mostly those involving the use of a couple of fingers on a keyboard or hand-control, and not much creative thought, skill or brain power.
This will, and does have, an impact on what the keen modeller will buy, as high prices certainly deter many, including me.
There's no quick answer, but if other companies took a leaf out of Revell's book, and priced their kits more realistically, perhaps more would sell overall, and smaller businesses might have a bit more of an already slim chance.