I think with in five years or so, the high street model shop will be history, save for maybe a handful of specialist retailers dotted around the country.
I purchase nearly all my model equipment on line, a visit to a model shop entails a trip uptown, often to find they probably don't have what I want anyway. Lets face it, most model shops are little more than toy stores, stuffed full of big box items designed to appeal to the five minute wonder brigade.
The big problem for retailers in the UK is that very little is made on these shores now, so they are left as middle men ramping up the price for imported goods which can be very easily purchased directly at a considerable discount. Years ago the only way to source imported goods was at a model shop, usually having gone through one or two distributors first. The rise of the internet means that game is now up, and has been for quite sometime.
I purchase quite a lot of items from HK, mainly radio, motors and batteries. The quality is very good on the items I have received, I've had little to complain about to date. Certainly not tat.
Where I can I support our own manufacturers, I use UK made brushed ESC's (Microgyros), I used to purchase my radio from UK suppliers (Fleet) until they went under, I drive a UK built and designed car (Mini).
If UK model stores and suppliers want to compete with outfits like HK, they will have to do so by diversifying and going back to grass roots. Think about introducing product lines that are original, small items you can't get anywhere else etc.
The snag with that is soon as you come up with a product that is any good and sells well, you can bet your life the Chinese will copy it and sell it at half the price or less. But that's what you get for thirty years of underinvestment in your home industry, and moving it all overseas. They sowed the wind.
