I think WM put a lot of LQSs out of business with their lower prices (and other types of stores too) but my quilting mentor who i've known for 25 years said there are not as many quilters as there used to be--that's why a lot of stores are having trouble now.
The decrease in popularity of quilting as well as rising prices are hurting the LQSs.
I know no one here wants to hear the hobby (lifestyle) is waning, but the heyday was in the 80s and 90s i guess.
If fabric was a profitable line, WM would still carry it.