I think there has been more than a one .. two punch .. that has been delievered to the LQS. The first was a BAD economy... many just could not afford to purchase as they had in the past, the second punch came in the cost of cotton, making the few dollars left to spend able to purchase less yardage.
Now with shoppers/consumers having more and more access to the internet , to price shop ... its not a pretty picture.
If you want to make a quilt top and it takes 8 yards , will you spend the $$ on lower quality/price... or shop the internet quality and a price point.. or will you make a smaller quilt?!
Almost all the quilters I know have increased their internet spending for fabric in the last few years.