It seems to me it was the competition of the no-store-overhear internet. I want to buy a game - will CompUSA pay to have it sitting on a shelf locally and charge less than I can get it online? Will they pay to keep a graphics card in a store and charge less than Newegg without the overhead? Same with Circuit City.
Somehow a bay area audio visual retailer has remained in business, called 'Video Only'. I paid for a tv there yesterday and discussed this very topic with the salesperson (and other chains that went of business as well - she said a lot of people there used to work for the other chains). Somehow, they were selling the tv for hundreds less than any of the online black friday deals.
And they still haggle a bit - local delivery? OK, free including installation. Charge to take and recycle broken previous 65"? $30 fee - ok, waived. Warranty to 5 years $130. Oh Costco is $90? Matched.
There always seems to be talk about Best Buy having issues also, the last store chain like this.
I remember there was a company that tried to compete with Fry's in the bay area, I think from Japan.
Their approach was, 'better service, quick checkout', but top prices, across the street from Fry's. Turns out people want cheap. They didn't stay in business long.