I used to own a record shop selling new and secondhand cds and dvds and secondhand records. I closed down 4 years ago after seventeen years in the business and I'm glad I did. It had just turned into a nightmare in the end. Competition from supermarkets, the internet, charity shops, car boot sales,newsagents, off licences - even the Edinbrugh Wool Shop sells dvd's for f*ck's sake! Add to that a whole new breed of customer who expects a lower price than Tesco's and the same kind of returns policy ie: "I bought this last week and I don't like it so I want a refund." . Or people who 'd spend half an hour listening to 20 cd singles out of the 3 for a £1.00 box and then not buy any. In the end it just wasn't worth the aggravation.
People bang on about the big labels profiteering, but i can't say I ever found an independent distributor or label that would've allowed me to make a reasonable profit and take a chance on stocking a wider range of cds. Mostly, i would've made one or two quid on something retailing for £12.99+. Well, at that sort of price in your average provincial town you're not going to have enough turnover to make it worth your while and, of course, anything you got stuck with would have to be sold at a massive loss, effectively losing you most of the profit you'd made on stuff that did sell.
I used to have a good wholesaler that did special offers, but I usually found that with anything I sold as a "loss leader" people would come in buy that item and only turn up again the next time I was selling Amy Winehouse or Neil Young cds for a fiver.
As for secondhand stuff it just ended up as being offered dozens of copies of whatever HMV or Tesco's were selling off cheap. Oasis, Limp Bizkit, Blur etc. So it became really boring and one of the main advantages of owning a record shop had all but disappeared - your chance to get your hands on new and interesting recordings and films.
I used to know about 12 guys in the trade and all but 3 have packed it in now as has my wholesaler. Fopp closed down a while ago and then reopened, but in my opinion they're not truly independent ie: owner/operator, and eve so they can still only exist in a very limited list of locations.
For myself, I buy everything online now. The chances of finding Midlake's The Trials of Van Occupanther. Temptations Psychadelic Soul, The Best Of Hardold Melvin and the Blue Notes, Clifford T Ward's The Both Of Us or Sothern Manners by The Watson Twins anywhere within a fifty miles radius of my house are nil, because not even HMV can afford to stock such a wide range of titles. And if they did I couldn't afford to pay their prices anymore.