So why is Barnes and Nobles struggling? A couple of important points:
Their inventory and footprint IS HUGE. Large inventory with low turnover is a margin-killer in retail. And I doubt they make much money off the books in their shelves - real money is in the piled selection and special coffee table books and new features and what have you.
Wide inventory is their advantage over the smaller stores, but it comes at a huge cost and forces them to keep prices high. Remember, in retail, selection costs money consumers have to pay. Smaller stores can get away with a random selection and stacking books all over the place (the hunt is part of the experience). If someone can't find a copy of the Republic at B&N, they probably lost a customer.
I suspect they will switch over to a more curated model (like AmazonBooks) - basically only new and select books. Smaller store, less footprint, and less product to buy and eat costs on. And then they can compete on costs more.