They sowed the seeds for their own destruction when they got out of the actual electronics hobbies the marketplace. Had they stayed true to that original vision, they'd not be in the mess they are now.
I won't be shedding any tears. They ended up selling worthless, overpriced electronics, so their value proposition became essentially close to zero for many people who used to shop there. Those who did start shopping there had no real loyalty as they could go to any consumer electronics store - and later online store - to get what they needed.
I agree with this, Dick Smith's should have watched the fall of Radio Shack and said, "Gee, we don't want to do that..." but such things take time to play out and when RS first made the switch to de-emphasize electronics and get more into higher margin consumer electronics it looked like a winner for them.
Neither company predicted, nor expected, that kids would go back to a more 'maker' mindset from the packaged goods mindset.
Well my observation, and granted it is limited, is that when I crossed the HS -> College threshold Ham Radio was a 'thing' and then building "microcomputers" was a thing, that lasted until the mid-80s when it started getting killed off. Then in the 90's and the '00s it seemed like the HS -> College age kids were investing all their disposable income into gaming computer rigs with wild liquid cooling and what not.
It wasn't until the time that suddenly you could make a useful computer gizmo again for high school accessible cash flow with Arduino, PIC, and things like BASIC Stamps did you start seeing a return to less commercial construction and more hobbyist type construction. That tools like GCC became widely useful on small machines and cast off computers became reasonable Linux machines that it once again became apparent that people were building things for fun.
Between 1984 and 2006 I participated in the Homebrew Robotics club, and in the 90's and early 2000's it was very very difficult to get people to come and build their own robot, but once things like Arduinos and converted R/C servos got to be more mainstream more and more people started building their own robots. Today with RasPi and BeagleBones etc there are lots of robots in the club and many members have several.
So for me at least it isn't a narrative so much as it is an observation that the 16 - 24 demographic went back to creating things with less structured "kits" and more variety.
I know what you mean about the drought of the 90's and 00's. I was at math-science high school and in robotics club in 1998-2002, and our team's big hardware-related achievement was replacing a burned-out resistor on a Handyboard. By then software (and video games) had already started to eat the whole hobbiest segment.
That said, I'm skeptical that even at the height of the late 1970's and 1980's there were enough kids doing hardware-related projects to sustain RadioShack at their modern scale. In the very early 1990's, I remember my family purchased a Tandy computer and a stereo system at RadioShack. In Virginia, there was really only a couple of places to buy computers: RadioShack, and MicroCenter. 5-6 years later, we ordered our next computer via Dell direct. I think the loss of that business probably had more to do with RadioShack's demise than any change in the number of electronics hobbyists.
Is there a huge retail component market on the Internet, where you can define "huge" by "revenue" and support that with evidence? Adafruit is awesome, but you can't build a national big-box retail chain on it.
I agree that the hobbyist electronics market isn't large enough to support physical stores, and that major suppliers and existing supply chains are sufficient to not necessitate local retail stores.
I don't care if Radio Shack is down the street; Adafruit and Digikey can overnight me whatever I need.
I'm not litigating whether Mindstorms is a good product. For that matter, I like Adafruit a lot too. But for it to work at a big-box retail chain, it has to be a product suitable for a big-box retail chain.
I would be surprised if there were as many kids buying parts today as there were prior to 1990 or so. It used to be pretty normal for schools to have electronics or ham radio clubs.
I won't be shedding any tears. They ended up selling worthless, overpriced electronics, so their value proposition became essentially close to zero for many people who used to shop there. Those who did start shopping there had no real loyalty as they could go to any consumer electronics store - and later online store - to get what they needed.