In any UK town of reasonable size, you will find bookshops, which usually come in the shape of either Waterstone’s or Borders. Branches of WHSmith sell books but that doesn’t make them bookshops, as much as Tesco is not a bookshop. Many independent bookshops have closed over the years, and anecdotal evidence suggests that this downward spiral has accelerated.
The competition is not only limited to the high street. Amazon is the on-line giant, but there are other websites that sell books, such as Tesco and eBay. The huge high street chains and on-line (book)shops have a very strong purchasing power and they also control the market. These behemoths then promote books with "three for the price of two", "buy one get one free", "buy one get the second book at half price", "2 books for :20" and other such means. No wonder independent bookshops cannot cope.
It would be interesting to see, as some of the comments have suggested (see the link below), whether the likes of Waterstone’s or Borders can survive in the next few years. They seem to target the casual book purchasers therefore cast the net wide and offer a certain kind of atmosphere by providing cafes to read, study or pass the time. Casual book buying and drinking overpriced coffee are discretionary and in the tough financial times ahead, these bookshops may be in trouble. More crucially, if you want a particular book, it is almost always cheaper and less of a bother to buy it on-line.
The only way that I can see bookshops on the high street surviving is by stressing, paradoxically, their uniqueness and specialization, which are often the hallmarks of (successful) independent bookshops. Uniqueness is something difficult to create that easily since it may be contingent on its history or location. Specialization, on the other hand, is somewhat easier to achieve: the high street bookshops could concentrate on one particular area of genre (be it, for example, 20th century literature, translated works, political or religious beliefs). Such bookshops will become a destination for those looking for books for that particular theme. On-line bookshops are convenient and efficient, but as yet, they cannot beat the buzz you get from browsing the bookshelves for related titles. You might go to a shop to buy one book but end up buying three, becase they were close to the volume you wanted.
Some second-hand and antiquarian books are highly specialized and they use the internet to reach a wide audience (abebooks) as well as a brick and mortar store to great success. I cannot see why books selling new tomes cannot do the same. Finding a niche has been much the talk on successful on-line business. Why not combine physical building and on-line presence?
Whatever the merits and otherwise of the chains, town centres without bookshops will be rather desolate. This may be the biggest threat of virtualization in book buying.