Good point. Loss leaders, especially, were a major source of trouble. The point of loss leaders is to bring the customer into the store to purchase many items in addition to the loss leaders. Instead, a whole network of customers started just patronizing stores for their loss leaders, thereby defeating the purpose and turning a win-win into a win-lose.
However, I think the bigger issue is the one you alluded to with regard to comparable types of stores, i.e., B&M versus online. There is no question that B&M stores have higher overhead, and provide more personal face-to-face service, which is generally significantly more expensive than personal service by voice or chat.