The situation in Singapore is slightly different. In Singapore, because of its size a
bookstore is always within half-an-hour drive (on average) away. We have a couple of computer bookstores which are well-stocked with computer books and I am always able to get what I want from one particular computer bookstore. My observation is that computer people tend to avoid bigger chains like Borders due to its straight conversion from US dollar to Sing dollar. We could get a better bargain through the computer bookstores as they get their books from a local distributor, which is always able to give a better price.
Online bookstores has never really taken off in Singapore. A couple of businesses have gone online and failed miserably. This is not surprising since finding a bookstore is really easy in Singapore and people would always want to get a book fast. Moreover, buying books online does not get any cheaper and ordering online from Amazon.com is really expensive. The delivery charge is sometimes higher than the cost of the book itself. It is only when a book cannot be found in Singapore that you would order online.
But the scenario that Tim mentioned is very common in Singapore (I think it happens everywhere). People go to bookstores and spend their whole afternoon browsing through the books, mostly with no intentions of buying. Worst, the books would often end up with have dog-ears, rendering it unsaleable. Magazine sections are the worst hit, but I guess that is a slightly different problem as their business model is different from the book market. In general, the mentality of most people is that a bookstore is just like a library - they are free to browse with no social obligation to buy.
Bookstores are not doing well in this difficult time. A number of big names have closed down. A critical factor to realize in this difficult time is that the consumer dollars is shrinking. With a shrinking budget and an increasing pool of new titles (do a count of the number of .NET titles published by other publishers and see if you can decide on which one to buy), the eventual party to suffer is still the publisher. But on the other end the publisher is also facing financial pressures - stop doing new titles and the revenue will stop. I think O'Reilly's strategy of doing non-overlapping titles (and making that just one title really good) will pay off in the long term and allow it to stay afloat in this tough time.