Was what? Closing their retail store front? Yes, it probably was.
Let's start off by noting that not all small business owners have any business training, and don't really understand how to run a business. By and large, these are the ones that just fold up and die when faced with a changing business environment. Based on my experience with them, I don't think MB Klein was one of these.
I think their decision was based on a hard business case analysis. They looked at what the retail space was costing them, in terms of rent, utilities, payrolls, etc, compared to the percent of their sales that were coming from the brick and mortar location, and concluded that it was no longer a cost effective operation. Some loss of sales ensued, obviously, but it was more than offset by the reduced overhead costs. The American consumer is evolving. More and more, they prefer the convenience, greater selection, and lower cost of shopping in line versus going to a brick and mortar location. Wait, lower cost? Yep. Because while shipping charges are an obvious expense over in-person shopping, it doesn't factor in the time and transportation costs. Even if I value my time at minimum wage ($11 in CT, and I get paid a lot more than that), if it takes me an extra two hours, it's almost always more than the shipping cost. Since the nearest hobby shop to me is a 35 minute drive away, plus another 15 or more to find parking and travel to and from my car, locate what I want (if they even have it), wait in line, etc, etc, and throw in a couple bucks for gas and parking, there's really no scenario where the physical shop is cheaper for me. And that shop isn't a good one (it's a generic toy and hobby place). If I want a GOOD train store, now you're talking 45 minutes to an hour one way, and the math gets even worse for the brick and mortar place. Add to that the risk of a wasted trip if I can't find what I want (or ANYTHING I want). The tradeoff, in most cases, is the wait to receive it (although that can be mitigated by a curbside pickup, like Walthers Terminal Hobby Shop).
Sure, there are still some advantages that go to brick and mortar locations, like expertise, better visualization, testing / demos, and instant gratification. Whether these are enough to offset the e-mail advantage depends on the customer.