I feel like there are a number of things in play.
First and probably foremost, online sales have killed the majority of the local niche stores. When I was younger, if you wanted something hobby related, you had your local five and dime type place, your local toy stores/discount stores, and your local hobby store, in that order in terms of specialization and time/expense. But all that vanished when you could go online and find that specific engine or plastic model, etc… as well as the paints you really wanted, as opposed to what you could find. The same thing happened with other specialty stores, like sporting goods I suspect.
Second, I feel like a lot of the attraction of the older hobbies was a certain… boredom(?). I mean most of these are very intricate and time consuming, and the sort of thing that many boys/men did because they didn’t have a lot of other options on a rainy/snowy/sick day. But these days, the TV landscape is different, and the presence of video games/social media make those days a lot more interesting than they were in say… 1984, when the best thing available was gluing together the rotor of your Mi-24 helicopter model on a rainy day. My boys will occasionally do stuff like plastic models (they’re 10 and almost 13), but given the option, they’ll always play Minecraft or watch TV versus old-school hobbies.
That said, I can’t say I’ve really seen a decline in specialized hobby stores. They’ve always been thin on the ground, and maybe now they’re marginally thinner at worst. But I think now they’re more of a community gathering point- there’s always a gang of RC people chatting at my local HobbyTown about RC stuff, and usually some people chatting near the trains too. And I think that’s the point- you can always go online and get your HO gauge track cheaper, but you can’t really go discuss the ins and outs of new vs. old Lionel engines anywhere else.
But there’s been a HUGE decline in other brick and mortar sources. There aren’t really standalone toy stores anymore, nor are there five-and-dime stores. The big discount stores no longer really carry hobby stuff, except for the traditionally female stuff like crafting, scrapbooking, sewing, etc… And here at least, the Hobby Lobbies, JoAnn, and Michael’s stores have more shelf space devoted to crap like papercrafting embellishments than they do to all the older tradtional masculine hobbies like plastic models, balsa wood airplanes, model trains, etc…