One of the biggest drawbacks to pdf sales is the direction of its marketing. It is almost entirely Internet driven sales. While I do not have the available data I would venture to say that a significant percentage of consumers do not use the Net to influence their buying decisions. To exceed the "usual and declining" sales trend, marketing techniques need to move beyond the box thinking. Pdf publishers have to be willing to try new ideas to make their products more visible and to reach a wider audience. I think some of the suggestions posted in this thread are good starts but the elusive "Eureka! That's it!" idea has yet to be found. The pdf publisher that figures that one out will be the envy of the gaming industry.
PDF files have been something of a "strange beast" in the regards that they do have a certain conception among the general public of being not good enough for print. The variety in quality (with many being not so good) doesn't help with perception either.
The average consumer does not understand nor does he care about the investment required for a publisher to manufacture a product for print only to see the lion's share of his margins eaten up in operational and overhead expenses. The average consumer only looks at it in terms of his cost and his use. To him, a $5.00 pdf is a great deal until he has to print it out. Depending on the amount of color, borders, and excessive graphics present in the pdf, the customer may find that printing that pdf may very well drain a print cartridge. If this happens, suddenly the $5.00 pdf winds up costing $35.00 because he now has to buy a new printer cartridge. Many publishers (like Bastion Press) have started to take steps to get around some of these issues but it has not completely resolved them.
If a retail operation was to print and sell pdfs, they would quickly find themselves in the same boat regarding cartridge use. If the retailer sells the pdf and then offers to print it for a nominal fee (say $5.00) then the consumer has already invested at least half the cost of the average printed product (going with an average of $19.99 here). So from the consumer stand point, he's back at the view of "why am I paying so much for this product that was supposed to be so cheap? If I am paying this much then I want a more professionally printed and bound product."
Until pdf publishers can package their pdf products in such a way where all art can be turned off with the click of a mouse, I believe there will be an uphill battle for acceptance among the general public. It could very well be that working deals with FLGS can help turn that corner, but you have still have to consider the backlash that may come from them when they see what costs are involved in printing those products for the consumer. I could quickly see a situation where a dealer charges the cost of the pdf plus $15-$20 to print the full pdf (color and illustrations included). See the potential for abuse and consumer backlash here? Granted, this is strictly a hypothetical speculation but it should be a concern.