I think there's some other issues too. One which is worth considering is this.
When I "got into" HiFi in the mid 80s, you spent your £1000 and got a good set up of (in my case) Harmann Kardon CD, Arcam Alpha One amp, tape deck, tuner and Mission 70 speakers. However, I knew i could get better so saved up and upgraded speakers, amp etc etc. A lot of people did this trying to achieve a better sound and going from a £1000 to a £5000 system provided noticeable improvements and if you could afford it, going the High End offered even more improvements.
Nowadays, you go to your HiFi shop, buy a £2000 system (My current set up is probably achievable for that sort of money) and to be honest, it sounds so good, I cannot possibly justify many more upgrades. I'm sure I'm not on my own and so there is less drive to upgrade and as such less sales.
Of course, this is now compounded by the fact that due to many factors there's less disposable income going around and so luxuries like £5000 amplifiers are going to become lower priority purchases over other luxuries like food, fuel etc.
