There is an interesting article from Photokina
See page 17 regarding film sale tracking volumn and how the 4x6 print market is changing world wide.
I own a photoshop/minilab in rural Ireland and yes the number of people getting prints from digital cameras and phones has decreased. It came to a stage where I woundered if I could survive in business. I spoke to other lab owners in other parts of the country and they had the same problem. I approached Fuji Ireland and they were of the same opinion. If something wasn't done soon a lot of photo shops would close.
The solution was an all out effort to make the customer awear of the value of a printed photo. The national advertising and local window display pushed home the idea of " if your pc crashes/ lost memory card/ stolen phoone, you loose all your photo, so print them now"
And guess what, it worked. Ok it did take time but the scare tactics worked. I now have regular customers coming into the shop and ordering 100, 200, 300 + prints from phones and memory cards. They also buy albums to store the prints.
And it has a good knock on effect for my film processing. We now get "Oh you still develop film? I have a few at home in the drawer, I must get them developed"
I even had a few digital customers go back to film because they liked film but thought it was dead.
I now sell lots of second hand 35mm film cameras and usually to people in their early 20's.
So what I'm really trying to say is that photo retail can survive but a lot of effort is needed from the retailer. There is a market out there, you just need to find your niche.