This is pretty upsetting to read. I had been going to that shop for a long time, remember seeing Backes do a presentation there, they long sponsored a local cycling team, and also advertised on this site for a long time. When I started getting into the outdoors in 1992 there were tons of stores in the Seattle area, especially on the Eastside where I grew up. This is really terrible. I will say I'm surprised to read they had a store in Redmond; I had no idea. I would also say that the changes in Seattle have likely not been kind to having a business in Ballard. Ballard has always been hard to get to, but with increasing traffic, a vast number of good bars and restaurants there taking up even more parking in a situation that already sucked, I suspect didn't help.
I do think there is a unmistakable reality in that companies like Backcountry and REI are just crushing the competition. These companies are very sophisticated in their operations, they are very data driven, and have extraordinary reach. REIs made a very strategic play in acquiring Mountain Project and their related sites.