They don't need to carry 50 different brands, they just need to carry a selection of a few good things. Just get rid of all the shit brands.
Trader Joe's has an excellent model that keeps me going there. A huge amount of their stuff is decent and interesting. Although I can't vouch for their tea they have plenty of stuff that is original and well-priced that you can't find online easily.
Tj's also targets wealthy clientele, not the average shopper. The difference in your cart between them in Walmart at the end of the day is huge. I too would rather shop at Joe's, but its likely both your and my income is significantly higher than most Americans simply because we are on HN. We are not a good measure on what stores should cater for.
They are losing business because there is no route to competition on a local level.