In any market, the path the success is to either be better than your competition or be different from your competition. In this case, it's hard to see them besting Amazon at the online service. And it's impossible to believe their toys, games, music and movies are going to give serious competition to the Walmarts and Targets. So their focus should be on books and the book-buying experience.
Their first dose of reality is that they have to price-match Amazon on books. It really is hard for me to pay list or close to list when I can get the book for half price from Amazon. And they'd do best if they could price match prior to the sale. If their reputation is "as cheap as Amazon, but in your hands now" rather than "it's a hassle to find the best price and then ask them to match it" they could see a serious uptick in volume.
Their second dose of reality is that pushing the ereader is not going to grow their business. What they need is to emphasize the real, physical aspects of reading. Comfortable seating areas, book clubs to discuss titles in the store, coffee shops, and well laid out displays are what is going to win the day for them. The easier they make it for people to not come into the store, the more they are going to lose to their superior competition in the online world.
If what I'm suggesting is that B&N become, once again, a traditional book store, you're right! This is what has been lost, in their "chase the trend of the day" approach that, coupled with severely overpriced titles, has led them to the brink. I don't believe they have the means to compete with the big boys on the big boys' turf, so they're going to have to be different.