My only surprise is that this type of decline didn't come sooner, as many ex-staff and ex-GW gamers have been predicting for years.
Back in the annals of history there was little alternative to GW's games and minis line (particularly here in the UK) certainly if you were looking to play sci-fi or fantasy themed games with good looking models and a large, cohesive system. Other mini lines seemed too scattered or simply didn't look as good. Sure, there were exceptions but in the main GW was arguably the best option unless you were a historical wargames player. GW rose in popularity due to excellent art values, solid rules system that were easy to teach and remember, and high-street presence.
These days there are many companies selling well thought out and expanded gaming lines where the sculpt quality rivals or beats GW, the prices are lower and the availability just as good. Games like Warmachine, Malifaux, Warpath and Anima are widely available in gamins stores and mini-boardgame hybrids like X-Wing, Star Trek attack wing, Heroclix and Dreadball fill the gaps where players don't have the time or money commitment to make to a full wargame system. Players have absolutely no reliance on GW's presence which means GW should be trying harder than ever before to maintain their top-dog spot.
GW doesn't enjoy the largely uncontested space as it once did and with their policy on continually raising miniature prices at every single change (from lead to 'more expensive to produce' white metal, then from white metal to 'more expensive to sculpt masters for' plastic and from plastic to 'more expensive to mould and produce' finecast) and rulebook costs with every new printing they are driving more and more players into the waiting arms of alternative games systems.
GW are creating themselves a perfect storm of failure slowly but surely. Forever rising costs, forever shrinking store support, poorly supporting well-loved products, forever tightening in-store rules and a traditional pursuance of policies that alienate of long-term players in the pursuit of seemingly younger and younger fresh blood will eat into their profit margin more and more. We all see it coming and it's only because of the strength and player investment built in the brand in previous years that stops it from faltering completely and quickly.
Ex-staff I've spoken to rarely have nice things to say about the company. Long term players in my neck of the woods have been slowly leaving Warhammer games for alternatives that don't suffer Codex power creep, don't give less for more money every year and don't make them feel straightjacketed in the way they play. The immediate future isn't looking great for GW but the fact remains it is a company that still contains passionate gamers, helps serves the needs of a stubborn community not willing to let the brand die and that still has the most recognizable and accessible high-street presence in the gaming world.
If GW don't learn soon their death would certainly not be a quick one. Don't write them off yet as they are still a behemoth of the wargaming world and let's face it, any change in direction takes a while for such a large creature to execute and killing them takes some mighty large weapons (or a gaggle of angry Slayers. Make no mistake - being ginger and short can really make you dangerous
).
Regardless of the truth of the matter the gaming community has long regarded GW as not really being a company that cares about 'the hobby'. I'm sure this would dismay many within the company because at it's heart used to lie a core belief in the gaming hobby. I'd like to think that this was still true. A strong customer focused GW benefits the tabletop gaming hobby in many ways so I hope they learn from this and change some of their more damaging policies. I certainly know a lot of players that would be happy to 'return to the fold' if GW just started cutting it's supporters some slack and started bahaving like it cared about it's playerbase rather than constantly appearing to throw sand in their faces (price hikes, dropped support for beloved products, staffing cutbacks, draconian in-store policies, seemingly ignoring regular players in favour of new faces in store yadda yadda yadda).
I'm an ex-GW player myself. I love Blood Bowl (which deserves to be a regular fixture in any FLGS alongside other board games) used to play a lot of Epic and Necromunda alongside non-GW favourites such as Battletech. These days most of my wargaming is quick and non-company specific games like Full Thrust (which I own three scratchbuilt fleets for). I still buy some GW materials for my RPG sessions and would be sad to see them fall too low.....despite believing that in some ways they'd deserve it if they did fall entirely from grace.