With a college nearby, the students there are very likely in the highest music-consuming age group. Incidentally, this 18-22 age group also has a high average of disposable income as well. So the marketing problem that's making business slow, in part, is a likely disconnect with the nearby college-buying public. Don't be discouraged, this type of thing isn't rare. In fact, it's quite common to find businesses structured and literally targeted at non-existent markets, but they still sell enough to get by.
Marketing is definitely their answer.
An obvious marketing move would be for them to break out and provide the most current music trends and target the college student body with advertising. There may be a financial reason why they haven't expanded or chosen to appeal to a closed market so close by. Often, small players in big markets suffer from the inability to purchase inventory at the same cost as larger players. If you look at the record industry in total, it could be frightening for any record or music retailer. The only obstacle holding back MP3 from totally revolutionizing the way music is produced and sold is the copyright and intellectual property laws.