It's simply a matter of obsolescence of brick and mortar shopping centers.
Also, Melville Corporation became CVS in 1996.
Thom McAn stores closed in 1996, however, Footstar (1996-2008) was spun off from the Melville Corporation in 1996 as part of that corporation's reorganization of all of its operating divisions including Marshalls, KB Toys, This End Up, and Linens 'n Things. After the spinoff and/or sale of all of its divisions other than CVS Pharmacy, Melville changed its name to CVS Corporation and relocated its headquarters to Woonsocket, Rhode Island. From 2008-Presnt it operated under Sears LLC apparently.
By the 1980s, Melville was still the largest footwear retailer in the US. The company had diversified to add such chains as Chess King, Foxmoor and CVS Pharmacy. It began to phase out six of its seven footwear factories in 1983, and in 1985 it closed 72 Thom McAn outlets. In 1988, it purchased the athletic shoe chain FootAction.
In 1992, Thom McAn was down to 730 outlets, and Melville announced that it would close 350. In 1996, Melville closed the remaining Thom McAn outlets, converting approximately 100 of the locations to the Footaction USA format. As Melville divested its operations to focus on CVS, the remaining footwear operations including Meldisco were spun off into a new company, Footstar.
With the closure of the retail outlets, Thom McAn shoes began appearing in Kmart stores, through the footwear departments operated by Meldisco. In 2003, Footstar began selling Thom McAn in 1,500 Walmart stores.
In 2005, Kmart owner Sears Holdings reached an agreement with Footstar – which by then was in bankruptcy and consisted almost entirely of the Meldisco-operated footwear departments inside Kmart stores – to let Footstar run the shoe departments through 2008, after which Sears would purchase the remaining inventory at book value. In April 2008, Sears Holdings agreed to obtain Footstar's intellectual property, including the Thom McAn brand name.
So, it looks like you are correct to a degree. They may have seen the writing on the wall with regards to brick & motor establishments, but the real focus had become the CVS stores as their mainstay business, which of course still required brick & mortar establishments. Thus I'm thinking that healthcare products was a more viable business as the population began to age, more than the internet aspect itself. But the internet aspect still played a part in their divesting from so much brick & mortar establishments for less performing aspects of the brick & mortar establishments. Because not only was the populating aging, the slowdown of the population growth with smaller family units, made sales of shoes less profitable. Thus better to become the supplier, and they probably did outsource those items to be created abroad with cheaper labor, with other entities operating & responsible for the brick & mortal establishments for the shoe products.
I knew of Tom McAn, but never really paid much attention when I didn't see them around much anymore. Out of sight, out of mind I guess. So, thanks for setting me on the right trail to learn more, not that I had much interest, but I had offered my two cents, and that was overevaluation on my part. 🤣