I agree with this entirely. I suppose it was partly an issue of limited floor space, but maybe the largest factor was that if a store sold junk mixed with good items, they could get a bad reputation.

Another factor of purchasing in "the old days", particularly for Sears, was that it was usually quite easy to get replacements for faulty products. None of this business of packaging things up, mailing them away and waiting. Walk up to the counter, show that the item was nonfunctional, and a cheery salesperson would go out back and get a new one for you. Sometimes they didn't even ask for a receipt. Sears had products that were "good enough", and they wanted customers to keep coming back. Of course it didn't last, but that wasn't just this particular company.