The town is dying because

people are no longer coming in to it to shop or wander the main street.  This is the complaint from someone who owns a small business in a small country town in the hills behind me.  

The hills behind me are littered with small "towns" like the one in question. They are really villages, indeed some of them might be labelled "hamlets" they are so small.

Most of them consist of some sort of main shopping strip with a few streets branching off at the sides. There might be a supermarket of some sort, perhaps a chemist, a cafe or two, and the "gift" shop or the mini art gallery. Tucked into this there might be a medical centre with reduced hours, one or two might have a "playground" for children next to a church and the cemetery which is a reminder of things past. There might be a "green" with dying grass and a war memorial to the men who went and did not come back.  If you are lucky there might still be a decrepit "community hall" of some sort.

There is one such town which is a tourist attraction - if you believe the advertising. Yes, it has a history of German settlement in the late 1800's and some "quaint" cottages but little else apart from the shops designed to entice tourists. I have been there and have no desire to return.

Many of the people who actually live there commute down the freeway into the city for work. Some will drop their children off at school along the way. At weekends there is sport but not much else to keep you entertained. 

If you want a quiet lifestyle then yes they can be lovely places to live in but I know you will do your serious shopping elsewhere. Those quaint little shops are not for you. They are there for "tourists". They sell things you do not need every day of the week, if you need them at all. The occasional "art and craft" exhibition or event is not going to keep local businesses alive.

I have no idea what the answer is and I doubt the locals know either. The little place I was born in is now a larger country town. It is not in the hills but it is a similar sort of area. Some of those who live there commute to the city to work. They expect all the amenities of city living and, for the most part, they can get these. At the same time they now believe they are "living in the country". 

No, they are not "living in the country" at all. They are living in semi-rural suburbs. Such places can be just as lonely as suburban living and those who really live and work there are being stifled by you who believe they have nothing to offer.