If the store is able to continue to give away books for free, then obviously the first store that had to charge for the books isn't generating enough value.

Unless the end-game for the 2nd store is to price out every single book store, then obtain a monopoly. But then anti-monopoly laws should come into place.

But if the end-game for the 2nd store is to subsidize their cost via a different business - then it's the same as a newspaper using classifieds to subsidize their subscription business. You can't then argue that another newspaper that charge for subscriptions goes out of business is unfair.