Am I being wrongfully demoted?

I'm a store manager for a retail company, and recently my boss hired a former colleague (who she is friendly with) in a store in our area. When they worked together previously, her 'friend' had held my position, but re-joined the company in a lower position since no other openings were available. In the time since her employment began, my boss has now told me that I am not doing my job up to par, and I can either essentially swap jobs with the 'friend' at another store, where I will be demoted and she will be promoted, or i was given the option of being put on a 30 day action plan which she honestly told me was a way to manage me out of my job. My problem is, I was never documented previously for any wrong doing or inadequacies in my job. ever. Is this legal for them to basically tell me I either have to move to the lower position at the other store for a pay decrease, or stay in my current job on an action plan that is only set up for me to fail?
I can't afford to lose my job and i feel very strong armed into this. this seriously can't be legal, right?