But in a constituency such as Wavertree, very few people will ever vote for any candidate who isn't Labour. In 2017, Luciana Berger won 79.5% of votes on a 70.1% turnout, which is a huge endorsement. If people were really dissatisfied with her, they would probably not have bothered to vote.
Local party membership constitutes a very small percentage of the electorate. By parachuting in favoured candidates or deselecting those they don't like in safe seats, they can undermine local democracy by limiting choice.
I actually know more about how the Conservatives select candidates via a list system. The only constituency where I know about Labour selection is Manchester Gorton, where Corbyn's favoured candidate was rejected. Nevertheless, I guess both major parties jostle for position go get favoured candidates on to the list. Additionally, there are questions about who is actually responsible for selecting the candidates. There's loads of scope for manipulation.
In the case of Luciana Berger, unless she does something outrageous, there seems little reason to deselect her and I would hope those who voted her would kick up a fuss. She's managed to increase her vote quite significantly since 2010, when she was first elected.