Hobby Shops in Tough Times

[Will_Annand]

Time has come for the hobby shop owners to get tough as their competition...The days of paying full MSRP is over thanks to the computer...Savvy hobby shop owners knows and understands this and has adjusted by offering a modest discount and having a web page for internet sales..Those that cling to the old ways are going by the way of the dodo bird...

Easy to say, hard to do.

I look at some items out there and the internet only guys are selling them for 5% over what I can buy them for.
If I have to sell with that narrow a margin, I could not keep my doors open.

Some of these shops are run from guys basements and as a part time thing to make some spare change.
There was one guy I know who started an online hobby shop, set his prices, then found out if he placed smaller orders from the supplier, they charged him shipping. The last couple of orders he recieved before he shut down his business, were costing him more than he was selling, he forgot about incoming shipping, customs charges and cost of packaging materials.

[Brakie]

Time has come for the hobby shop owners to get tough as their competition...The days of paying full MSRP is over thanks to the computer...Savvy hobby shop owners knows and understands this and has adjusted by offering a modest discount and having a web page for internet sales..Those that cling to the old ways are going by the way of the dodo bird...

Easy to say, hard to do.

I look at some items out there and the internet only guys are selling them for 5% over what I can buy them for.
If I have to sell with that narrow a margin, I could not keep my doors open.

Some of these shops are run from guys basements and as a part time thing to make some spare change.
There was one guy I know who started an online hobby shop, set his prices, then found out if he placed smaller orders from the supplier, they charged him shipping. The last couple of orders he recieved before he shut down his business, were costing him more than he was selling, he forgot about incoming shipping, customs charges and cost of packaging materials.

Will,That's the future of hobby shops..Nobody that owns a computer is willing to pay $130.00 for a locomotive he can buy for $89.00 or $30.00 for a freight car he can buy for $19.00...

As far as e-shops there are tigers and there are kitty cats-the kitty cats usually fails just like the hobby shops that clings to old business ways..Full MSRP,poor stock/poor service/bad attitude..I even seen strong train show dealers fail because of their 10% discount..

Sure hobby shop owner has bills to pay,mouths to feed,backs to clothes nobody denies that..However,he should realize he's in for a tough fight for modeler's hobby budget and therefore offer discounts in order to retain his customer base.

IF I was to enter your full MSRP store and ask what's the least you will take for (oh say) 2 Atlas N Scale MP15s? Will you work with me or sit on your full MSRP and watch me walk out the door? I have had that to happen..Even $20.00 off the total would have closed the deal...In simple math that's $10.00 off each engine-recall the total price is still way ABOVE what I could order both for including shipping..

[Will_Annand]

Larry, I don't stock rolling stock or motive power. I leave that to the fellow in Bracebridge.

I stock structures, vehicles, people, detail parts and scenery. I tend to have better pricing than the Southern Ontario shops.
If you are a regular and ask, or member of the local model railway club, I offer a discount equal to the taxes. So here in Ontario that would be 13%. (8% provincial and 5% federal). I also offer the local club items at my landed cost for anything they are buying for the clubs layout.

I will special order anything that a customer wants and we will work out a price for it.

[RobertInOntario]

BTW, it's not just hobby shops that have been shaken up by the online world.

Christian bookstores, for example, have been hit hard. It's partly their fault as well, IMHO, because some of them were slow to develop their online presence. Scores of Christian bookstores have closed in the Greater Toronto Area partly because they failed to compete with Chapters, Indigo & Amazon -- all of which have a good, inexpensive online selection of Christian books. Also, there are a good number of "big-box" Chapters and Indigo bookstores scattered throughout the city. So why drive to a Christian bookstore when everything is so easy to get at Chapters?

A few years ago, I think Chapters/Indigo also put a number of smaller regular/general bookstores out of business as well. Anyone remember the smaller Lichtmans chain?

Rob

[Sumpter250]

If one you stopped by was "An affair with trains" on bethany home, I hear they are moving up near deer valley airport. The new owner does not like the neighborhood they are in (can't blame him).

It's been a while since I was last in Phoenix (Chandler). An Affair With Trains is a shop I've been to, and found Clinchfield rolling stock, that I couldn't find in shops near home. I'll have to look for the new location, next time I get out that way.

I came back to edit this after reading the thread on "Georges trains moving".

As a kid, on the south shore of Long Island, in the fifties, hobby shops were usually a section of some other business. Taggert Auto parts, in Amityville, N.Y. was the closest to my home, and I could cycle over, and check out "the stuff".
There was a small trains hobby shop in the marina in Sag Harbor,N.Y. that I could ride the bicycle to when we were at the summer cottage on Noyac Bay, and the "hobby shop" in Lindenhurst,N.Y., was a paint store. Then.....there was Polks, in Manhattan, when I was old enough, I road the "flatwheel express", (LIRR, MP-54's), into Penn Station, and walked to Polks, now THAT was a hobby shop!
There were very few "ready to run" items, including locos, which were in kit form!
Brass was probably the most RTR of all the products. The "NMRA horn/hook" coupler, which had a long life as the "standard", hadn't yet been released, so you never knew what you'd get, and sprung trucks were the order of the day....UN-assembled, I learned very quickly to run a length of thread through the spring, to keep it from flying into "irretrievable locations"
Today's RTR everything, is a far cry from the hobby I started in.....There's something to be said for having to paint and letter each piece of rolling stock...they always had the "road" I was looking for, in the right paint scheme for the era, thanks to Floquil paint, and Champ decals. The Ambroid "one of 5000" kits were among my favorites, and scratchbuilding to MR's construction articles, was right up there.
I still get more pleasure out of building something, than buying. It's neat to have things on my layout, that no one else has.

[Will_Annand]

Just did some quick figuring...

If a hobby shop wanted to stay open utilizing only a 5% markup so he could compete with the internet only shops...

Given he wants to pay expenses at his shop and also at his home, for me and my expenses are low.... I would need to sell $60,000.00 per month. Ain't gonna happen. Glad I have the computer repair and CD/DVD production sides to the business.

Also what people fail to take into account is shipping. I have seen some sites where the prices were low, but when you added the shipping charges, it was the same price as buying it in my shop. Some people do not think of shipping charges.

[Brakie]

Will said:Also what people fail to take into account is shipping. I have seen some sites where the prices were low, but when you added the shipping charges, it was the same price as buying it in my shop. Some people do not think of shipping charges.
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Agreed IF you only order 1 item..The shipping cost will cut the savings..
However..
Savvy on line shoppers like me orders more then one item..

Let's look at the real time costs for 2 Atlas N Scale MP15.

Local hobby shop..
2 @ $114.95..total..$229.90..

On line discount.
2 @ $80.50..total $161.00

Savings $68.90.
Shipping:6.95 (USPS)

Total saved $61.95.

Now I usually apply that $61.95 toward ordering other items.
See how it really works?

Now..
I order 1 MP15.

Hobby shop
$114.95

On line.
$80.50

Savings $34.45
Minus shipping.
$6.95
Total saved.
$27.50..


Now add gas for a 52 mile round trip..

The better deal for me is ordering from e-shops.

You see before I started ordering off line I checked every figure and savings..

I found ordering a single car or structure there is no real savings..Ordering multiple items is where the real savings at.

[nachoman]

Now add gas for a 52 mile round trip..

The better deal for me is ordering from e-shops.

You see before I started ordering off line I checked every figure and savings..

I found ordering a single car or structure there is no real savings..Ordering multiple items is where the real savings at.

I am willing to pay a little more for something at a local store, but not tens of dollars more. For example, I would be willing to pay 25$ for sometging that would cost only 20$ to order online, including shipping. That is, if is on the shelf and I can get it when I need it. Reasons? 1) I dislike both UPS and FedEx and would rather not give them business. 2) I hope the LHS makes enough to stay around for when I need some rail joiners or paint at the last minute 3) convenience of seeing something before I buy it. 4) An excuse to be social and go out and do something 5) not having to wait.

[Brakie]

Kevin said:5) not having to wait.
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Yeah,I order (say) Friday Morning and its here by Monday or Tuesday by USPS.

I can wait 3-4 days to save money..

I cut my not so local shop completely out of my supply chain..

Why?

Its pitiful when he doesn't have MT 1015s or truck king pins in stock and special orders can take 2-7 days.

That was the final straw..

So,now I do all my shopping on line.
Faster,convenient and 100%.
----------------------------------

Now,if there was a full line shop within a reasonable distance with a modest discount I would shop there to include rolling stock.As it stands the closest full line shops is in Columbus..A 120 mile round trip.

[Will_Annand]

Brakie, if the suggested retail is $114.95, the LHS buys it for $73.97 (40% off) to this he has to add shipping. The etailer is selling it for $80.50 so he is making $6.53 on the item less any shipping he paid. Now he probably charges more for shipping than it costs him. But maybe not. So the etailer is making about 7% on his purchase.

No wonder LHS are closing all over the USA. They cannot compete with etailers who have zero overhead and only want to make 7% per item.

This keeps up, no LHS will be left.

[Brakie]

Will said:No wonder LHS are closing all over the USA. They cannot compete with etailers who have zero overhead and only want to make 7% per item.
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Perhaps in some cases..All 3 of my on line dealers has store fronts and been around for years as mail order shop(remember those?) In fact if you care to check you will find the majority of the e-tailers has brick and mortar shops.

Now the days of the basement dealer is slowly counting down as wholesalers are requiring store fronts.Even Walthers has climb on board.Not to mention you need a ton of money to get started and maintain a monthly inventory...Lack of stock can kill the basement dealer as fast as a hobby shop.So,a "basement dealer" has overhead..

Will,Your cry of "no overhead" is a well sung song.I have heard it for many years starting with the mail order shops,then train show dealers and now its sung due to the e-shops..

Of course we read on forums that "Charlies Hobby closed" but,if you notice there is seldom any concrete information such as:

Did "Charlie" retire?

Was it due to health reasons?

Was it due to his full MSRP and lack of new stock?


Will,I am sorry but,you should know some times the shop's owner is his worst enemy or as I like to say "LHS killed by owner."

Sadly its only going to become worst in the coming years due to the ever increasing price of the hobby and the ever increasing cost of living..

Those shops that utilizes the Internet and maintains a solid local customer base will survive...Those that clings to the old ways will fail.

[MasonJar]

This issue is not as black and white as it may seem on the surface. The biggest shop in Eastern Ontario is a well stocked (mostly HO) sizeable store in a tourist town about a 45 minute drive from the biggest market (Ottawa). In addition to a good stock of HO items, he will order anything from Walthers or Horizon - and generally has it for you in a week. Given our proximity to the US border, he maintains a PO Box in upper NY state for US business. He will ship anywhere in the world, runs eBay auctions and an eBay store, and also is a big player in the estate sale market. He regularly charges full MSRP, but does give discounts to some clubs, and on special occasions (like 25% off anything for his 25th Anniversary a few years ago). The service is great - very knowledgeable and polite/professional to everyone, even if you are just browsing or picking up railjoiners. He answers the phone and responds to email very promptly. The hired help is also very knowledgeable (one extra staffer on Saturday).

His competition is a few basement shops, and two hobby shops in Ottawa (one with primarily trains plus other stuff, and one primarily other stuff plus trains). There is one other full time shop that specializes in large scale only.

Railroad modelling in Ottawa is huge though - many, many clubs (at least two or three in each major scale), plus round robin operators and lots of "lone wolves". Oddly, there is no permanent club with a central, communal layout. There are also a variety of prototype groups from museums to historical societies. But the owner of the shop comes out to the "premier" monthly event - a dinner at <!-- w --><a class="postlink" href="http://www.ovar.ca">www.ovar.ca</a><!-- w --> - and will even deliver your order there if convenient.

So despite full MSRP (the perceived common cause of the demise of brick&mortar stores), he does very well since his business model seems to be well balanced. And he does it at 4 days per week (Thu - Sun).

Andrew

[Fifer]

I think you would find that all of the e-tailers (like Robin and I) would like to have the same type of shop that all of us remember, where you go in and get information , have a soda sit and chat, watch a related video, browse , but the fact is unless the retaler charges the prices they do they simply can no longer provide those frills , if you will. The cost of space , insurance , employee's , utilities and such has almost made the small "homie" type shop extinct. The large shops in large areas can still draw enough people to make it if they also do e-tail.
I think that almost all of us remember the small shop that had the owner living in the back and the heater or air conditioner was always on and you could buy a model car kit for $2.95. The net has put an end to that life style.
We had a retail shop and it is no easy task. We do however try to replicate that in our e-tail shop as best we can , but you'll have to have your own soda handy!
Thanks all you guys and gals, Mike

[Brakie]

I think you would find that all of the e-tailers (like Robin and I) would like to have the same type of shop that all of us remember, where you go in and get information , have a soda sit and chat, watch a related video, browse , but the fact is unless the retaler charges the prices they do they simply can no longer provide those frills , if you will. The cost of space , insurance , employee's , utilities and such has almost made the small "homie" type shop extinct. The large shops in large areas can still draw enough people to make it if they also do e-tail.
I think that almost all of us remember the small shop that had the owner living in the back and the heater or air conditioner was always on and you could buy a model car kit for $2.95. The net has put an end to that life style.
We had a retail shop and it is no easy task. We do however try to replicate that in our e-tail shop as best we can , but you'll have to have your own soda handy!
Thanks all you guys and gals, Mike

Mike,The last nearby shop where the faithful gathered every Saturday morning closed its doors due to the owner retiring after 40 years in the business.He was 72 when he decided to retire...Lewis always like to say I started this shop a young man full of vinegar and pee..Now I am old and tired.

The coffee was always fresh as was the donuts..He kept that tradition going up to his retirement.

I know I spent more then my fair share there.

[Fifer]

I think you would find that all of the e-tailers (like Robin and I) would like to have the same type of shop that all of us remember, where you go in and get information , have a soda sit and chat, watch a related video, browse , but the fact is unless the retaler charges the prices they do they simply can no longer provide those frills , if you will. The cost of space , insurance , employee's , utilities and such has almost made the small "homie" type shop extinct. The large shops in large areas can still draw enough people to make it if they also do e-tail.
I think that almost all of us remember the small shop that had the owner living in the back and the heater or air conditioner was always on and you could buy a model car kit for $2.95. The net has put an end to that life style.
We had a retail shop and it is no easy task. We do however try to replicate that in our e-tail shop as best we can , but you'll have to have your own soda handy!
Thanks all you guys and gals, Mike

Mike,The last nearby shop where the faithful gathered every Saturday morning closed its doors due to the owner retiring after 40 years in the business.He was 72 when he decided to retire...Lewis always like to say I started this shop a young man full of vinegar and pee..Now I am old and tired.

The coffee was always fresh as was the donuts..He kept that tradition going up to his retirement.

I know I spent more then my fair share there.

Yep , those were the days. I used to go to one every day on the way home from school and they had a slot car track. Man it was cool. Two levels with the basemnt and planes hanging everywhere and always a model contest going on , and how I used to stare at those AMT accesory parts , all chrome and on a fancy rack. Oh and also remember the rack as you went to the register with all the balsa gliders?
Those were the days.
Mike