Why can't the hobby shops survive?

Tbone Jun 25, 2007

  1. Benny

    Benny TrainBoard Member

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    No sir, I'm right be hind you, I'm a bottom feeder after all! Hobby shops see me and groan because they know their discount bin just got wiped of everything good!! Ok Ok, So I can't say no to those nice little vehicles and the prices on those are pretty much the same no matter where you shop around, so I get those at the shop. But after that....hey, I LOVE Trainworld. I jsut sent in an order for about 400 discounted LHS, 500-600 MSRP, I got it all for about 200, I'm bones happy here!!! WHY Not????

    But I feel there is one point of contention which you have a small problem with and I can clear up for you...
    Review my last post and you might find that part about merchandise "walking out of the store." THink about it.

    That little engine costs 100-200 dollars. It fits in most pockets better then a cell phone. There is an instant market available for offloading this stolen loot [ebay] where even the most unsuavy businessman can get no less then 75% of the running price for stuff of any sort. You hobby is a Redhanded man's DREAM, and hence, your hobby is a royal pain in the butt for your pusher!!

    You are absolutley rightbaout the internet pushers - you can see the item on three or four websites, with Nice pictures, and if that isn't enough for you, some of the vendors will testrun for you. If that isn't enough for you, there is the manufacturer warranty and replacment services, which are MORE then reasonable. If that isn't enough for you, Guess What!!! YOU'RE A PAUPER ASKING FOR SILK AND ROAST BEEF!!!!!!

    So we boil this all back down to the initial question: Why can't I go to my favorite shop for a piece of track and this and that and a little mental relaxation and personal attention?

    Simple, its all Business!
     
  2. Rossford Yard

    Rossford Yard TrainBoard Member

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    No one begrudges us getting the best price, esp. when shops like Wig Wag live up to their motto of "Pricing and Personal Service."

    As to keeping the LHS alive for chatter only, I liken it to Barber Shops. Yeah, the cuties at SuperCuts or similar are nice, but I always kind of liked old men talking baseball cutting my hair.....

    In pure numbers, according to Sam Posey's Walthers interview in "Playing with Trains" locomotive sales drive the entire business. It appears we all buy more than we need. Rolling stock is next, and track follows, and he wrote that there are 29 real miles of HO track sold at Walthers every year. (Try figuring out how many new 4 X 8 layouts that might be!) Scenery sales are really lagging. I guess there are a lot of plywood centrals out there.

    Again, if we buy locos on line, the rest isn't enough to support a shop, since the bread and butter items are being sold elsewhere. Like the barbershop, I think Train Stores that get only kibbutzers will eventually go out of business.

    My big question is why the Walthers and Horizon crowd work so hard to protect the chain, when it seems that the market will eventually need to eliminate a middleman in the name of price efficiency. Maybe the net can do that, or maybe combining mfgs and wholesalers can, but I think we need a new business model, and that is the real problem.
     
  3. BarstowRick

    BarstowRick TrainBoard Supporter

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    What Is A LHS Employee Being Paid To Do?

    Yep, simple it is.

    Because, because...because, the personal ARE NOT being paid to talk about unemployment, latest joke, politics, your mental relaxation, gossip about the other hobby shop or Mrs. Edwards and Captain Baker. It's not their job to send you home with a menial purchase just so you can satisfy you're need for an addictive model railroad hit. They are being paid to sell you something and send you on your way, with your trunk full of model railroad goodies. When they open up a soda and ice cream fountain or pizza parlor then you can go in and relax and enjoy the soda jerks attention.

    Edited add on: Theft is a number one concern of any shop owner. Another reason the employee behind the counter should never engage in a discussion beyond the required sales pitch or deliberately turn his back while product is sitting out on the counter. His eyes need to be busy watching not only the customer he is attending to but the other customers who appear to be just standing around. The best game in town is for two sticky fingered critters, one to distract and the other to fill the order of the day. On the other hand, a person alone can ask to see a number of N scale items in a display case. Now, while the items are still sitting on the counter he can then distract via innocent conversation and request to see something off the shelf behind the sales person and while the sales persons back is turned he then picks-up a N scale locomotive or two...box and all... slips it down the front side of his pants, into a built in pocket. Security isn't likely to frisk that region should he become suspect. Never mind deep pocketed, bulky pants or various types of coats. Experience teaches.

    The employee can. Help you troubleshoot a problem on your layout if it results in the sale of an item to assist you with resolving the problem. He or she can engage you in the latest items available or new items, arriving soon, to reserve yours. Assist you with test tracking a locomotive. Caution: Think twice if the sales person allows you to handle the locomotive.

    Gosh is that rough...but it's the truth.

    A good salesman can be a good mixer, do his job and still send you home with a trunk full of "Paid" for goodies.

    I still say there is nothing like a trip to the hobby shop for an addicting MR hit.

    I was just thinking about filling that trunk. Do you have any idea how much N Scale stuff it's going to take to fill your trunk? I want to write that sales ticket. Grin!

    Rule #2, Dicker or negotiate for a better price. There's nothing wrong with asking for a discount. I'm no better then the next guy and I do purchase based on price. Some hobby shops have discount programs but you have to ASK! Many are based on a minimum dollar purchase Ie., $100.00, $200.00 and etc. When I lay down $200.00 plus dollars on a purchase I expect a discount.

    So back to one of the #1 rules "Have fun", however you perceive it.

    Relaxing at a ice cream fountain was always a good thing. Whatever happened to Woolworth's?
     
    Last edited by a moderator: Jun 30, 2007
  4. broadway zephyr

    broadway zephyr TrainBoard Member

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    Benny,

    I agree with that statement 100%. Yes, there are a lot of unsavory characters out there who want their "five finger discount." And thats yet another reason why I think the model is broken.

    If one of the prime reasons a shop exists is to be able to see the goods, and I can't see the goods in a manner that is comfortable to me, then the result is that I won't go there to buy anything.

    So the guy who has to protect his merchandise---and I understand he needs to do that---is doing the exact thing that drives me away from a store and to the internet. If the shop needs to subsidize the theft that is (still) taking place, I understand that, but I don't want to be the guy who is paying extra to subsidize it.

    I don't mean to sound cold to the shopowner with all this. I just think we all have reasons why we are spending less at the stores and more on the net, and am just trying to articulate what the reality of it is for me. Posters have noted the LHS is great to have around when you need that piece of track, or supply, or bottle of paint. Yes, that is all good. But I don't think the shopowner is really gonna cut it by selling those small items. You have to sell a lot of them, and even then, there is only price-insensitivity to a point.
     
  5. Grey One

    Grey One TrainBoard Supporter

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    So, would folks agree that to sum up the reasons _most_ hobby shops cannot survive are:
    • Dwindling customer base
    • Availability of substantial discounts from reliable places online
    • Good locations are too expensive
    • The need for "Service, Support, and Expertise" is provided by places like Trainiboard
    • The business model is changing / has changed from continous production runs to limited production runs requiring a commitment response only an online dealer can manage due to the communications of the web. That is an etailer can better judge how much to order from pre orders they are in a generally superior position to to handle than an retial store. This one is subtle but may well be one of the keys.
    My etailer has constantly provided me with:
    • Quality of information, service and product - including saving me from double orders, a superb easy to follow website, and delivery.
    • A fair price including shipping - at least 20% under retail.
    • Legitimate level of service - not that I have needed much
    • A location I can get to - Online, my door step or the post office. - I don't drive
    Think about it. If Rrrr wanted to buy me something I could give her my etailer's number, tell her who to talk to and they could suggest a few things I am interested in. Life is good.
     
  6. BarstowRick

    BarstowRick TrainBoard Supporter

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    Etailing versus LHS

    Grey one and all tuned in. Agreed!

    Not to mention an etailer has little to no customer theft. However, he or she does have to watch the employees.

    Downside: You never know when you are getting a returned item and and you are paying the regularly scheduled etailer price.

    I admit I do etail. Since it cost me almost $30.00 to visit the nearest hobby shop and shipping proves to be cheaper. I etail a lot.

    Hey that's enough out of me. I must find something to do on the layout...ahh...that is when the shed cools down.
     
  7. YoHo

    YoHo TrainBoard Supporter

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    That list of magazines seems really really truncated. Especially the gaming mags, comics mags and fishkeeping mags. I also see a lot of them fold and turn to e-zines as well.

    It's a brave new world. Still, I get a little thrill when I stop by one of my LHS and just browse.


    Also, my biggest pet peeve is Athearn BB kits being put behind glass COME ON PEOPLE.
    That's the nice thing about Reed's. Only engines are behind glass.

    Also they have a "junk/used section that's fun to browse.
     
  8. BoxcabE50

    BoxcabE50 HOn30 & N Scales Staff Member TrainBoard Supporter

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    Unfortunately, this is true. More losses come from within...

    :sad:

    Boxcab E50
     
  9. Rossford Yard

    Rossford Yard TrainBoard Member

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    A local LHS has recently started a redesign of its floor space, mostly to combat increasing theft. It must be a problem.
     
  10. Rossford Yard

    Rossford Yard TrainBoard Member

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    My new MR came last night, and it lists about 275 US hobby shops in the back. Again, I can think of many that aren't listed, so perhaps there are about 500 US Train only shops, plus the HobbyTowns, etc., which might bring train shops to a 1000, not 5000. That improves the average per store sale to about $400K annually, which comes a little closer to being a viable business.
     
  11. Pete Nolan

    Pete Nolan March 17, 2024 TrainBoard Supporter In Memoriam

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    As the former owner of a small business, $400K usually leaves the owners with about $36K of profit, without a salary. Yes, it was my wife's floral shop/greenhouse, but markups and staffing are about the same. We made most of our profit by renting large plants for exhibitors at local trade shows. Hard, back-breaking work transporting those plants around at all hours of the night, during set-up times.

    That industry has totally disintergrated with the introduction of floral displays in groceries, Sam's, and virtually everywhere. It's just the way industries move. Cheap flowers from South America and the US, year-round supply, major chains taking over the distribution--bye-bye local flower shop.

    We foresaw this happening and got out in 2000.
     
  12. BoxcabE50

    BoxcabE50 HOn30 & N Scales Staff Member TrainBoard Supporter

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    We have two ways to buy trains in our town. One is heavily crafts, and R/C. With a few plastic models, and trains in a back corner. Their train business does poorly. As it is just a small assortment of lower grade, warehouse line manufacturers. They'll order anything you want. But you wait at least two weeks. I can get it faster, many other e-places.

    The other shop has bicycles and skate boards. With a decent little train section. And a full time, knowledgeable, friendly model RRer. Guess which shop draws the region's customers?

    Boxcab E50
     
  13. Tony Burzio

    Tony Burzio TrainBoard Supporter

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    The question is, when will the manufacturers drop the pretense of supporting local shops? Seems that volume is the way to go, but they insist on a business model that creates high prices to novices, and therefore low volumes. The high point of modelers was when cars were a coupla bucks and were made of paper. China fixed the price thing, although injected plastic is loads better than paper...

    Imagine a virtual hobby shop, where the manufacturers create a very precise 3D model you can "look" at at web sites. Twirl it around, see if you like the detail. Order a complete railroad the same way you order pizza from Poppa Johns. Purchasing adviser won't let you forget the rail joiners or the feeder wires, much as Pizza Hut asks what kind of crust you want. :teeth: Need a book? Try these...

    Sure, our model train web sites are nice, but they are in no way the best of what I've seen is possible.
     
  14. BoxcabE50

    BoxcabE50 HOn30 & N Scales Staff Member TrainBoard Supporter

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    Where we are today, it appears to me this has actually been an ongoing process.

    :sad:

    Boxcab E50
     
  15. Rossford Yard

    Rossford Yard TrainBoard Member

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    Tony,

    Great question. If MRR continues to decline, it will have to happen, IMHO, but right now, they protect the supply chain more than the customers or even themselves.

    IF loco runs are down to a few thousand each, and we assume most of us by two or three, I wonder why Atlas, Kato, etc. with computer systems available now, couldn't almost just as easily ship directly to 2000 customers than 20 distributors?

    And Walthers, which accepts customer orders "if no LHS is available" and does structure runs of as little as 300 could easily set up a retail shipping dept.

    The benefits to Walthers would be huge - no 15% cut to distributor and 40% cut to dealer would enhance profits, and/or perhaps allow the retail price to stay stable, but there, I guess I am just dreaming!
     
  16. Tony Burzio

    Tony Burzio TrainBoard Supporter

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    Once this happens, enticing new users would be a major cost. It's not like the local shops are doing a good job, in fact they hoover at it. Except for a few commercials at 2AM, I've never seen a TV ad for model trains.
     
  17. skipgear

    skipgear TrainBoard Member

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    The manufactures are protecting the LHS and supply chain because they have realized that without the LHS, how is thier product going to be seen by the general public?

    How does the average non-train following public find out about Model Railroading? Not through the internet. They walk into a shop, see a display, a flier for a train show, swap meet, etc. Those of you whining about MR declining will put the nail in the coffin by having manufactures going internet direct. Savy die hard railroad buyers who are buying loco's and rolling stock monthly or weekly may be benifited by the online sales model but the casual hobbyist will be lost. As much as the die hards don't like to hear it, they do not make up the majority of the market.

    I really don't think the market is as bad as everybody makes it out too be. The smaller production runs of equipment doesn't translate to overall lower capacity. They are producing smaller runs of more variety than before. I would bet that when you add it all up, the same amount of equipment is being made it is just fragmented into more road specific and detailed units. It's no longer the day of the one size fits all F unit in the generic 5 same roads produced year after year. This choice unfortunately means that people are getting more specific in their choices and the manufacures and shops have to be more carefull in what they decide to run.

    As I stated earlier, our shops MR business has greatly increased and there is more and more interest showing each week. I don't think MR is declining, I just think it is harder to cater to the varied and specific interests of the new model railroader. Some shops are up to the task, some are not.
     
  18. Rossford Yard

    Rossford Yard TrainBoard Member

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    Tony,

    Good points about more proto specific runs. According to the LHS owner I talked about, total MR sales dipped in the 2002 recession, but have gone back up to previous levels and stayed steady, but not increased. Perhaps with more discounting going on, there is more product being sold, at less total profit in that scenario.

    As to interest, I hope you are right, and I also see some more youngsters looking around shops and train shows. Or perhaps, expecting none, I am always surprised when I see one.

    Slightly OT, but in the new Trains, there is a call for any railfans under 30 to submit a piece on just how they became railfans. To prove that our belief that youngsters aren't as likely to be interested in trains, they showed a 30 year old reprint of the same question in the same magazine. Nothing new, then, we are all worried about where the next generation comes from, and maybe its just a natural sort of participation rate that has remained about constant, despite WGH, etc.
     
  19. r_i_straw

    r_i_straw Mostly N Scale Staff Member

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    I am trying my best to get the younger set interested in model railroading. Next week I am holding a day camp at the local railroad museum where the kids build T Track modules, decorated them and then run trains. So far signed up are some repeat campers from the last two years and a bunch more new faces. This is always fun.
    [​IMG]
     
  20. BarstowRick

    BarstowRick TrainBoard Supporter

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    I honestly believe there is a very important place for the community LHS. Within the LHS environment you and I can nurture those future model railroaders. I used to teach model railroading to a number of boy and girl scout types. The local LHS worked with me. Today, there are two that stayed with the hobby. Two out of eight in one class and I think three non active ones out of another class. Not bad odds.

    Look in the faces of R.I.Straw's post here. If you can't see the interest in those bright shiny eyes...well...that's all I see.

    Hats off to those who take the time to nurture youngsters introducing them to the most fascinating hobby. You're work is to be respected Mr. R.I. Straw.
     
    Last edited by a moderator: Jul 2, 2007

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