Great news on New LHS

[MK]

I think that in today's world (with the ever-increasing number of online-only vendors), that is a very self-limiting decision on the part of the manufacturers.  I know Athearn was one such company, but I don't know if there are others. Plus, does Athearn still even enforce that rule?

EDIT: I see Brian snuck in.

I'm going to take a stab at this and say yes.  Athearn is part of the Horizon  Hobby kingdom.  I know Horizon very well due to my RC hobby.  They will not sell to you as a dealer unless you have a retail store front.

But that doesn't stop you from renting a huge warehouse and have a vestibule for your customers to come in and buy stuff.  No showroom but rather a sales room.  Customers bring printouts of items from your webs that they want to buy.   

[peteski]

Isn’t it Horizon Hobbies that owns Athearn?  I was thinking it was their policy.  I seem to remember online shops that used to sell Athearn but got cut off.

I think you are correct, but I don't think Horizon owns any other model RR brands. As I said, in today's online world makes not sense to just sell to the very few B&M shops remaining out there.

[MK]

Horizon sells online to consumers.  They don't allow their dealers to discount so they are essentially competing against their own dealers.

[pmpexpress]

Horizon sells online to consumers.  They don't allow their dealers to discount so they are essentially competing against their own dealers.

Horizon also competes with its dealers on eBay, where it has a fairly large presence, with 20,535 items shown in its venue store.

Although MB Klein no longer has a retail storefront, it is still able to sell Athearn products.

Unless something has changed in recent years, ScaleTrains and Walthers also require a brick-and-mortar store location.

[MetroRedLine]

Okay - seriously folks...

You CAN make it running a Hobby Shop these days. At least, in theory.

1. Do NOT ignore the internet. You have to be visible on the internet but, you should also take advantage of it as a means to reach more cusstomers.
2. Decide what range of products to carry. Be careful about trying to be JUST a Model Train Shop. It's good to have some diversity.
3. Because of #1 - keep in mind you need to price competitively to get sales. Look into purchasing in 'unbroken case lots' to get some more margin.
4. LOCATION is critical. You need to be sure you aren't too close to any serious competition and that you can afford the rent/NNN/expenses in that spot.

That last one is probably the biggest factor to consider before anything else. If you can't afford the rent, you wont make it. If it's in a lousy spot (dirty, nasty etc...) you may not get many customer. If you want to focus on the internet and forget about a physical store, you can rent a fairly cheap industrial space - or look for a mixed use spot at a good price.

When deciding what to carry, keep in mind what other stores have and what the actual inventory costs are likely to be. Model Trains and Radio Control are both expensive to stock as compared to Plastic Kits. The margin for most regular items (outside of paints, brushes and tools etc...) is typically about 40%. That means a gross profit of ~$4 on a $10 item.

Yes, I've looked into this quite a bit over the years. Even with the risks, if I had the money, I'd do it in a heartbeat.

I also agree with this. You CAN be successful running a LHS...BUT you CAN NOT play by the old rules, or else you're doomed to failure.

The Internet is a must. Not just for marketing your store, but for being an extension of your store. As a brick and mortar, your customer base is the people within an hour or two drive radius from your store. But the Internet extends your customer base nationally, or even internationally. M.B. Klein is certainly a shining example of that, so much that pretty much all their sales come from online orders as of last year (I did have the opportunity to visit their physical store during a visit to Baltimore in January 2015 - it was quite impressive!).

Finding an alternate associated revenue stream helps. I have a LHS around 20 miles from me (Railmaster Hobbies in Bellflower, CA - outside of Los Angeles), they opened in 2010 and in fact since them they've moved to an even larger location. In their relatively short history, they've become one of the more popular model train stores in the Southern California area, especially among the more serious modeler crowd. How?

- Their alternate associated revenue stream is DCC speakers. They've sold DCC speakers under the Railmaster name for years before opening their brick and mortar. It's not just direct consumer sales, but B2B sales, as the Railmaster speaker brand is sold in other hobby shops.

- They've created a sense of community among modelers in the area - On the last Saturday of each month, they host an in-store event called "Model Railroad Fellowship" inviting their customers to drop by, hang out and chat about their layouts/projects, share pics/video and meet fellow modelers (with free morning donuts and afternoon pizza). They also do special sales during those events.

- Aside from new stock, they regularly buy collections and sell used items as well. I've found some real rare/long-discontinued items there.

- They occasionally host in-store modeling-related events (Clinics/How-Tos, Lectures, Manufacturer reps, etc).

- They've maintained a presence at local train shows and modeler's events, also participating in sponsoring some of those events.

- They're active in social media; they update often to inform customers about sales and in-store events.

- They are also active in the larger community; they are actively part of the local Chamber of Commerce, and the husband-and-wife store owners are both military veterans who are active in veteran-related causes.

Those are just an example of how they run their business. Moral to the story, if you just sell the usual Walthers Catalog items and run your hobby shop like it was 1978, you're not going to make it in today's world.

[chuck geiger]

The new motif verses the old that has been mentioned is the way to go. They guy under the magnifier glass being bothered by a customer is too old school. A lesson learned should be Caboose Hobbies. Inventory, social media/internet, nice surroundings and most important I learned in a month's work at Discount Model Trains (1992-93) in Addison/Dallas, Texas: Customers would come in and want model trains, these are the new customers, we would talk to them about the hobby. Bob Wilson did that to me when I was a customer there and I learned about ground throws, rail size, etc. So that's what we did  when they came into buy "trains sets". We showed them the store layout and talked about stages of the hobby. This increases the purchase and they hopefully will catch the bug.

Anyone know what became of Bob and Barbara Wilson? They sold the store to in 1994. (The month I worked there while they were traveling I got paid in product - Yes)!

[Mark5]

A new hobby shop should be welcomed. Although I buy online, I still need a place where I can walk in and look at stuff, maybe pickup a tool or a bottle of paint.

I agree with the comments above that this can still be done (and in fact is still being done). To me, it would almost seem to be folly to try to do a "new" internet only business in a field where there are already a lot of players.

Cheers,

Mark

[wazzou]

A new hobby shop should be welcomed. Although I buy online, I still need a place where I can walk in and look at stuff, maybe pickup a tool or a bottle of paint.
Cheers,

Mark

Nothing against you personally Mark, but...
This is the foremost complaint I hear from the brick and mortar Hobby Shop owner.
The people that are known to come in to look at merchandise, maybe buy a magazine or a bottle of paint but buy the larger ticket merchandise online.
I believe that is the number one cause in the decline of the local Hobby Shop.

[tehachapifan]

...They guy under the magnifier glass being bothered by a customer is too old school....

Hard to believe that was (is still?) even a thing, given the climate now. We had two stores like that in CA that I would sort of nervously go to, but their stock and selection was good. One in the south SF Bay Area and my first time there could be compared to the Soup Nazi episode from Seinfeld. My second and only other visit there was a little better, but there was still a weird vibe (maybe only in my mind from the first visit). The other store was about a 2 hour drive to Sac but I would go because the store itself was awesome, but you would definitely have to deal with some grouchiness at times (not talking about the Roseville store...they're great and I like going there still). With both these stores, word on the street was you needed to be part of the "in" group before you were treated as something other than a nuisance. Funny thing is, each time I had as much as a c note burning a hole in my pocket too. I was probably the last guy to start buying online because I loved going to shops in person, but these experiences are a big reason why I eventually moved to online shopping almost exclusively. That and not paying (often above) retail prices. There were/are, of course, great shops around here too, with friendly staff and good prices. FRT being one of them.

[Mark5]

Nothing against you personally Mark, but...
This is the foremost complaint I hear from the brick and mortar Hobby Shop owner.
The people that are known to come in to look at merchandise, maybe buy a magazine or a bottle of paint but buy the larger ticket merchandise online.
I believe that is the number one cause in the decline of the local Hobby Shop.

Understood.

Background: I worked for TK's joint for years.

I can't go to MBK anymore. They have a $50 minimum for local pickup and this just doesn't work for me if I want to buy one of the new MTL releases (or a bottle of paint). The alternative is to have it shipped from MBK, but $10 to ship it a few miles to me makes ordering from out of state cheaper even if MBK's price is a little lower. MBK has a considerable internet presence and currently can easily absorb the loss of business from local curmudgeons such as myself.

There are few local options now (Pro Custom Hobbies for supplies). There are a few stores in south Jersey that I am looking at since I get up there now and then.

Wherever I move to when I leave this area (in a year or so), I hope that there will be a decent shop within driving distance - if there is and they aren't run by Crankshaft McCranky they'll get plenty of business from me.

Obviously, as pointed out by others, there has to be a good mix of customer friendliness and knowledge to make it work, and of course a coherent internet presence. You've got to be able to find and serve that regional niche that can't be served by only looking at a web browser.

Mark

[wazzou]

...The other store was about a 2 hour drive to Sac but I would go because the store itself was awesome, but you would definitely have to deal with some grouchiness at times...

Was it the one on Marconi Blvd?

[tehachapifan]

Was it the one on Marconi Blvd?

Wasn't going to name names.

[wazzou]

Wasn't going to name names.

I grew up in that area of Sacramento so I frequented the shop.
Of course the fact that there was an awesome video arcade right next door didn't hurt either.

[Ed Kapuscinski]

Oh, something else about hobby shops: DON'T HAVE HOURS LIKE THIS!

Tuesday - Friday 10:00 AM to 5:00 PM
Saturday 10:00 AM to 4:00 PM
Sunday Closed

Sure, it's convenient for the shop owner, until they realize that the only time their 9-5 employed customers can be there are a few hours on Saturday.

MBK used to do this when the store was open and I thought it was insanity.

[tehachapifan]

Oh, something else about hobby shops: DON'T HAVE HOURS LIKE THIS!

Sure, it's convenient for the shop owner, until they realize that the only time their 9-5 employed customers can be there are a few hours on Saturday.

MBK used to do this when the store was open and I thought it was insanity.

Ah, yes....hobby-related businesses with banker's hours. Brilliant!