Help with hobby shop pointers

Discussion in 'The Caboose' started by CSXect, Apr 18, 2008.

  1. CSXect

    CSXect Member

    :wave: Hi there anyone out there own or work at a hobby shop?

    Could use some pointers on that aspect of the hobby business:confused: I have been doing some research on venders and retail space rent It it looks more and more like just a crazy dream to have a small Local hobby shop of my own :nope: I just had a few basic questions to ask and I figured with the variaty of scales here on this forum I would get a less biased view then on a forum geared to just one scale of modelers.

    1.How much is too much for rent? (here in my area it seems to go from $7.00 to $14.00 per square foot per year)

    2.If you are just starting out how do you get inventory at the best price? (It seems as the major players in the train business want you to have been in business for a year before they will deal with you.)

    3.Should you offer mail order from the get go or add it after being established for a while?

    4.What items do you look for in a good shop from a customers view?

    5.Would it be a good idea to sublet part of a retail space to a local club or clubs for a working layout(s) to draw people into the store and hobby?
  2. Chaparral

    Chaparral Member

    I wonder why MRR manufacturers don't have setups like the Amway model, because they are missing a huge market. It may even help grow the hobby.

    Maybe franchising too.

    Registered MRR clubs could be their own LHS ordering directly from the manufactuers creating a distribution organization equivalent to thousands of LHSs. The sales force would then be made up of hundreds of experts in every aspect of the hobby and the club would profit, albeit on thin margins.
  3. CSXect

    CSXect Member

    That is an interesting Idea :cool:

    Found a free to download book that has a sample business plan and a lot of general info on starting and expanding a business:mrgreen: but still need hobby shop specific details.

    here are a few more questions

    1. How many Ho scalers like the Atheran shake the box kits??? when I was younger I liked to build Atheran and roundhouse kits.

    2.What sort of following do Rapido and Kato have as far as starter sets and ready to run items?
  4. eightyeightfan1

    eightyeightfan1 Now I'm AMP'd

    Sounds like a good idea.
    The LHS I go to, the guy runs it out of his basement. Saves the expense of renting, plus he gets the tax credit for running a business out of his house.

    As far as your questions.
    I like the Blue Box kits myself. But the reason a lot of manufacturers going to Ready To Run more is that the majority of modellers today want to run the peice as soon as they get it home. Plus the manufacturer can ask a higher price. Even the newer BB's are moving more away from the "Shake the Box..Put together in ten minutes", to more for the advanced modeller(adding grabs and stirrups, brake detailing much more finer and detailed).

    As far as "Train sets"? They usually sell more during the holidays. Any LHS I've been to only have one or two on the shelf(as they are pricey), and usually the cheaper of the sets. Just enough to get someone started in the hobby.
  5. CSXect

    CSXect Member

    I would like to thank everyone who replys to this thread as the input is very helpful. :mrgreen:
  6. CSXect

    CSXect Member

    I have lots of reading up to do on a business plan still:shock: any helpful tips from business owners of any type would be welcome:wave:
  7. nkp174

    nkp174 Active Member

    I typically go to two LHSes, and occasionally a couple more. My primary shop is the train section of a local toy store. They have more sets than I've ever seen before, and they move them...both the cheapy ones and the Spectrum N&W J with passenger cars types. It seems that the Thomas HO/OO sets move pretty well. My 2nd choice shop was more of a Large, O, and S scale shop...with a collection of HO sets and N scale diesels. I shun full list or near list shops. I also run all my walthers orders through my LHS since they give nice discounts on mail order items...I picked up $120 worth of special ordered NWSL tools for $80 last week...they wouldn't have gotten a dime from me if they didn't discount them.

    If I was you, I'd look into getting in with Walthers and Horizon. I'd try to start off with Athearn, Bachmann, Atlas, Woodland Scenics, Walthers, Floquil, and MRC. I'd next try to add Digitraxx and Soundtraxx.

    Also, I find that when my LHS gives me $1 gift certificates for every $20 I spend, I find myself always dropping multiples of $20 when I'm in their further helps promote customer loyalty despite having probably lost $50 in gift certificates :-(
  8. CSXect

    CSXect Member

    nkp174, Good marketing ideas. Here in Columbus most hobby shops are in the north end, If I should ever get this off the ground I hope to serve an area from Govecity to the west, the growing south end(if I was any farther south I would be out of the citysign1) and Groveport to the east.

    I wanted to be mostly trains but thought about having a hedge bet by having stuff like modern erector sets, linconlogs, Lego trains and lego mindstorms sets, maybe some basic robot kits, a small amount of rc vehicals and slot cars and diecast cars of various scales.

    Atlas was my first choice as I could cover N,HO and O lines of trains:mrgreen:
    Thanks for the input some things to keep in mind for sure:wave:
  9. CSXect

    CSXect Member

    Anyone who would like to put thier input into this discusion but not on the forum feel free to use the PM(personal mail)option:mrgreen:
  10. scubadude

    scubadude Member

    If your biz plan includes a full-service hobby shop, not just trains, you might look into buying a franchise store....namely Hobbytown around here, there may be others....Franchising has a lot of pros and cons, I would spend a lot of time researching if that is a viable option. I have owned a dive shop for many years, it would take me days to offer all the advice by my experiences, but the best piece of pure business advice would be to understand THOROUGHLY the art of inventory management....:thumb:
  11. CSXect

    CSXect Member

    Thanks for the advice Scubbadude, I worked at a place where they were big on jit(just in time) inventory system and they also had atleast two suppliers for each item and some times three when possible:thumb: But they were manufacturing where as I would be retail:confused:

    Feel free to PM me with any advice or experience you are willing to share:cool:

    I thought about a Hobbyland or Hobbytown but They would pretty much dictate what to carry in the store.
  12. scubadude

    scubadude Member

  13. CSXect

    CSXect Member

    :thumb: Thanks for the link to hobbytown:thumb:
  14. CSXect

    CSXect Member

  15. cntown

    cntown Member

    Most of the LHS that I go to often have the location close to the action,I mean they are sitting right beside the CN main line.This action goes hand in hand with modelrailroading,so look for a place near the tracks.The one store carries all scales(N,HO,LIONEL,S,G) and is heavy into Thomas (wood,metal) with a large play area for Thomas,plus train-related clothing.The other one is strictly HO and N Scales with train-related books,video's,and magazines.There have been a number of LHS in the area that have gone out of business due to a number of reason's ,some said that the internet has taken away the business as people can get a cheaper price online than in the store so they can't compete at a loss to keep customers,so maybe leasing space in another store might help you build your business up first before going it alone.Since I got into modelrailroading I have wanted to do the same thing but I don't have the money to get going.Good luck
  16. CSXect

    CSXect Member

    Thanks everyone who has replyed and givin advice and ideas it has all been helpful:thumb:
  17. Russ Bellinis

    Russ Bellinis Active Member

    I think another couple of things to think seriously about are:

    #1 is there a competing hobby shop nearby? A corrollary question is what is the population of the area where you want to have your shop? A larger population might be able to support more than one hobby shop if they are not too close together.

    #2 What is the train interest in your area as regards to scale or gauge? A case in point is my local hobby shop. Most of his train sales are in ho or n scale, but the owner loves Lionel. Lionel is not very popular in Southern California because it isn't as practical for a garden railroad as large scale, and we don't generally have basements. Also, Lionel has pretty much priced themselves out of the children's first train set market, except for a few sets. In addition, there is one modular railroad club in the area running Lionel called the Tin Plate Trackers, and one of their members owns a train store in Anaheim just 5 miles or so away. The owner of my local shop bought a bunch of Lionel locomotives that are very high $$$ models and they have been in the same glass case for 6 years or longer! The guys working in the train dept. look at all of that Lionel inventory that is having birthdays, and think of extra ho or n scale inventory that they could stock and move if the resources were not tied up in Lionel stuff that isn't selling. Recently, he has discounted the Lionel locomotives by 25%-35% to get rid of it and is see more and more space becoming available in that case where the Lionel stuff resided. I'm presuming that once the Lionel stuff has been cleaned out, he will probably more ho or n scale stuff. You need to know your market in your area. You want to stock what people want to buy, and avoid expensive items that will sit on the shelf for years.

    Another thing that my local hobby shop used to do, that may not be practical or possible since Horizon bought Athearn & MDC, is to buy unpopular items from distributors at steep discounts, and be able to sell those items cheap. Back when Athearn was independent, distributors had to buy some of each road name when they ordered Athearn locomotives. They could never get enough Santa Fe, Southern Pacific, or Union Pacific, New York Central and Pennsy sell ok here, but most other East Coast road names won't sell here in So Cal. I often wondered if there were East Coast distributors stuck with Santa Fe, U.P. and S.P. equipment, but who couldn't get enough of the Eastern road names? The owner bought cases of Athearn gp40-2 powered locomotives painted for Conrail at such a discount that he was selling them for $10.00 each and making a profit. He still had more left over, so for a while he was offering a powered Conrail gp40-2 for $1.00 with the purchase of any other locomotive at the regular price! I have an early Atlas Rs-1 that I got from them for $39.95 because it was decorated for the Southern Railroad. If it had been painted in Santa Fe colors the price at that time was $89.95 after his normal discount.

    This brings to mind another point. You probably won't be able to compete with the monster national mail order discounters like Train World in price; but if you do a business plan where you think you will sell everything at list price, you will probably not succeed. You are going to be competing against mail order and internet hobby shops who will discount. Give you local customers discounts on popular items. I think the typical wholesale price is @ 45% less than the list price. If you can sell it with a 20%-30% mark up, you are giving your customers a break and the advantage of being able to look the model over and take it home the same day. I would also sell mail order via the internet. Ads in the modeling mags are expensive and I'm not sure what return you get. I think a web site and perhaps supporting places like this forum are probably a better "bang for the buck" advertising choice.

    One other thing my local hobby shop offers is a 10% discount to members of local model railroad clubs or the NMRA. This discount is not offered on items that are already discounted like locomotives and rolling stock, but is offered on things that are normally sold at list price like detail parts and Kaddee couplers.

    Also put in a test track. Talking with the guys at my local hobby shop, they have told me that Athearn is the most reliable locomotive out of the box. They very seldom have problems with them, perhaps a 10% failure rate. When they get a new shipment of locomotives in stock, the test run every locomotive and send back any that don't work correctly. Aproximately 25% of the locomotives they get from Kato, Atlas, P2k, Bachmann, or BLI gets sent back for not working.

    This post has gotten a lot longer than I planned. I hope it is helpful.
  18. CSXect

    CSXect Member

    :thumb: very helpfull and thanks for the input:cool:

    I am an S gauger with a healty O gauge habit(collection) but was thinking of Atlas as a main product line as I could cover N, HO, and O scales also thought about KATO and Rapido lines as well.

    A question for HO modelers what about MTH HO locos are they popular or are they just a flash in the pan?

    Thanks everyone for the help/advice:cool:
  19. Russ Bellinis

    Russ Bellinis Active Member

    I wasn't aware MTH made anything in ho scale. I just know of them as a competitor to Lionel in three rail O.
    I do think you need a bigger product line. You will need to stock structures, and you will want to stock all of the popular locomotive manufacturers, especially those that offer the more entry level models. The only manufacturer that my local hobby shop refuses to do business with is IHC. They bought a bunch of IHC 2-6-0 Moguls when that model first came out. About 6 months later IHC started selling the Moguls directly to the public for $5.00 less than they had sold them to the hobby shops, and they refused to help out the hobby shops with any sort of rebate. In effect they sold to the hobby shops at wholesale, then after they had a bunch of hobby shop sales, they gave it to the hobby shop's customers for less
  20. CSXect

    CSXect Member

    They made one a few years ago and if I remember it may have been a triplex loco with a DCS system that is compatible with DCC now they have a 4-8-4 GS with matching cars to come soon.

    MTH Electric Trains look under catolog latest and it will be under HO

    Most O gaugers thought MTH going into HO as a blunder on thier part but if it has as much bang for the buck that the other MTH stuff has it might be worth looking into.

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