How to make money as an LHS owner

[TinGoat]

Gee... I get to save myself a lot of typing.

I'll just cut and paste my comments from an e-mail I sent to someone else on this topic:

I hate the Mantra "Support your local Hobby Shop."

There needs to be a shift in the whole Model Railway Culture and the business model needs to adapt instead of being artificially propped up [or dare
I say bailed out].

"Support your local Hobby Shop." sounds like "Save the Whales" or "Give generously to the Widows and Orphans Fund". Pity Purchases are like charity. There was a morbid element to the conversation, like hearing the obituaries.

Yes, Hobby Shops give value added retail services.

However...

One of the main things that is killing the Hobby Shop is overhead. Model Railroaders are spoiled by choice and it is impossible to stock the whole variety.

The business model is changing. Bricks and Mortar shops are being replaced by Basement operations and Internet sales.

I remember talking to the guys at Keith's Hobby Shop before they moved. They gave up on stocking any Model Railway specific merchandise. They said that they couldn't commit that amount of capital into having enough variety to get the ROI needed. They didn't want to deal with "I like that model, but its in the wrong Livery or the wrong road number or the wrong.... etc...".

And then there's the manufacturers who will not sell through department stores. They think that they are protecting the hobby shops, but I think that the policy is having the opposite effect. As a kid, I couldn't get to a hobby shop easily, but a department store was within walking distance. They didn't have much stuff, but it was enough for me to whet my appetite and go looking for more.

The Big Box Department Stores all sell miniature village stuff for christmas and for the garden. They should be selling On30 and g-scale trainsets to go with them. The Big Box Department Stores should be selling better model trains than the battery operated plastic junk that they have.

There are Vendors and Hobby Shops that do most of their sales on-line and get their exposure at the shows.

Two suggestions:

Change to a Kiosk operation in a high-rent mall location. Lots of exposure, but less overhead in a small footprint. Keep a few high ticket items on display to draw in the crowds, but mainly stock the generic stuff, like flex-track, paints and scenic material. The type of stuff that the serious modellers will want on a moments notice. Otherwise, operate as a catalogue store. Have people order through you to the Manufacturers and Distributors.

Keep the rest of your stock in your car or basement and remember to rotate stock.

The other idea is to set up shop inside the local club-house. Mostly the same idea as the Kiosk but there'd be a symbiont relationship between the Vendor and the Landlord. I'm not suggesting that a new hobby shop do this. I'm suggesting that a struggling hobby shop does this rather than going out of business.

In either case, set up a co-op where members pay a membership fee in exchange for closer to wholesale pricing and other perks like coupler upgrades, DCC installations and run-in, etc...

Not that I've ever given this subject any thought...

This brings me around to the related topic of "Promoting the Hobby".

I suppose that it makes me a hypocrite because of my deep involvement in train shows, but I say "Phooey" to the concept of "Promoting the Hobby."

Vendors and Manufacturers can do the promoting.

If the big Manufacturers and distributors are seriously interested in reaching out and advertising to the world in order to promote and expand the number of people involved in the hobby, they've got the resources.

I am bothered by the suggestion that we as model railroaders are somehow responsible for promoting the hobby to the general populace while the Manufacturers and Distributors get a free ride.

However, they are not advertising in National News Papers and magazines. Anything that goes on television is done as general interest fluff segments on early morning news broadcasts.

They spend their dollars on advertising to the already converted through specific publications aimed directly at their already captive market.

It is left to individual model railroaders to try and pull their family, friends, co-workers and acquaintances into the hobby.

The Corporations are getting us to do the advertising and promotions for free; or else forcing individuals to seek out information and materials on their own.

If you are already interested and involved in model railroading, I'm happy to talk to you and share what I have to offer, but I'm not seeking out any converts.

I like to watch some sports too, but I'm not paying to advertise for the team or league by buying their merchandise and wearing it. I'm not a billboard: They'd have to pay me to become one.

I've tried "Promoting" in the past and I don't like it anymore.

Train shows are for getting together and sharing with like minded folks and if neophytes are interested in joining in, I'll answer questions, but I'm not going to try and sell them the hobby anymore.