05-05-2010, 10:20 AM
I think the most successful hobby shop I've been to in the Los Angeles area uses a business model that is common for most businesses, but apparently lacking in much of the local hobby industry. That model is "turn your inventory 3-4 times per year." This shop puts a modest discount on all new inventory in the store when it is first received, except books, magazines, and detail parts, coffee mugs etc. Anything still on the shelf after 3-4 months is put on sale at a steep discount. They also have a "deal table" where they sell estate sale items for pennies on the dollar verses new prices. If an item is on the shelf for 5 or 6 months, it goes on the "deal table". Typically an Athearn Genesis, Kato, P2k, or Atlas locomotive that has been on the shelf too long will be sold on the deal table at 1/2 msrp sometimes less. The store is strictly a train store no other hobbies, but they always have full shelves. The owner and his employees are friendly, no one is pushy, but if you need help, they are ready to help.
You see the same sort of marketing strategy with the big internet/mail order stores that have had 2 and 3 page ads in the magazines for decades. When a new model locomotive first comes out, they will offer it at a discount calculated to be big enough to make you want to order from them instead of your local shop. 3-6 months later, that same model will be offered at "blow out prices."
Inventory left sitting on the shelf at high prices is eating up money that could be better used to get fresh inventory. As an example, when Intermountain first came out with F-7 kits, my local hobby shop bought two undecorated body only kits. They were priced at $50.00 each for a body kit with no running gear. 6 years later they were still on the shelf under the glass counter at $50.00 each. That was when I asked one of the guys behind the counter, "How much would the owner be willing to sell those kits for to get rid of them?" My friend behind the counter was of the opinion that the owner would sit on those kits forever if necessary before he would lower the price. I said go ahead and ask him anyway. When I got home from work the next day, I had a message on my phone saying that he would take $70.00 for both to get rid of them. I went down immediately to buy them. These kits were not "shake the box" type. They have enough details to model almost any prototype with extra details left over. I haven't built them yet, but am looking forward to it in the near future.
You see the same sort of marketing strategy with the big internet/mail order stores that have had 2 and 3 page ads in the magazines for decades. When a new model locomotive first comes out, they will offer it at a discount calculated to be big enough to make you want to order from them instead of your local shop. 3-6 months later, that same model will be offered at "blow out prices."
Inventory left sitting on the shelf at high prices is eating up money that could be better used to get fresh inventory. As an example, when Intermountain first came out with F-7 kits, my local hobby shop bought two undecorated body only kits. They were priced at $50.00 each for a body kit with no running gear. 6 years later they were still on the shelf under the glass counter at $50.00 each. That was when I asked one of the guys behind the counter, "How much would the owner be willing to sell those kits for to get rid of them?" My friend behind the counter was of the opinion that the owner would sit on those kits forever if necessary before he would lower the price. I said go ahead and ask him anyway. When I got home from work the next day, I had a message on my phone saying that he would take $70.00 for both to get rid of them. I went down immediately to buy them. These kits were not "shake the box" type. They have enough details to model almost any prototype with extra details left over. I haven't built them yet, but am looking forward to it in the near future.