Help with hobby shop pointers

[CSXect]

Thanks everyone who has replyed and givin advice and ideas it has all been helpful

[Russ Bellinis]

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.

[CSXect]

Originally Posted by Russ Bellinis

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

very helpfull and thanks for the input

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

[Russ Bellinis]

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

[CSXect]

Originally Posted by Russ Bellinis

I wasn't aware MTH made anything in ho scale. I just know of them as a competitor to Lionel in three rail O.

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.

[MadHatter]

A puny tip: Keep your promises to your customers and always keep them informed!

[CSXect]

Madhatter good sound advice for any form of business

Back when I was a kid there was AHM, Life-like,modelpower,Tyco and mantua were the major players in the HO world and atlas, round house and atheran were also popular as well.

Brass locomotives any and all scales are they slow movers or a good investment???

What about propriatery special runs of rolling stock exclusive to a hobby shop is this a good marketing move or a waste of capital??

[MadHatter]

Well, Model Power now owns Mantua.

Atlas trains are, in fact, Kato as well.

Many of the companies fall under the canopy of W. A. Walthers these days.

[Russ Bellinis]

I would not go with brass. Most of the plastic models run better than brass, and the prices are outrageous for brass. I think you are better off to use the money that you would tie up in brass to stock more Athearn, Atlas, Kato, BLI, etc quality plastic locomotives, and cars in both kit and r-t-r. I was at Arnie's Train Shop, an advertiser at the bottom of the page here on the Gauge, and they make a point of moving the product in and out of the store as soon as possible. They have a "deal table" in the middle of the store. They will buy a bunch of locomotives when any body comes out with a new model. They do not allow them to sit around the shop. They discount from the "get go" to move them out. When they get down to having only 2 or 3 of that model left, they put them out on the "deal table" really cheap. He has made his profit on the rest of the locomotives and the last 2 or 3 he aims to break even on. With a train shop, you can afford to have detail parts sit on racks for a while because they represent a relatively small part of your inventory dollar. High dollar items like locomotives need to move out the door and bring the money back in to buy more inventory. I think the rule of thumb in business is that you want to "turn" your entire inventory at least 3-4 times per year.

[CSXect]

Hello all very good ideas and tips as always thanks for the help.

[CSXect]

Russ thanks for all the input. You have raised some good points to think about.

There is a shop I know of who sells thier MTH stuff for list price yet they still get repeat customers I have read equal amounts of complaints about MTH and Lionel trains and it may be luck of the draw but one lionel train I got has a flaw it is a american flyer bawldin desiel whos side frame vibrate loose after a few laps around the track easy fix but should not have made it past QC, had sevaral minor problems with original K-Line products(they got better quality before take over by lionel) And completely satisfied with my one and only MTH train again may not have enough of any one manufacurer to see a pattern.

The deal table sounds like a good idea also test runing and returning defctive product sounds like fun.

[col. kurtz]

MY FATHER CO RAN A MODEL BUSINESS HERE IN THE UK QUITE AFEW YEARS AGO HE HAD A SIMPLE IDEA TRY TO CATER TO VARIED HOBBISTS INTERESTS BUT STILL STOCK AND SELL THE STANDARD STUFF.HE HAD A GOOD RAPORE WITH SEVERAL REPS FROM HOBBY BUSINESSES LIKE HUMBROL AND AMARANG.HE ONLY CLOSED DOWN THE BUSINESS WITH HIS PARNTER AS THE LOCATION IT WAS IN WAS BEING COSED DOWN AND RENTAL PRICES IN THE LOCAL AREA WERE TOO HIGH. HE USED TO GIVE LOCAL CLUBS DISCOUNT WITH PURCHASES OVER A SET AMOUNT AND ALSO ORGANISED SEVERAL EVENTS IN THE STORE WITH THE CLUBS WHICH DID BRING IN ALOT OF BUSINESS.HOPE THIS HELPS

[CSXect]

Thanks for the long distance suggestion from across the pond My favorite shop did the very samething then closed due to too high rent Last I heard the owner was selling his inventory at shows and thru another shop

It all sounds like it is a doable venture but the risk at the moment is making me do the research for a more approrite time in the future.

Keep sending the ideas they are all very helpfull and I am sure that there are others out there wondering about the same thing as well.

Again thanks for the effort and good convercation everyone

[CSXect]

Wow this thread has been viewed close to 800 times so far still reading up on some things form Groveport chamber of commerce and from other websites of hobby assocations.

I really do find all the ideas and insights very helpfull thanks again everyone

[lester perry]

My wife tried to get me to buy out a small local train shop when the owner died. I said no because I like the hobby to much. The owner started it when he retired and told me several times he used to love the hobby but grew to dislike if not hate it after he opened his shop.He also used a room in his house so he had no overhead. Another modeler did buy him out. Now three years later with a shop in his house he told me he needs to show a profit or his uncle, you know, Sam, will cause him some headaches. He said there is no profit to show. If you do make the plunge I suggest staying away from cheap sets as they are junk and will chase potential repeat customers away from the hobby. You may consider making you own kit with good solid inexpensive products such as Athearn blue box. If it is still available. Also if you don't know the hobby Learn it(I don't mean reading Model Railroader) so you can give answers besides I don't know. I wish you the best of luck.
Les