Recently I was in one of the regional big box stores (Meijer, which is based here in Michigan). The one-stop kind that sells groceries, clothes, automotive, electronics, etc. The front of the store, outside the cash registers, has various services such as a bank office, eyeglasses, photo, etc. There was a large blocked off space that was available for another “store in the store”. My immediate thought is “What a great spot for a hobby shop”.
Meijer sells toys, but nothing that would compete with a hobby shop. The traffic would be great - Moms with kids and fathers who would rather not shop for their children’s underwear, and old geezers who don’t want to follow their wives around. (Or maybe some wives who don’t want to follow their husbands around?).
I’m no entrepene… entrepo… businessman, so it’s not something for me. The cost charged by the big box store might be excessive also given the thin profit margins in our hobby. But it sure seems like a better spot than a store front on a stretch of road that would have no walk in (walk by?) traffic and requires a specific objective of visiting the store. There was the “Great American Train Store” in the big malls some years ago, but I am thinking more in the line of a traditional hobby shop with better supply and knowledgable staff.
I think there are a couple flaws in your logic. First, as you addressed, the cost is going to be more than you can afford.
Second, your target customer is not the clientle shopping at the big box stores.The main customers are women with families. If there is a guy there, he is with his family , or mother, or girlfriend and they are not going to spend time and money in a hobby shop. There are a large number of kids who might enjoy trains, but they are not going to be customers spending a lot of money.
Sounds like a good idea, but I bet the rent is a bit steep. I see similar stores at WalMart for eye exams, McDonlads and at tax time, people who will do your tax forms. These places probably have a higher profit margin than a hobby shop
Well, without knowing the rent, it’s hard to figure. Right now, though, retail is hurting along with most other businesses, and there is a glut of vacant commercial space. So, it might not be a bad deal.
I believe in the “If you build it, they will come” philosophy of stores. If you’ve got a good shop, with knowledgeable staff, good inventory and competitive prices, you will attract customers. The walk-in business would be great, but to sustain a shop of this nature, you need all the same things that any other LHS does.
I’d worry about the hours. The big-box store might require you to keep their hours, which is 12 to 16 hour days, 7 days a week. No one person can do that alone, so you’d need at least one and probably 2 others to help cover the time.
Something similar has been tried from time to time. Long’s Drug Store in Moreno Valley, CA comes to mind. I know of a J.C. Penney in Wisconsin that had a train / hobby department, and somewhat in the same vein, I have been in a few Ace Hardware stores that have rather extensive model railroad departments. I don’t know if any of these were / are leased departments or just an idea on the part of management to try something different. John Timm
I have heard that the concourse space rental in our local smallish mall, which is owned by one of the major corporations, is in the neighborhood of $1,200 per square foot per month. Do you think a hobby shop could make enough profit to afford that type of rent?
I think you mght have the decimal point in the wrong place. At that price it would be $1,200,000.00 for a 1000 Square foot (20 x 50) spot. $12.00 would put it at $12,000/mo. Maybe I am wrong though.
I know some folks in the hobby shop business and they are saying the only way to make a living and survive is to do mail order in addition to having a shop, plus diversify into some of the other hobby lines that are more profitable than trains. This means having an online presense, discounting, and providing a very good customer service. This also means having warehouse space that may be more than just a backroom. It is very tough out there. I like to walk into the local hobby shop and get supplies or call them and order something so I don’t have to pay $8 in shipping on line but the old business model is changing. I live in the second largest city in Indiana and we only have two good hobby shops now and they are owned by the same family. They cater more to other hobbies besides trains but they are coming around. A train only shop without mailorder has some viability in a heavly populated metropolitan area but it’s still tough.
Read an article recently which focused on new business.
Person erected an impressive website, which advertised everything one could possibly want in his area of interest, (non-hobby, btw).
All merchandise is shipped to customer from various warehouses around the country. There is no inventory to be concerned with. Billing is by PayPal and other equivalent electronic methods. E-mail list sends out occasional “special” offers. No paper catalog, website only.
Returns, if needed, go directly to the manufacturer for adjustment.
The “business” is open 24/7, 365. 800 phone w/ answering machine.
Yes, but unfortunately, you’ve got to attract enought PAYING (not just browsing) customers to cover your fixed costs at the margins you can make. True, all else being equal, it’s better to have walk-ins on top of purpose stops, but the average walk-in at the big box store isn’t going to buy. There’s a reason many (most?) LHS’s are of the “Toy and Hobby” variety.
We have the phenomenon at our local mall. It’s a good sized mall, with 1000+ customers on the average day. Down the middle of the mall are all these booths, most of which sell jewelrry, t-shirts, and cell phones (which is especially funny, because the mall has a Verizon and a Cingular store among the “permanent” shops). I never see anyone patronizing these booths, and most of them don’t last 6 months. This is the hard part of the business plan. Sure, 1000 people may walk past your kiosk, but how many of them are going to stop and look? Of those, how many are really serious about buying? Sure, the quality of the merchandise (cheesy, for the most part) does enter into it, but you really need to be able to position yourself where walk-in customers are going to impulse buy.
Had one here at Lake Square Mall. Cashier was a young girl in late teens. Didn’t know a coupler from a wheel set. Took your charge card/cash,made the receipt. bagged it, done. Store lasted 3 or 4 months.
Dad worked there for a time, the reason they failed was they grew too fast without testing the waters. Had they taken more time, they’d likely still be here. But I’ll agree they weren’t neccesarily right for an LHS. They were neat train stores though.
Also, the costs to go into a Mall ar likely not the same as one to go into a chain store. My concern, is the chain store spaces may not be large enough for an LHS.
Now, if yu want into shell of a Big Box, WHew There’s a store.
Commercial space is rented by the square foot and quoted for a year usually with a cost of living clause and a five year lease. In 2008 my business rented 1800 sq ft and the monthly rent was 2100 a month plus utilities.That is an annual rate of 14 sq ft.
The landlord wanted to raise it to 20 a sq foot. I sold the name, and assets and closed the doors Nov of 2008. The space is still empty a year later.
Funny how landlords do that to themselves. Back in the 90s, the organization I worked for leased two floor of a professional building. The landlord decided to raise the rate so we just consolidated to a single floor. They just crammed everyone into smaller cubes. That floor was a big vacant spot for the two years we remained before pulling out of that office complex completely. Yep, they sure made a killing off that space.
In a similar vein, our local mall is nearly empty. They can’t find businesses to rent the spaces, yet they would rather have empty space than competitive rent. The bigger stores are putting up their own buildings and the small stores are moving with them to out lots rather than stay in an empty mall.
Also, they were a full MSRP store and offered almost as much in the way of toys as scale models. Lots of Athearn BB stuff. Maybe a place for newbee model railroaders, but even they would quickly outgrow the store.
That’s not a cost of living adjustment, that’s highway robbery. The Social Security COLA for 2009 was 5.8%, your landlord was asking for 43%. Apparently Aesop’s Fables have fallen out of favor, particularly the one about the goose and the golden eggs.
In a similar vein, my daughter and her hubby just moved out of the townhouse they had rented for years. The original owner died and his kids decided they want to sell the thing (in a down marked in California no less). There was a townhouse in the same complex that sold for $435,000 about a year ago. However, that one had been thoroughly renovated and upgraded. The geniuses who now have no tenant think they can sell a 70’s era townhouse for the same price without putting any money into upgrading it.
As that great philosopher Ron White put it, “You can’t fix stupid”.
That kind of hike is what seemed to have driven a lot of retailers into buying up blocks, or pads, of land to build their own big box outlets—away from the malls. Many that are now owned by pension funds interested in making enough $$ to keep up the $$$ in those very funds. In so doing they started pumping the rents and leases through the roof-----one up here lost almost 40% of the tenants in a few months after they pulled a 57% hike —shortly after the mall was sold to them
As the retail/commercial real estate sector is about to see a kind of melt down of their own sort in the next little while—some projects were financed almost in the same way as the curent housing issue—there may be some interesting opportunities coming up[swg][:-^]
Great for traffic, bad for the curiosity seekers and theft, which is more rampant in the big box stores than you know.
Hobby Lobby has a model railroad section but its never has the variety or service you look for in a true LHS. Yet I keep a watch in the Hobby Lobby for stuff.
I think the better melding is a connect to the game stores. Thats where a lot of the interest has been turned to, well, go get the attention of the gamers out there as train operations is something like a puzzle game.
I double-checked on the local mall rental fees and stand corrected on my original figure – it is $1,200 per month for a 10x10 foot area in the concourse. Still, I don’t see how these ear and nose piercing and cell phone people have enough customers to afford that. Maybe that’s why the kiosks are different every week.