What would it take to run a successful train store today?

Model Railroader General Discussion (Model Railroader)
61

I would question the truefulness of this, and also question its legality.

What Walthers might be doing is not accepting small dealer accounts that lack a brick and mortar store to prevent “basement operators” who actually order very little product, only sell at train shows and online part time and who are more a front for a few guys to get all their stuff at dealer cost.

Even then, if I have a bussiness licence, a retail sales tax license, conduct business full time on any business platform and meet their minimum order and credit requirements they might be asking for trouble by not selling to me.

But, back to the main question. In my view, the only hope for model train shops, of any size, is a more stable supply of product, and more uniform stable pricing.

Distributors are dead, and any actions Walthers is taking are more likely a move away from being a distributor to only selling their own products strictly as a importer/manufacturer.

Direct distribution, like Athearn/Horizon is the real future.

Direct distribution with similar price structures to retailers of all sizes would serve the customers better and give smaller retailers, online or bric

62

I can speak from experience being in thece toy business. Manufacturers ARE NOT required to sell someone just because someone has a tax ID and does it full time, or has an online presence. No one can be forced to sell anyone they don’t want to. Manufacturers, just like retailers can choose whom they want to sell to. You can restrict where you want your product to be sold. It’s being done right now, not only in the toy/hobby business, but in many classes of trade.

Neal

63

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This is incorrect.

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They would ONLY be in trouble if you try to purchase at FULL RETAIL, and they refuse to sell to you, then you might be able to claim discrimination, but still not black and white, you need to prove your case. If you want wholesale, dealer net, preferred, or discount pricing, you better be ready to play by their rules and meet their requirements.

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Manufacturers set up all kinds of requirements that you must meet to become an authorized retailer.

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Your only other option is to buy from another supplier and sell at tertiary price markups.

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Try to become a Games-Workshop retailer if you do not believe me. You should see the dealer contracts we enforce in my field!

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-Kevin

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64

OK, to both of you, I understand what you are saying, and as long as policies are uniform, you are correct. Manufacturers can set whatever standards they feel benefit their products.

But if such policies are not uniformly applied, and it can be proven, they may, and I repeat ONLY may have issues. The laws regarding such things are complex and subject to lots of interpretation.

But all of that is a minor point in this question. Small retailers cannot stay in business with large retailers selling to customers at just a few percentage points above what the small dealers pay for product from the distributors.

A long list of manufacturers in this business have and do sell directly to dealers at various price levels, not requiring dealers to buy from distributors.

Again, I predict an end to the middleman in the model train business, and I do think whatever Wathers is doing is a step by them to get out of distributing other brands to dealers.

Sheldon

65

When I first openend my shop, Columbia’s Hobby and Craft World, in 1973 I soon learned many things…mainly about wholesale, very wholesale, and really very wholesale. These forms of wholesale were directly predicated on the size of your order. I do not know how this works today as my shop was almost a half century ago. I also learned that distrubuters (and ther were many) could be circumvented just by doing your own shopping within the many cottage craft makers and builders during this period. The end result was winding up with an almost unique inventory except for the staples which did come from distrubuters.

HZ

66

And it was similar in the late 70’s and early 80’s when I managed the train department at Glen Burnie Hobby World.

Today, all the big players are buying at some where between “very wholesale” and “really very wholesale” and then selling to the public at “wholesale”.

As I said, the little guys don’t stand a chance.

Howard, you seem to be ignoring the issue of price in your thinking about his. Respectfully, resources are clearly not an issue for you. But for many who are in this hobby, resources are clearly a factor. Price is king…

In 1970, or 1980, the deepest discounting was generally about 20% off retail. So the mail order places, and the few big shops who bought direct and discounted had strong margins which allowed them to fund large/deep inventories.

And not eveyone lived near such a shop or was willing to buy through the mail. 20% was not a deal breaker for most customers, especially if your local shop had good inventory, good service, a few deals now and then, and maybe a 5-10% discount for your club, etc.

But today, most every big ticket item can be bought at 25-40% below retail, pushing margins to the lowest profitable levels even for the big players.

But more impo

67

If true, Sheldon probably gave the answer. Any shmoe can start a small online store that ultimately is started to serve he and his buddies’ hobby discounts. What Walthers is doing is trying to eliminate the online version of the B&M “basement store” customer, something they’ve been doing for years with retail basement stores. There has been a requirement that the owner can’t live in his store, it can’t be his dwelling, so I’m told.

If the owner was a B&M store that was already a Walthers customer…then went purely online, he probably is a “legitimate business” and met Walthers’ standards when he was B&M.

I’m sure there are one offs here and there where somebody figured a way to skirt the rules, if they really wanted to go to that much trouble.

68

Skirting the rules is easy, done all the time, especialy today.

69

I suppose I’m really a dinosaur. I have shopped for price and I come from a Jewish background where word “retail” is repugnant", even still, quality and service have always come first.

There are still shops who sell for “MSRP”, but offer exempilary service and stand behind what they sell. Check out [company name removed]. I know this company well as I started it in 1986 aka Piermont Division. I sold it to [owner’s name removed] in 2005 above other higher offers as I was convinced that he would make the best of it…He has and then some through old world business ethics and excellent service. My business will always go to the firm who offers a combo of the best product and best service…and you bet, the best price. I do look for a combo of all three.

Of course this is me and certainly not gospel or retailing in your face. And I’m quite certain there will be radically different opinions.

HZ

70

Howard, I understand, and I personally am not just price driven.

Even though I don’t generally buy brass, I am familar with that company we can’t name - first class outfit, no question. But brass is a “special” catagory in this hobby…

But let’s face it, when one guy asks $300 for a loco, and the next guy only asks $185, anyone with any common sense is going to question the higher price.

Hence my point about back in the day, when most of what discounts there were, were not so deep.

And you talk about new people, what message does this wide range in pricing send? Not a good one.

It’s like the home improvement commercials for 50% off - come on, if you can give 50% and stay in business, you were charging usury level prices in the first place. That guy is not working on my house - but then again I know because that’s what I do - restore old houses…

You and I know that’s not true of the small deale

71

Brass is a whole other subject, the way they are tuned is way beyond what is needed in other engines, not that other engines don’t need fine tuning but not to the extent brass dose.

72

While I agree, customer service is a very big part of things, there are other important things as well.

Case in point: One store near me, got all my DCC business while they were around. They sold Trains, R/C cars and planes, kites, and dolls.

The first time I went there, I asked a few questions on a DCC system. Len not only answered them, but demonstrated the system on the in-store layout.

I purchased the system. Went back in two weeks to pick it up. I purchased a couple more decoders, and a bag of ballast while there that second time.

The next time I went back to the store, about 6 months or so later, due to travel distance, as soon as I walked in, Len said “Welcome back Ricky. How is the (name of DCC system) running?”

I was very impressed.

I then gave him all my business. He could get anything I wanted, at a decent price, and I saved on shipping to boot.

Problem was, his location was not near enough any other major stores. Due to expenses, and lack of a large enough customer base, he had to close.

So, location has a hand in it as well.

Another big issue - Getting what I am looking for. If I go to your shop, even if I am willing to special order something, if I only hear that you can’t order anything from brand-X, its a little annoying.

Then, as has been discussed, pricing matters. I will not pay more than $35 higher on a loco, with DCC/Sound, just because you have a shop. I can save money by purchasing online, and save gas and time. That more than offsets any shipping charges. (Even if I need it express, 2 day delivery, which I really don’t.) Smaller stuff? Much closer margin. I have a full-time job, yes, but gross under middle of middle class. (I am lower middle class, if not below middle class income.) So, if your price is too high, I don’t buy.

So, for a small hobby shop of any kind to survive, it will take a big, a

73

As a former owner of a small business ( home beer & wine making supplies ) I have to say that

1- impossible to have everything in stock just look at track alone, also DCC systems, and of course Engines & rolling stock, buildings, ballast, etc.

2-Location Location Location= top dollar rent

3-Knowledge of just about any type of repair on any type of equipment

4-Willingless to accept returns ( thorn in any body’s side )

5-Service is the most important asset of any business

6-Competition from the Internet, unless you are willing to sell in the store at the same price as the Internet

7-Don’t think your pretty face will drive them to your store or web site, competition is fierce

I have a shop in my hometown that is going out of business, place has been around town for 45 + years, excellent service, kind of place where everyone knows everyone ( aka Cheers ), but the rent, internet, and lack of not having the product you may want, most times drives people to the net, especially when prices are lower w/ free shipping and you don’thave to leave the house

8-I love small & local business, but the competition is fierce, which I think makes the net so popular. I shop at my local store and will continue to do so until the day comes. You can’t find that relationship on-line

74

You can make most buisnesses do well, but it takes more work than most people are willing to put into it and you also can’t be you. What I meen by the later is you have to put personal feelings aside, such little things as that lookie lou. You may see him as a pain that never buys anything but you never know when that will change or who his freinds are. I was always a lookie lou, not that I never bought but bought only what I really wanted and ussually at a bargin basement price. My freind however had no problems spending lots of his money on anything he wanted and was not really concerned with price, and he bought a lot of stuff, especialy engines. He proubly would have bought even more from what was his main shop but the guy running it had an attatude and one day I was looking at a display of LGB and my freind said to me, don’t buy it here, I have a set, the store owner overheard and yelled at my freind thinking he was stealing a sale and my freind was going to sell me his set but what he realy wanted was funds for his next big purchace having picked up the LGB in a lot sale with other stuff he wanted. Never went to that store much again and the guy knew we were together as I never went there without my freind as this place was road trip distance away for me and my freind was there at least evey couple weeks for the latest and greatest like his ongoing collection of Big Boys.

75

I used to work for Home Depot. When they came to town, all the local hardware stores worried and many desided to just close up. Now they are coming back. They have changed inventorty to what the big box stores don’t carry or only carry in bulk or things that people localy may need, why drive 5 miles when all you need is a single light bulb and can be in and out in less time than it takes to drive to the big box store. Saw this happen when Hobby Lobby came to town also, but with them, they didn’t last, Hobby Lobby that is. The local