Doesn't sound real promising for LHS(local Hobby Shop). I can see manufacturers selling their own stuff at list prices, but at selling at discounted prices really puts the LHS at a disadvantage.
Modeling Conrail in 1991, Pittsburgh Area, Digitrax / CMRI
I agree with the above link about overseas models. The hobby industry could move manufacturing back to the United States from China. I believe the conditions in China will continue to change, thus making it easier to compete both in quality and price. I work for a company that builds some of their products in China.
One problem is the demand for skilled labor, The demand has caused a large turnover in our employees in China. This turnover has an impact on both our product quality and ability to deliver on schedule.
Another problem is the increasing cost of labor. Each year each worker's wages go up by a larger percentage.
While not to US standards it is no longer the bargain it was a few years ago.
Shipping and control of raw materials are problems. Shipping cost are going up each year and this impacts our bottom line. The procurement of raw materials has been a challenge too. If you are not careful your stainless steel part will be made out of pewter.
I understand that this concept would not be easy to implement, but would give any hobby company an advantage over the increasing problems of Chinese manufacturing. I believe with advanced manufacturing technology, and a well planned product line, the time is right to build more American made model train products.
This type of long term planning might result in the realization that the LHS is a valuable asset that should be supported and not destroyed for a short term profit.
A fanatic is one who can't change his mind and won't change the subject. >> Sir Winston Churchill
But I think the era of the LHS has come and gone. I don't have one nearby to support but even if I did why would I want to go in there and pay for a loco I can buy online for 20 to 40 bucks less? Would I do it under the justification of "supporting my LHS" ? Sorry but times are hard for me too and I'm on a very tight hobby budget. Supporting my LHS is the least of my worries.
For me the decision is easy. I support MRH sponsors first.
I went into what passes for my "local hobby shop" way back when MRH was in it's infancy to tell the owner that he could list his shop on the MRH site for free. The guy told me he was already listed on some R/C sites and that was all he needed. That explained to me what his focus was. Guess how much shopping I've done there lately? ZERO!
Appreciating Modeling In All Scales!
I have been studying marketing and especially online marketing, for the past several years. Here is the real problem, and no one else seems to have figured it out.
The manufacturers are selling at what was dealer discount, to anyone buying online. They are doing this because they need paying customers to stay in business. Everyone knows that the cheaper you sell something, the more people will buy, assuming the same product and quality. That's bad for the LHS because it takes customers away from them.
Something else I've learned, is that there is no virtual replacement for the knowledge and individual help you can get at your LHS. Yes, the business model for the LHS needs to change. Instead of being the only, or one of a few outlets for products where a customer can get what they want, the LHS now has much more competition. They have to compete with the same people who are selling them products. Competition is good. It weeds out the businesses who are not innovative, and adaptable.
The LHS needs to stop advertising as the place to buy stuff, and start advertising as the place to get help. They need to stop sending email with 40% off, and start sending email with "You have a problem building that dream railroad, come in, we can help you solve it!" That is the most fundamental aspect of marketing, you have a problem, I can solve it.
It is a proven fact that people buy from businesses they trust. What better way to gain trust, than to help the local modeler? You want to use DCC on your layout, but which system is the best? A LHS can have all three of the big DCC company's products set up and ready to use. A customer can walk in and actually use the different DCC command stations and throttles, and then decide which he likes best. What a concept! On top of that, a LHS can talk about the differences between the systems, advantages and disadvantages. You can't do that online.
Got a problem with a short you just can't find? Come in, describe the problem, and chances are they will have some suggestions. You can't get that from a manufacturer online. The LHS would do well to go as far as sending someone out to the layout who is familiar with troubleshooting. That way they can teach the process, and probably find the problem, and suggest a solution. Would you buy from someone who did that for you? Can't get that online.
You want to see how a piece of rolling stock looks on the rails? Your LHS can show it to you, and you can see it before you buy it. Can't do that online. You want to know how to solder feeders to your track, and run the bus? A LHS can actually show you how. Can't get that online.
Building the trust creates loyalty. The LHS needs to start looking at the lifetime value of a customer. Yes, the first trip in might be to buy a book, or a magazine, or just to look around and size the place up, but how many hundreds, if not thousands of dollars is the lifetime value of a happy model railroader worth?
I'm lucky, I have the world's largest model train hobby shop here in Denver. I know that if I go in there with a problem, I can talk to someone who can help. I know that if I have questions, I can get answers, even if I don't buy anything today. Are they having the same financial problems other hobby shops are? Of course, but they know that if I can get help, advice, ideas, and knowledge I can trust, they will be my preference to buy from.
In fact, I don't even bother with the LHS that is closer, I go straight to them. The closer LHS is 10 minutes away, it's at least 30 to them, and I have to take the highway, and their parking lot is small, but I still go to them because I know I can get what I need. The closer LHS is an all around hobby shop even though trains is in their name. Trains are only part of what they sell. They don't have train people, they have model car people, and airplane people. I go there if I want to buy a plastic model kit of the starship Enterprise.
Not only can I find out which product I really need, but I can buy it, and take it home with me to use immediately. There is something to be said for immediate gratification. Amazon is easy and cheap, but I have to wait a week to get the book. The same goes for any online purchase.
Once the LHS starts playing to their strengths, instead of the same old advertising they've done for 50 years, they will find that people will come to them, because people will always prefer to do business face to face. People will also always want to do business with a person they trust, even if that person is a LHS.
Here's an idea for any LHS that is willing to try it. You want to get more customers through the door? Start a free weekly newsletter that you email to customers. Ask everyone who walks through the doors if they'd like to get it. Make it a club, people love to join things. Make the purpose of that weekly newsletter, to talk about how to build a model railroad. One week might be about how DCC works, another might be about scenery techniques, still another might be about bench work. There are hundreds of topics to choose from. Don't advertise in the newsletter, just make it usable content. End it with your company name, address, email address, phone number, website, and business hours.
People who like what they read, will go out of their way to buy from you. You are someone they can trust. Build that trust, and the relationship that goes with it. Every week, they will be reminded of who you are, and they won't mind, in fact they'll ask you for more, because you're not advertising, you're helping. They have a problem, and you can solve it.
I go to my local hobby shop for a number of reasons: 1.) To purchase something; 2.) To get their expert advice, like answering the question: "What type of rolling stock would I see on the L&Ns tracks in Louisville, Ky. during the 1960's?"; and 3.) Fellowship - often I see many of my modeling buddies there, so we chat & "hang out". I also like to chat with the hobby shop owner and their employees.
Now I certainly can get #1 above online; however, it's tougher to get #2 online from vendors (yes I can get great info from MRH and alike!). For #3 - it's only available at my LHS! If I loose my LHS (which is a fantastic place!) I loose a part of the hobby which is both enjoyable and helpful.
The former Richlawn Railroad Website - Featuring the L&N in HO / MRH Blog Eastern Standard Time
I hear you loud and clear. I live in the Detroit metropolitan area. We have lost all of our area model railroad shops except P&D Hobby which targets O-gauge/RC/plastic kits. But...... if you want to see a hobby shop using the correct business model, check out <enginehouseservices.com> , in Green Bay, Wisconsin. These guys are following your bullet points. They have in-house clinics every weekend to boot! Get on their email mailing list. They are the first people I'll call if I need something. They really try!
My experiences with my local LHS are not great. Sitting around with his click of friends annoyed that you're bothering him to ask a question. Dusty old products on the shelf, yellowed and covered with cobwebs. Refuses to accept credit cards unless he's in the mood. Nothing is ever in stock - but he can always order it for you at extravagant prices compared to the online web sites. Of course he needs the money up front, and he'll place the order when he's good and ready.
I recently moved 2000 miles to a new city. Great there's a hobby shop! A fresh start ? No - same stock, same guy, same attitude. I never went back.
I've been in several shops like this ... good riddance.
As for advice - I'd rather use the forums here.
As I've said many times before, my LHS is mostly R/C and I know far more about the train products than anyone working there. The new owner tries his best, but its really hard for me to justify spending retail + on something that they have to order in (as they don't carry a lot of stock) when I can just order it online, generally have it faster as the LHS waits until they have a certain size order before ordering, AND get it 20-40% off retail, depending on the product.
As to the "support" issue, there are several places I can get some advice/support from online through a few emails. Litchfield Station, Dallas Model Works, Tony's Trains, Fifer Hobby and I'm sure many others can be very helpful, very quickly through email. And I don't have any buddies to hang out with at the LHS. I've also visited a number of hobby shops around Canada and the US, and I can say there are few that I would ever go back to for train stuff as they just didn't have the stock and/or the knowledge that I would say sets them apart from someone online.
The LHS CAN survive by following some of Ken's advice, but most won't.
New HO Plan Coming Soon!
HO Scale '70s/80s era
N Scale "Collector" '70s/80s era
I couldn't open the PDF, so I'm not referring to the content, but I have to say that I also grow tired of LHS owners complaining that I'm doing the hobby a disservice by not supporting them. I think most of those owners need to look at themselves in the mirror, or at competition that is successful, and start finding ways to serve me so I would want to buy from them. Pointing the finger at the customer as the "problem" is a sure fire way to go out of business.