Poor way to run a business

[FJ and G]

Many hobby shops are great places to go; answer customer questions, good prices with frequent specials, and a nice place to meet others in the hobby.

But occasionally, you will find a snooty dealer, who marks EVERYTHING up to the MSRP, with few specials. Fortunately, I'm done buying stuff but I was struck the other day at exactly how a business can be hurt by being penny-wise; pound foolish.

Each month, I get about 18 frames made at an Alexandria art frame dealer. Inside the frames, are the front pages (magazine tear sheets) of articles that we used in my magazine, The Military Engineer. We mail those out as gifts.

Well, we were spending about $66 per. So, I went around town pricing. $35 and even found one for $25. Same quality and standards. So, guess where my business is going?

By charging the maximum, the dealers make short-term profits; but in the long run, you lose customers.

Something for you to chew on.

Dave Vergun

[cnw1995]

Dave, this is especially true when you can easily comparison shop online as well as through magazines. I am stunned by the prices (some of them MSRP-plus) at my local hobby shop - which I still try to buy things from - since he's local - and he's still into O gauge. Someone must be buying them though...though come to think on it, the rest of the customers seem to be personal friends - they come in, take a seat, go back to see the dog - it's kind of nice. I wish I was part of that crowd - but I'm usually ignored - I must be 25 years younger than them and I usually come in with a passel of kids...

[Big_Boy_4005]

It is getting harder and harder to find any brick and mortar hobby stores that sell at any discount anymore. You can find closeouts, and pre buy specials, but the internet and eBay have pretty much ended any regular discounts in this business.

[dougdagrump]

I stopped by one of the local hobby shops yesterday to find that they are closing this store but their other one, about an hour away, will remain open. The one that is closing was heavily oriented towards HO and N, and the O was more or less very limited. What I found difficult to understand was the fact that almost all of the O stock, although very limited, was the high end stuff from MTH and Lionel. On top of that some of the prices were actually higher than MSRP. If a customer thought of switching from HO or N to O wouldn't it make more sense to try carry a balanced inventory even some entry level material for someone entirely new to the hobby. [banghead]

[3railguy]

You have to shop around and there is no one dealer who offers the best prices across the board. I've found hard to find items in MSRP stores.

[Anonymous]

It's a wonder that any 'Train Store' owner can keep a positive attitude, turn a profit and stay in business in today's fractured market. Years back, when Lionel was the only player, stores such as Hardware and Auto Accessory stores would sell Lionel only during the cold winter months--all just to augment the stores' bottom line.

Back in the early '70s I was close to a guy who owned and operated a small Train Store in Hudson County NJ. Vinny would never let any of the 'Regulars' (visitors) to his store even mention the words 'train show.' And would never permit a train show flyer to be hung in his windows. He once told me that when a customer finds out about and visits a train show, he'll never come back. And if he does come back, he'll accuse the store owner of price gouging.

Today, everything being relative, a store owner may have to pay up to thousands of dollars a month in rent and utilities; collect and remit sales/use taxes to his State Government, keep accurate records, keep long hours, contribute to his employees' Social Security, pay steep insurance fees and pay for advertising.

Considering a train shop owner buys at anywhere from 40% to 50% off retail (if he's lucky). He has to sell a hell of a lot of trains and accessories just to pay his rent and expenses, before he even turns a profit. Don't get me wrong, I'm not defending any store owner who is not customer oriented.

But how is the average small train shop owner going to keep a positive attitude while he has to compete against 'basement operators' who regularly sell competative wares at a whopping discounts at train shows, or on eBay?
Bill
www.modeltrainjournal.com

[3railguy]

You make a good point, Bill. We have a dealer here who sells trains as a sideline to TV repair. His discounts aren't huge and he claims he makes $5.00/hr selling trains after expenses. I believe him too. Like anybody, he has his moods. I don't know many people who get excited about making $5.00/hr.

I think some of this depends on products that sell well too. I buy a lot of Atlas and Lionel scale cars there individually for near MSRP. It seems like no matter where I go, there aren't huge discounts on these cars so it really isn't worth the effort to shop around and save 5 or even 10 bucks on an individual car. Discount mail order house shipping costs cancel out the savings. $500 or 1,000 engines are a different story. I'll shop around but I buy very few. I spend as much on engines as cars so the fertilizer is getting evenly spread.

To put myself in the shoes of a train dealer, I do residential home repairs as a sideline. My labor is cheap. The jobs often go like this: My original quote is to do the job right. Except I get beat up over price and ordered to eliminate this and that task and go with the cheapo materials. So OK.............I bite the bullet and perform the crap work I'm ordered to do and won't warranty it. They sign anyway because I'm cheap. This excluses work where saftey is involved. I walk away from that and that ticks people off. I have to eat the belly aching the customer gives me in the end. But hey.......they get what they pay for and there is nothing I can do about it. The badmouthing is getting to a point where I'm going to have to tell people, no matter what the work is, either I do it right or not at all.

[FJ and G]

Some questions:

1. Why is it that you can order a train over the Internet or by phone (browsing the ads in CTT), and get trains for significantly less than brick and mortar stores?

2. Most of these Internet or mail order stores also are brick and mortar stores. Why don't more brick and mortar stores do Internet sales?

[3railguy]

To answer your question, when you take internet or phone orders, the sale is already made. Many order takers are paid for the orders they take. They don't have to pay display rent and someone to help customers decide or tend the store during idle time. Many mail order houses who have a store won't honor their mail order prices in the store. I've seen this in fine print in their ads.

Volume is another issue. The more a dealer buys from the manufacturer, the bigger the discount so large dealers have an edge. The downside is they may not be as personable as the small shop. Your frame shop may be the same way.