LHS starting up question?

[chateauricher]

QUOTE: Originally posted by ctcbound
I recieved a 50 grand grant from the Canadian government.

$50,000 from the Government of Canada !!! Nice. [^]

Where in Canada are you located ? Will you be doing mail-order and/internet sales ? Will you offer any other services ?

With the exchange rates, and shipping costs, I find it is usually just as cheap to order from a Canadian retailers than from the multitude of American-based retailers. It will be nice to see a new Canadian source.

I would suggest you offer rolling stock and locomotives for Canadian rail companies. Its not always easy to find them, particularly older and/or lesser known companies.

Good luck. I hope your business will be booming very soon.

[Anonymous]

Hey Everyone Thanks for the Advice.

Well, my business plan is currently in the process. And right now I have been doing it out of my house, sales is ok. I decided to get out of cost accounting because the company I work for is doing the downsizing. And to be honest I have a Hon. BCom, Masters in Financial Management and a CMA to my name. Its not fun going to work, to a job thats no fun anymore. Well I know its a bold statement to do, but I have done a lot of marketing research through several business sites. Our store is 2500 sq. ft. Also I purchased the empty warehouse beside it. My future goal is to get a huge worldwide market. SImilar to what Pacific Western Models has. I have several distributor local and the huge bulk wholesaler. I am thinking within two years I am gonna pu***o the max. I recieved a 50 grand grant from the Canadian government. I think if I put my heart and sweat into it, I can accomplish anyhting. I have completed all that above education and I am only 29yrs old. I have been involved in the hobby since I was 8, and I love trains. As someone mentioned the DCC, I know how to write software, and during my undergrad. studies I was doing house calls to people for DCC, because I had the most experience in the province.

Thanks for the input guys
Roger

[MisterBeasley]

As a compromise on the "Train Set" question, you might try putting together your own packages of track, power pack, 1 locomotive (diesel or steam option) and a few freight cars. I'd also add a building into the set. That way, you could start your customers off right with much better quality than they'd get at Wal-Mart, while not overwhelming the newcomers with choices and details. Along the way, explain the options to upgrade to DCC so they know they are not getting a dead-end, toy system.

[railroadyoshi]

Sounds like a very interesting idea!
Some of the points I discuss will be similar to those before and some will be the opposite.

Do stock local road names. They will be the big sellers most of the time.

Take Mail Orders from customers. I find that some 50% of my purchases at my LHS are mail order.

However, 1 of the reasons I purchase so much mail order through them is because the in shop inventory is imbalanced. Stock good amounts of scenery supplies etc.

While some have told you not to stock train sets, I highly recommend you do. This is because new modelers will gravitate towards them to get started, and then buy your higher quality items. I recommend this especially since your shop isn't solely trains, so some of your customers may be people buying your other stuff, then seeing the trains and becoming new modelers.

Best of luck!!!

[CraigN]

Make sure you order scenery materials. For a good place to start, Woodland Scenics makes all kinds of scenery items. Check there website for ideas.

Alot of women the knit also make crafts, so you want to possibly offer some of the dried plants ( stuff that can be transformed to trees with some spray paint and ground foam) and hot glue sticks and stuff like that.

Also make sure you order building kits and premade buildings. IMHO only order the ones that people see day to day. You don't list where you are from but DPM and Walthers Cornerstone make alot of nice buildings that will fit into most eras modeled in the U.S.,

You will also want to stock railroad paints , glues and supplies for the model builders. Make sure you get weathering paints and chalks for the serious model builder.

Another thing to think about is your pricing.
A discounter will sell more items per month than someone selling at MSRP.
If you are willing to discount your items, possibly even match mail order( if feesable), most of your customers will shop your store before they shop by mail. They know that they are getting a good deal and they know they are getting it without having to wait for it. If you can offer special orders at discounted pricing, that will help keep your customer from doing it himself by mail order shopping.

That's my $.02

Hope this helps.
Craig

[nfmisso]

Roger;

What do your accountant, banker, lawyer and financial adviser think of your business plan?

[BRAKIE]

Roger,One more thing.Find yourself a distributor other then Walthers..These area distributors has fairly good discounts,sales and close outs which means you'll get more stock for your dollars..

[BRAKIE]

Roger the truth about e bay..You can loose money on e bay as well as make it..As you will find out you can't sell a engine or car for less then it costs you and that is the danger of e bay.Set your minimum bid to high and you not get any bidders because another item just like it has no minimum,so,you item could sell for less then you paid for it plus you still have to pay e bay a percentage which will cut into your profit or lost.What to do? Start a on line store IF YOU HAVE THE TIME NEEDED to mail the orders and inventory needed to fill those orders.If not then try Train Shows start small with 1 or 2 tables to get the feel of the train show business.
Good Luck!

[cacole]

Contact local clubs and modelers and ask them what they would like to have you stock. Three local hobby shops have been opened and closed in the past five years because they didn't take the pulse of their customers beforehand. The one that lasted the longest and had the best prices contacted our club before he opened and asked us what we would like for him to stock. The latest casualty had prices that were 10 to 20 percent higher than MSRP, so only those who didn't know otherwise patronized him. He's closing at the end of December and was the only one remaining.

[Rotorranch]

Good luck with your new venture!

First suggestion, you need way more than just Walthers as your distributor. You NEED Horizon, Altech and Great Planes, among others. There are more and more "Exclusives" that are only handled through one distributor or another. No one distributor has everything.

Second...you need to stock entry level sets. You are going to find initially that most of the walk ins are looking for gifts for others, or to get started.

Watch the distributors specials to get the best pricing on things! They'll close out items at killer deals sometimes. These are items you can discount deeply, and still make a decent profit.

And last, but most important, be freindly, helpful and knowledgeable. At one of the shops I used to go to before I opened my store, the owner was rather offish, but helpful. He warmed up some, after a few hundred dollars changed hands.

Another was just simply uninterested. Wouldn't greet you when you came in, and didn't seem to mind if he sold you anything or not. besides the fact that most everything was retail+ (?) [:0] and he didn't get but a few bucks.

You can't stock everything. What you don't have offer to order for the customer.

And have fun! You now make a living playing with toys!

Rotor

[MisterBeasley]

So, where are you and what's the name of your store? Too many LHS notices here are obituaries, and it's good to see a birth announcement for a change. The stock market is moving again, too, so maybe it's a good sign.

You will need track, and roadbed and decoders. You need to understand and sell DCC equipment. Sound is a growing item right now, and customers are interested in it, but not necessarily knowledgeable.

What gauges are you going to specialize in? Since you and your wife are sharing the floor space, I assume you will need to economize on the train-related real-estate. Even so, if you have room for an in-store layout, it is a great plus and a big draw, especially for younger modellers, or adult modellers with kids.

Make contact with your local clubs. Offer discounts to club members. It's the best concentration of potential customers you will find.

[twcenterprises]

I agree on having local/regional items/roadnames. A shop in New England probably won't sell much Southern Railway or Florida East Coast locally, though if you sell on the 'net, you could likely expect to sell most of those roads to that region. Personally, I haven't bought any high-ticket items online, but have bought them through my LHS, though I do shop around for the best local prices.

Stay away from having any "cheap trains" (cheap quality, that is) as most serious modelers won't touch them. For cars, I have bought (and still buy) Roundhouse, Athearn (Blue Box), Accurail, Intermountain, Bowser, and Walthers. I have locomotive from IHC (steam only), Athearn (blue box and Genesis), Kato, Atlas, Proto 2000, Bachmann Spectrum, Stewart, and Walthers. I also don't buy expensive rolling stock such as Marklin ($70 per boxcar, List) or Kadee, these are just a bit too expensive for me. I'm sure they sell, or my LHS wouldn't have them in stock, but if you're in a lower income area, expect to sell lower priced items.

Brad (HOtrains Yahoo group Co-Moderator)

[jecorbett]

I would concentrate on medium to high quality items and skip the train sets and low end items. Serious modelers are going to be your repeat customers and for the most part, they aren't interested in the junk. My LHS sells trains exclusively. That has been there philosophy and they have been in business at the same location for over 25 years. They stock a few train sets but most of their inventory is made up of quality brand names. HO is probably 70% of their stock, N makes up about 15-20%. The rest is Lionel or items that aren't scale specific, such as books and magazines.

Let Walmart sell the toylike stuff. Cater to the serious modelers.

[Anonymous]

I agree with accord. You may want to at least be involved in the intenet sector. Ebay sounds like a good idea because you dont have to get the word out about your site. This way, not only local people, but anyone at all can buy from your shop.

[accord1959]

One of the LHS's in my area is a big ebay seller. He has the stuff for sale in store and also lists it on ebay as buy it now, that way his market is not limited to the local modelers. If the item sells in the store he closes the auction early. It must take alot of time, but he does seem to be doing very well.

[TrainFreak409]

Local items usually sell well.

I used to work in a train store in Sykesville, Maryland, right by the old B & O main line. And as such, the shop could not keep in any B & O, WM, C & O, and so on merchandise.

[gvdobler]

I think most people try to support the LHS when they can.

The people thet I know (2) that have shops:
1. Try to compete with mail order on the big ticket items (or they would never sell any.)
2. Have all the small stuff so anyone working on a project can run to the LHS if the run out of supplies. (that's also where the highest margin is.)
3. They have to have a minimum of $250,000 in inventory to survive.

Good luck- we need all the LHSs we can get.

[WickhamMan]

I concur that the LHS business is a very tough one. The hobby is certainly a luxury item and finding the demographics of those in residence around your store location might be a good indicator of success. The census bureau has some great information on both income and demographics for anywhere in the country (census.gov).

As for particular items, I think there are likely two ways to go:

1. You can attempt to sell what is most popular. From my understanding of the market, you are likely to want to focus on the transition era for equipment and scenery (1930-1950s). Unfortunately, I have found it difficult to quickly determine the era of equipment from vendor information but my experience is growing (slowly).

2. You might discover that the "most popular" items are also the most competitive from a pricing perspective. Your margins are likely to be the smallest on the most popular items because every internet vendor carries them at rock bottom prices unless there is significant scarcity (in which case you probably won't be able to stock many anyway). So, you might want to focus your sales effort in more lucurative, but smaller, markets. That would mean looking at odd gauges, lessor known vendors or less modeled eras.

My [2c]

[BRAKIE]

Be sure to carry Atlas,Kato,Stewart(some) and try to get Athearn..IF DCC is popular in your area then stock decoders BUT..BE forewarn the internet shops will kill you on decoders if you can't discount..As far as P2K ..Risky at best since the prices has gone up..Again the on line discounters will kill you if you can't discount..
As I mention before I was a part time train show dealer and would sell at the club if the members wanted to order.My prices was 12% above costs and I sold a lot of items.

Best of luck to you! [:D]

[Anonymous]

All the narrow gauge stuff is really becomming popular. On30 is a very popular gauge, as is HOn30.

[Texas Zepher]

Seems like that bit of marketing research should have been done up front, like before you decided to start a train store in the first place. It is a very tough business at this point in time.

I would actually guess there is too much competition for the hot items. Right now the BLI California Zephyr cars seem to be the hottest item. While I purchased my sets from my LHS they are offering them at mail order prices. They can't keep them on the shelves, but I doubt they are making a good profit. The other LHS that has them on the shelves at suggested retail price can't sell any. Normally, I go to my LHS for specialty items that I can't get anywhere else. As a result I am going there less and less. The last few times I've left empty handed. They are de-stocking slow moving items and trying to stock only the hot items. They always offer to order it, but I can order it myself I don't need them for that.

[GAPPLEG]

Depends on your location, you really have to be in tune with the local modelers, Some variety is nice for the others in the area, but your locals are the one that will keep you going.

[Anonymous]

Hey Everyone
I am new to the hobby. My wife and I just opened a train and knitting store. I need your advice. I have made my wholesaler/distribtor connections. I am placing my first huge order this week or ealry nextweek with Walthers. Any suggestions at to what to order? I prefer to carry products that are very popular and will sell well. This is any products in the Walthers catalog. What are hot items right now, that I will be able to sell very good?

Thanks
Roger