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Why do hobby shops close?

Old 03-24-2015, 04:56 AM
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fliers1
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Default Why do hobby shops close?

There has been a lot of theories why hobby shops go out of business. How about hearing it from hobby shop owners and related businesses, past and present.
Old 03-24-2015, 06:29 AM
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Jennifer Curtis
 
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Of the 11 hobby shops I've purchased stuff from,
6 have closed. Three of them closed so the
owner could retire. The other 3 closed for
reasons I don't know.

Jenny
Old 03-24-2015, 09:26 AM
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fliers1
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This is probably a good reason most hobby shops have a hard time making it.

http://www.rcuniverse.com/forum/gold...ml#post4560338
Old 03-24-2015, 02:10 PM
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w0mbat
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With the ability to source many products direct from the manufacturer, the local hobby shop is still a very viable business model in most areas of the country. There are 2 main reasons why hobby shops fail:

Lack of money

Lack of Knowledge
Old 03-25-2015, 02:41 AM
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dasquirrelisme
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1. Young people don't do many hobbies
2. Its easier to order online with free shipping and saving money. Most hobby shops have to get an order ready and it takes longer than ordering it yourself.
3. Everything is outdated in a few months.
4. A lot of hobby shop employees don't know anything about what they are trying to sell.
5 Too many aspects of the hobby. The hobby shops cant stock what all the people want. If you have a blue plane the people want a red plane.
Old 03-25-2015, 05:38 AM
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fliers1
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Maybe because there is an insufficent market base and at best, on the average, 20% profit margin hobby shop owners have to deal with.

http://www.modelaircraft.org/insider/10_01/leader.htm

Last edited by fliers1; 03-25-2015 at 06:25 AM.
Old 03-25-2015, 06:29 AM
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rustyrivet
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Originally Posted by fliers1 View Post
There has been a lot of theories why hobby shops go out of business. How about hearing it from hobby shop owners and related businesses, past and present.
Ok.....I'll provide just another armchair opinion from somebody who's never owned a hobby shop......because it would not be surprising if you receive little to no response from a current owner who is either having difficulty with the business now, or had already closed the doors years ago, as failure is often not something most folks care to discuss or take direct blame for. But, about 15 years ago, I was shopping inside of a hobby shop that had "store closing discounts" posted on his windows. Even then, before online shopping was anywhere as prrevelent and popular as it is today, I overheard the owner mention to somebody that it was internet sales that had done him in.

Internet sales being the major obstacle is pretty clear to me, and should NOT be one of life's great mysteries...... as I myself prepare a $1,000 order with Tower Hobbies for a Top Flite Giant P-47, Robart Retracts, and a DLE engine......all shipped free and with $130 in coupon discounts throughout the end of the month. (and, next month will be still another great promotion I'm sure!). While I do prefer to support my local hobbyshop, myself and many others work too hard inside of our middle class income to just hand over an extra $300 to the LHS for this kind of a purchase, just for the sake of being charitable. Online shopping is fast and easy, and the exact RC kit you want with the whole assortment of parts can be aquired online without running around town and placing special orders which will usually cost me close to list price. Add the other deficiencies like unknowledgable store employees and having to pay sales tax, and it's clear to me that anyone who is considering opening a Hobby Shop has trouble differentiating between his dreams-aspirations and the current realities of modern times.

Last edited by rustyrivet; 03-25-2015 at 06:32 AM.
Old 03-25-2015, 09:46 AM
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jdmachinery
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Have to agree with Rustrivet above, It is so easy to go online, check off what I need & place an order at the two (2) major Champaign/Urbana, IL warehouses. I'll pay the state sales tax, as its just so convenient. and I have found their customer service to be exceptionally good.

Chicagoans will remember Stanton Hobby Shop that used to be on Milwaukee near Lawrence.....its smelled like butyrate dope & glue, just a great collection of everything including special c grain balsa for wing ribs, fuel, engines, accessories and kits. I always spent $$$ there, all long before the internet.

Recently stopped into G&G Hobbies in Griffith, IN. Good airplane guys & I plan to be back there soon with more cash.

How about hearing from some hoppy shops like G&G , what do they say & are they making a fair living?
Old 03-25-2015, 01:46 PM
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I'll throw my 2 cents worth in. I have been out of the hobby for 20 years. My son got me going again, but a lot has changed in 20 years. he only place to buy a real kit is online. I went to our 2 local hobby shops and they were not hobby shops, but toy stores. Nothing to build there, just planes to pop out of a box and fly. All electric and no nitro. They both carried the exact same thing. I was lucky enough to find a spinner, but that was it. I may be old, but I want to build my planes, and I want them to make noise when they go by, I love the smell of fuel. Now its all just charge and fly crap, whats next? Will the hobby be only people watching videos of other people flying? All cgi of course. I agree, the internet has wreaked havoc on the brick and mortar stores. many online sellers have no real overhead so they can offer very competitive pricing. Today's people just want to point and click, not touch and feel. Its a shame, but in my opinion, what has happened to the hobby is a shame. I applaud all who build their own planes.
Old 03-25-2015, 03:24 PM
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049flyer
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Having owned a hobby shop for 10 years or so, closed now for three years, I can say that the short answer to the question is that there simply is very little profit in hobby shops.

The longer answer is:

1. It is really difficult to compete with free shipping, no sales tax, low overhead, no service offered by some online vendors.
2. Customer expectations are unrealistic, they expect you to match online pricing but expect a level of service as if you made full retail mark up.
3. The hobby has changed, we have become an association of RTF/ARF flyers, very few are traditional modelers. Hard to stock every ARF/RTF and parts, batteries, etc.
4. The hobby is infinitely more diverse, and thus infinitely more difficult to support from a typical retail environment.

At one time everyone flew pretty much the same type of model, .40 size and smaller glow powered aircraft. It's pretty easy to stock most everything everyone needs when everyone is flying similar airplanes AND built it themselves. Some balsa, dope, glue, covering and a good collection of Dubro stuff is all you needed. Now the average flyer can barely attach a bolt on wing much less rebuild an airframe after a crash. Most are flyers, not builders or modelers, just buy a new one!

Hobby shops located in very large cities can survive because they have a much larger community of flyers to sell to, with enough capital they can scale themselves up to a point of profitability. Mike's Hobbies in Dallas is a good example, but sadly he too has closed due to problems with freeway expansion encroaching on his property.

I fear the small town hobby shops days are numbered, if there are any left.
Old 03-25-2015, 03:41 PM
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fliers1
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One thing that no one considers is that unlike any other retail business, hobby shops has a tiny, tiny market base. In a city population of say, for example, 1,000,000, how many RC aero modelers customers will any given hobby shop have?

I had a small hobby shop a few years ago and the majority of my customers were indeed builders. Some were already builders, but others had arfs, but when I trained them to fly right away and once they were confident that they could safely fly, they went ahead and bought kits and all of the necessary assessories needed to build and finish their kits. I had a standard offer to provide instruction, using my trainer. Some who had never flown or built a airplane kit before, bought a trainer kit, did a fantastic job building it and learned to fly and never bought an arf since. But like the OP pointed out, there just isn't enough money to be made to be bothered running such a business.
Old 03-26-2015, 09:22 AM
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w0mbat
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We started out as a kit manufacturer and ended up with a hobby shop by accident. As a manufacturer of kits, we had quite a few dealers that were small hobby shops. 90% of them didn't have very good luck with kits but the other 10% sold them as fast as they could stock them. In talking to them individually, there were two things the successful shops had in common: 1. They were very educated in kit building and could provide any type of technical support. 2. They had the money and weren't afraid to put in inventory.

Our business started to change in 2008 and we slowly progressed into the general hobby shop business. Our town is only 50,000 people and every hobby shop before us had closed rather quickly so we were a little apprehensive about it. We knew that 75% of club members in the area didn't support the local hobby shops, so we either had to grow the hobby ourselves or be content with only a few customers. We had one hobby shop at the time and they didn't even stock propellers on the rare occasion they were open. We opened our retail shop as more of a showroom for Skyshark products with the addition of hundreds of different size props, spinners, hardware, etc. From there, it just started to grow and we devoted less time to our kit manufacturing business. It's funny that today we sell more kits (all brands) in store than we do ARFs or RTFs. Most of our business comes from getting new people into the hobby and making sure they will be successful at it. Granted, some of those people will learn all they can from you and then buy everything online, but we also have quite a few very loyal customers. I can't even count how many times we have turned away business from people who just wanted to buy a plane and fly it themselves, but in the long run it has paid off for us and the hobby in general.

Owning a hobby shop and being successful isn't about just moving product. It's more about building trust and relationships with customers and having fun doing it.
Old 03-31-2015, 11:16 AM
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Ron Olson
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I live in a city with about 64,000 and we have 3 hobby shops here, a HT USA and 2 others. They cater to what's popular. What's hot this month will probably be old news in six. It's a constant struggle for them to keep older and newer parts including aftermarket in a limited size building. Not all are just RC but also have other hobby and craft supplies. One has both an indoor and outdoor track to the 4-wheel crowd so that's a big money-maker there as if you break something, walk to the front and get replacement parts.
It's an instant gratification world. Everybody wants RTR, RTF, etc. instead of taking the time to build something from a kit. They're going to sell what sells as they can't afford dust collectors. I try to buy local when I can because I need them tomorrow. Most will price the same as Tower or Horizon. Pay the sales tax or pay for shipping, your choice. I'd also rather be able to see exactly what I'm getting instead of seeing pictures of said item.
I'm a boater so the options aren't that good for someone who builds instead of buying a RTR even with the many lakes here. I do dabble in the flying things once in a while though.
One in town I don't know how they've kept their doors open. Oftentimes I'm the only customer in the store. Another does a lot of online sales, mostly drop shipments from "their" warehouses in Champaign, IL.
Old 03-31-2015, 12:52 PM
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You can't stay in business selling for retail. I was a purchasing agent so I know the discounts the retailer gets and believe me your getting gauged by the hobby shop.
Old 03-31-2015, 01:44 PM
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Ron Olson
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Yup. Some cry like used car salesmen. I happened to see one day at a LHS what they pay and what they sell for. Nobody in their right mind pays retail. I've seen lot of places that sell some things for a LOT less than even the giants likes Tower or Horizon sells for. Seeing how I'm mostly a gas boater I priced the Zenoah 260 from both. I just bought one last week new for $158.00, they want about double.
Many items that they both sell, a hobby shop can't undercut their prices as they'll give a ridiculous retail price then a "street" price so that online shops don't sell for more or less. There are some who will offer a "freebie" if you buy from them at that price so that you're in essence getting a better price without them losing Tower or Horizon from cutting them off.
Old 04-03-2015, 12:32 PM
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A others have said, the internet is the main thing that has killed the LHS (and many other small retail stores.) When hobby stores setup websites, one could get a lot of pictures and information about the products; much more than you could ever get from a printed catalog that dedicated a few square inches (or less) for each product. This is not as good as being able to see a plane up close for yourself, but it's the next best thing.

Tower Hobbies was already well established when I started flying 25 years ago. Still, we had a LHS, and bought most of our stuff from them, except for most of the kits we purchased. This LHS allowed the flying club to hold monthly meetings at the shop. This was a good business idea, as they always made a dozen or so sales for modelers who were there for the meeting. Even though Tower had no free shipping back then, Tower's cost of the kits + shipping was always less than the retail price of a kit + sales tax.

Glow fuel sales are one of the big trump cards for the LHS, since mail order/online retailers have to charge high shipping surcharges for hazardous items. Every drop of glow fuel I have ever purchased came from a LHS. Our nearest LHS (a Hobbbytown USA) is about 30' from our home. It's worth the drive for fuel, and for small items that I need ASAP to get a plane ready for the weekend.
Old 04-04-2015, 11:40 AM
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I think the most difficult part of running a hobby shop is having to spend most of your time with people who have no intention of buying anything from you. Many people just prefer to purchase online so they use local retail stores to get all the information they need to make an informed decision and then buy online, even at the same price. It's really a double edged sword because if you stop assisting them once you realize they are not going to buy the product from you regardless, you risk losing future business. On the other hand, if you spend hours educating them and they never return, you lose potential sales from other customers.
Old 04-05-2015, 04:19 AM
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One major issue is your suppliers are your #1 competitor. Then trying to sell at MAP at 20% (normally less) just won't cut it. It usually takes 30 to 35% in margin dollars just to keep the doors open. Then there's the customers who just can't understand why your not selling at Hobby King pricing. Probably the biggest issue is the guy who wants to make a business out of his hobby but has no clue of how a business works. Some of these guys will succeed by most will not.
Want to make a million in the Hobby shop invest 2 million.

Mike

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