This topic (about Local Hobby Shops and their future) arises almost every week or so on the various forums and conversations I have with industry colleagues. Our economic system is without a doubt in trouble. Yet each day new businesses continue to enter into the marketplace or existing ones reinvent themselves to adapt to the ever changing trends. Many of the new entrants will fail for several possible reasons, as will established businesses. There is no one pill that a business owner can take to prevent eventual death in the retail marketplace. However, there are preventative measures to remain healthy and viable until the time of their choosing to make an exit, one such measure being education.
The emphasis on the Local Hobby Shop’s (LHS) survival is forefront in this hobby. It is a similar story which has effected other retail establishments such as family-owned book, drug, sporting goods, bakeries, five & dime, butcher and appliance stores, to name a few. Each has had environmental and evolutionary changes. Main Street gave way to highway bypasses that took traffic (customers) away from the once cherished and profitable locale.
Single, stand-alone operations lost out to chains and franchises. In many cases this was a change that was inevitable because the owners of the local little shop reached the end of their tenure, much like a farmer who has no one to continue on the tradition of the family’s farm.
Retailers who failed to adapt and grow with the community and its needs succumb to those who have read the tea leaves and acted appropriately. As with the fast food industry, we all know who the major players are…McDonalds, Hardees, Wendy’s and KFC. Yet there are regional operators who are gaining ground in that marketplace because they have the ability to identify and react to consumers’ wants and needs. Companies such as Culver’s have created a large geographical footprint in the marketplace within the US. They potentially have the ability to give the larger national franchises a hard run for consumer dollars.
So what is the future of the LHS? Many are searching for this answer. It could be that the end is near OR that a new breed of LHS is about to evolve…a store that specializes in hobbies, collectibles, toys and items of scientific interest. Could such companies as HobbyTown USA be poised to capitalize on this? I don’t know, but regardless of what happens, some hard business decisions need to be made.
Hard decisions need to be made not just by one of the “players” but by everyone involved…manufacturers, distributors and retailers. All have to plan and make those tough choices. Consumers also play a role in this. As prices continue to soar, what is the upper limit they are willing to spend for merchandise related to their interests? Will this necessitate the elimination of the “middle man” to trim final costs to the consumer? In other industries the distributor tier has been eliminated to keep costs competitive.
No, I haven’t forgotten the role the Internet retailer has on this industry either. Do not forget that it was once feared that Amazon was going to put all brick and mortar bookstores out of business, yet even with their huge customer base and sales volume, Barnes & Noble and Borders still exist and thrive in the same marketplace. The doom and gloom rhetoric spouted about Internet retailing being the cause of the demise of the LHS is based on misinformation perpetuated by those few who don’t have command of the facts.
Internet retailers have one basic difference in their business model…they don’t conduct face to face interactions with their customers. There are advantages and disadvantages to either business model, but they must be managed in exactly the same way and able to adapt to an ever changing market. The scale and scope of Internet retailing is as diverse as it is for the LHS. Success or failure boils down to the business decisions made by the owner/manager. I’ll touch more on this particular topic later.
Will the LHS survive? I hope so, but in what form I don’t know. If it follows the trends of other similar businesses, it might be found not on Main Street, but out on the bypass near the mall, bigger and better than ever!
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September 24th, 2008 at 9:09 am
Retailers who are seen as good, really good from the CONSUMER’S POINT-OF-VIEW will survive and grow profitably…..assuming they offer stuff folks want to buy. The issue is, of course, what does “really good” look like?
What do most want/expect to see from a retailer, either on-line or on main street, including the LHS? I think are three basic/critical requirements for any and all retailers:
1. Broad selection of product wanted by the consumer markets aimed at .
2. Good value, wherein value represents……what you get for what you pay. The more you get of what is important to you in the procuct, for less and less money, the better the value, eg, a brand new 2009 Audi A-6 for $25,000 is an incredible value for me……at $75,000 it is not. Generally, value is in the eyes of the beholder……for those who don’t like Audis at all, they might not be a good value for them at any price…..well, maybe “free”, eh?
3. Top-notch service, wherein service includes having the products you say you will have, on hand and ready to sell; knowldege about what you sell; fairness and promptness in making adjustments, always with a friendly attitude.
There are many added components to success, however these are critical and shortcomings in them will result in less than desirable sales/profit results, often leading to business failure.
Food-for-thought.
Bails-In-Minnesota
September 24th, 2008 at 9:58 am
Bails,
You are quite right. I have used the car analogy myself, one can purchase a Buick or a Lexus, both provide the same basic features and amenities. They are both functional transportation, the difference is which is the better overall value? Most importantly can one given their financial situation afford that value? For each there is a place in the market, there are those who prefer one of the other and having an option as to which they prefer to purchase is all part of the free enterprise system.
Customer service is for many a consumer the most tangible reason they do business with a vendor. When a vendor loses sight of the importance of good customer service they lose the customers that keep them in business. Many fail and cannot comprehend why they failed…prices good…selection good…location good…but we still failed? I don’t understand why?