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Industry Issues Survey Comments

Published: September 14, 2016

If you would like to take the "Industry Issues" survey, click here.

In the October 2016 issue, Model Retailer asked what was keeping you up at night. We revealed hobby retailers' biggest concerns: from manufacturers selling direct to consumers, declining sales, the Internet, and more. Shop owners from across the U.S. and Canada answered our survey in earnest.

Here are some of the comments we received:

"The thing that upsets us is that, as we've grown accustom to distributors selling direct to customers, some of our distributors will list Minimum Advertised Price (MAP) but NOT what price they are selling through their own on-line stores. They call it "Street Pricing". To quote a price to a customer visiting our store we have to go, not only to their wholesale web site to check availability, but also to their direct-to-customer site so we can find out what the real MAP/Street price is!!!"

"Disinterested kids and the rapid loss of the "greatest generation" makes me wonder where our future customers will come from."

"Competition from the manufacturers is a problem, it's hard to compete head to head on the exact same product. Several manufacturers sell product cheaper on Amazon or their online site cheaper than we can buy them wholesale. We simply have to opt out of selling those items which starts to limit what we can sell. We'd also like some support with advertising and marketing--simply supplying store graphics, small marketing giveways and promotional items would help everyone in the sales chain."

"Well this is not new but, the online sales that seem to always be running can hurt a brick and mortar shop like ours. Customer interest or lack of it is always a problem as well as kids not getting into the hobby. Sometimes because there not interested also parents have very little time to spend with their kids due to themselves being overworked ( or not interested )."

"Manufacturers who spout about individual hobby stores being "the future" and the "lifeblood' of the hobby can't help themselves to selling discounted products to the public through their own retail and on line outlets. It appears that they don't believe what they say and are actually preparing for the day when there are no longer any surviving hobby shops and all the retail sales go directly to them."

"I am very concerned about how availability of items is helping to kill the model railroad hobby. Model railroaders are increasingly frustrated by not being able to get what they want, when they need it and are turning to other hobbies. Most manufacturers are at 1 year or more between announcement and delivery; and they don't want product on there shelves for more than a few weeks after arrival from China."

"Manufacturers sell directly taking sales away from the shops - end of story. They should be concerned with development of product, keeping on schedule, etc. Why are they putting all this effort into selling into the market they want us as store owners, to support??"

"There isn't enough SPACE to comment: NO-ONE under 18 exists anymore on their own; with Stevens selling to our customers: THE END is NOW!! No category is ENHANCING $ales; Cost of goods sold is "thru-the-roof"; Industry does not seem to care ($100 tank models!!!-common); The day is coming when you will only be able to buy a piece of balsa, tube of glue, jar of paint: ON LINE only, from MEGAHOBBY (aka Stevens)."

"The Internet offers more outlets for the consumer and often lower prices and no sales tax."

"Distributors selling direct at deep discounts is a very big concern for me. They are blatantly undercutting the hobby shops giving little margins that is shrinking all the time."

"I think that Amazon is the death of small business because they make it a point to undercut in store pricing."

"I am concerned about manufacturers moving towards direct sales to consumers and internet sales. The brick and mortar store has to struggle with competition in price, availability, and marketing exposure. Small shops need help and cooperation from manufacturers and distributors, not competition and lip service about what they do, but don't deliver. True MAP pricing from all the major manufacturers would be a big step in the right direction. It would even the playing field on price at least."

"Amazon doesn't care about profits when it comes to getting a new customer. They will sell it for a penny. We can't afford to do that and stay in business. Likewise, some internet and Big Box retail prices are lower than our wholesale cost for the same item because of their volume buying power. Then we have manufacturers and distributors selling direct to the consumer online at prices well under the MSRP. We stopped buying from companies that do this, which narrowed the number of suppliers greatly because the majority of them do."

"Manufacturers selling direct to customers at the sale prices in the catalogs they send customers is aggravating"

"sales have completely tanked, can no longer pay bills or do anything that will make the business move forward."

"Online is the way of the future but mfg and distributors need to control MAP and bootleg products to protect legitimate products and retailers"

"I feel concerned about a lot of the issues. The main issues that I'm concerned about is how Amazon behaves as a dealer and how they can ship things for next to nothing which essentially kills us. Other than that it also is very concerning that a lot of manufactures now sell directly to the consumer and many times under cut our costs by selling cheaper than we can buy"

"time management is always a problem I never have time to get everything done."

"If the trend continues with the young people having no interest, it won't matter about all the concerns above because there won't be anymore hobby shops in the future."

"My (former) major supplier also sells direct to the public and aggressively undercuts my prices. They exhibit no loyalty to the hobby shops they sell to. I still buy some items from them but the percentage of my stock that comes from them has dropped from 70% to 25% in the past 18 months. Yes, I'm talking about you, MMD!"

"Many of these issues tie together when pertaining to mine and any small individually owned business. Naturally I'm concerned if I'll ever be successful in selling all my inventory so I could retire completely someday without ending up stuck with product that can't generate dollars but having dollars invested. Also, whether or not someone else would want to be a train shop owner so that my little shop would be a continuing asset to our community."

"The biggest issue to us is Manufacturers selling direct to the public. We just dropped a major manufacturer as they keep flooding the local retail space (their US offices are here locally) with kits at a price well BELOW wholesale. They have a complete lack of respect for the retailers. Despite repeated complaints by us and others they made it clear they will continue doing so."

"Late shipments cause me to have to explain to customer why the Manu. is late. Kids are too interested in video games that their parents use as baby sitters"

"Due dates" falling behind and behind then not being done at all."

"Am in Canada and the US$ vs the CDN$ and being 1 hour from the border."

"A big ongoing "thorn-in-the-side" has always been distributors competing with dealers. For example Tower Hobbies (Great Planes/Hobbico) offering ongoing discounts to customers that make it very difficult for dealers to compete with. We have even seen some examples from Tower Hobbies that the customer can get an item for LESS than dealer wholesale cost!"

"I'm not terribly concerned about internet competition because we have a web store. If you can't beat them... There isn't much we can do to stop the decline of brick and mortar. We have to follow the sales to the internet. Our web store is more than making up for the decline in b&m sales. If we survive my store will be a lot smaller in the very near future."

"Distributor/Manufacturer in Milwaukee continues to make it hard to do business with them. Reducing discount on top line and eliminating prompt payment discount for small shops are just two examples. Cancelling so many announced products and then delaying release for another year or more really kills sales and interest."

"Internet only lends itself to someone that knows what to look for. Discourages the novice or beginner."

"Loss of business due to the economy. Sales off 50% every since the economy tanked in 2008-2009."

"Distributors should not be allowed to sell directly to consumer. Either they choose to be a distributor or a retailer not both."

"The companies that produce and distribute should realize we are the front line to our boss The Customer and we need help to show what is best for them and know that they will be treated with respect."

"Internet is putting pressure on dealers forcing dealers to drop prices to virtually no margin. Dealers cannot operate competitively with internet sales."

"waning consumer interest - Smartphones and the internet are sucking the average intelligence quotient down so drastically - we will probably be in caves in a couple of generations!"

"How to get more kids into the store. How to generate more interest in Games Workshop products."

"We are facing a local economy that is in pretty bad shape. We are oilfield dependent. With manufacturers selling directly and box stores getting into the drone business it makes it harder to get people into the door. With Amazon starting to get same day or next day delivery, margins will have to shrink to compete in those markets"

"The made to pre-order production model is causing most of the problems/concerns in the hobby business."

"I fear that the "customer is always right" mantra has turned into an ugly 2-headed beast. The all-too-lenient return policies of big box stores have turned consumers into mindless users that are actually committing crimes of fraudulence without even knowing it by demanding refunds they should not get and/or creating a chargeback with their credit card company and then leaving bogus reviews that border on slander in the on-line realm. As a result, the retailer is left with a damaged pile of goods that cannot be reimbursed, or in the case of a chargeback, no goods for reimbursement and hefty fees from the merchant services provider, and a bad on-line reputation. Where are the laws to now protect the Retailer from the Consumer?"

"Quality can be an issue, our customers are paying for hobby quality items and when they receive a product and something immediately goes wrong through no fault of theirs we have to do the right thing and get them up and running, often at our cost."

"For us a big concern is the neighborhood that we are in. It's overcrowded with people that are buying from our shop so we rely on customers coming from other areas. A big problem is lack of parking. I know it's easy to say well move! There's a couple of reasons not to move. We were lucky enough to purchase this building so not rent, also we've been here for 45years plus. So moving is probably not an option for us right now"

"The pricing of today's most popular products are ridiculously high. Granted the detail is amazing but how is a younger hobbyist going to purchase a $400 locomotive or $35 rolling stock on their part time, minimum wage pay? There was a time in my younger days when an Athearn locomotive could be had for under $20 and rolling stock for $4 each. There will be no future for the hobby without attracting the young and that just isn't happening - thanks to the short sighted and profit driven 'big boy' manufacturers. While they whistle to their way to the bank the hobby dies."

"Pricing: The price advantage of doing business in China has gone away. Current pricing with the poor economy is keeping parents from getting their children involved in the model railroad hobby. We need more low-end detail items for kids. They don't care about museum quality reproduction or DCC; they just want trains to run on a layout."

"Less than ten years ago collecting die-cast vehicles and planes was an affordable hobby for almost everyone. Today, with skyrocketing prices it has become a hobby for only the elite. Few want or can afford to pay $50-100.00 or more for a replica that sits and eventually collects dust, with little or no resale value. A good part of collecting fun is finding that toy that cost $1.00 or less 50 years ago, that's now worth $100.00, not vice versa."

"As a shop owner who is also a teacher, I see far to many children who can't take their eyes off their phones and games. They are getting to be totally away from interests that require thinking and doing more than pushing a button. Sports so far have not been affected."

"Counterfeit products, distributors selling to end users,"

"Another issue that we find very concerning is the quality versus cost issue. It seems that many products are made in China and the quality is not up to standards. Yet the cost still seem as hot. This has ongoing concern and one of the reasons why we work to find vendors from Europe and America That offer quality products for the price"

"My main concern over the past year & a half has been whether or not my little train store, that sits right beside my house, will be robbed again or if my new security system will stop any intruders. My first concern is not whether or not business will come which is probably not the best way to conduct commerce. I guess it is what it is. Thank you."

"High cost of retail space. We have loads of empty stores here but the landlords still think they can command high sq. foot $s. and cannot rent the space. They can rent at a lower rate but do not seem to care at all and would rather loose money (tax breaks??) than rent. The high rents have caused at least one nearby store to turn over almost every six months, and then the property remains empty for three months until the next to try. How can the landlords keep that up? I would rather have a steady renter for years than every couple of months."

"Multiple manufactures (importers) announcing products that virtually duplicate another's products. When three different manufactures announce literally the same thing, we do not order any unless requested until the reviews are out and we can tell which people are wanting."

"People ordering stuff and then not picking it up."

"Not enough new customers entering the Hobby"

"If the manufactures keep allowing deep discounters, they will continue to see their sales fall, and ours. Railway is the worst offenders, I bring less high end locos into the store now, a lot less. People get the brain storm at 11:00 at night, go online, and find the deep discounters first. Now they think the $150.00 item is $100.00, they come sailing into the store the next day and find out it's really $150.00, more than they planned to spend, so they just don't buy it."

"Wholesalers not performing their role in the distribution chain. Most are acting more as brokers than wholesalers."

"Overwhelming social media channels. Trying to figure out how to communicate with my target market."

"margins that are to small. Looks like a lot of hobby companies want to sell direct to the customer more and more and don't leave much margin left for retailers"

"The general lack of consumer spending as noted in the recent report on the decline of fast food sales for the last 3-4 months. It appears as thought the American consumer has decided to "wait and see" what the next months will bring."

If you would like to take the "Industry Issues" survey, click here.