Hobby People Closing-The slow death of retail hobby stores.

I went into Hobby People just to buy a propeller balancer, and the shelves were empty.   They were starting their going out of business sale.   The owner, Paul Bender died last month.  His kids didn't have an interest in keeping the stores going.


Women have their own hobby store, Hobby Lobby.  And though Hobby Lobby won a landmark Supreme Court decision against the Affordable Care Act (Obamacare) and many a feminist was up in arms about the place, vowing to never step foot in the store again the stores are doing great.  Plenty of women shop there and other craft stores like Micheals.

The  male hobby store is a different breed altogether. Perhaps it's because we don't tend to like shopping as much, or perhaps the stuff sold in these stores tends to get expensive, we just tend to shop online.

The online world is killing the hobby store.

Let's do some fun math.    There is a radio controlled airplane kit that costs $50 wholesale.   You own a store that is online and one that brick and mortar.      The retail store runs on a 30% GTM whereas the online store is at a 15% GTM.
Selling price
$69.95=Retail store
$59.95=Online

In this example you're making  a bit less than 30% GTM for retail but more than 15% for wholesale.  Another way to look at it is that you're picking up $20 for each retail sale but only $10 for online.

The question is, how fast can it sell?  It's a fairly popular item, you sell it once a week in retail on average, or 50 times a year.  Whereas you're selling it 100 times a year online.

Either way you're making $1000 a year on that item.   Now, let's factor in the retail cost.  You're getting a deal on your lease, you're only paying $10 a square foot. The kit takes roughly 2 square feet.  That's another $20/4=$5.  So, the extra $10 you made having a retail store means that half the profit is gone, just like that.   With the extra $5 you have remaining you have to pay wages, workman's comp, heating, cleaning and all the other fun things  The extra $5 you made doesn't go far.

And that's the problem in a nutshell. It's cheaper to house inventory in large warehouses where rent is measured in pennies or low dollars per square foot.  Because places like the Amazon fulfillment center are massive.  With predictive logistics they can help you stock inventory in warehouses close to where sales are most likely to occur, thus reducing the wait time.

Now, as a consumer, would you like to pay $59.95 for a kit you can have shipped free to your house that may arrive in a day or two, perhaps without sales tax,  or pay $69.95 for something you can get today?

Much of retail is dying

Everything about retail is changing, forever.   The ability to walk into a store and chat up the local pro is increasingly a thing of the past.  There still are some hobby stores around.  But they are increasingly dying off.  Perhaps we should talk to Bass Pro Shops and ask them to put in an RC section in their stores.  Guns, ammo, LiPo batteries.  It's all good.

So long to Hobby People

This was a great store! It was local in flavor, but full of people who were passionate about their hobbies.  But, when you're looking for an odd motor mount and they didn't have it, the alternative was that you would have to check out half a dozen other stores in the area. Now, you don't have to leave the house to find it. .  No matter how obscure it is, if it is made, or was made within the last 20 years you can usually find it.  The only problem is the cost of shipping.   Tower Hobbies wants $100 in orders to get free shipping.   What do you do when you only need one piece of balsa wood?  Are you going to pay $10 for something that you were overpaying for at $5?  Are you going to come up with another $95 in orders just to hit your free shipping minimum?

Though I can clearly see how the store closed down I still feel sad that a piece of our heritage is going away.  This was a store for men, kinda like Bass Pro Shop.   When you factor in the amount of drones in the market the base of people flying something is larger now than ever before.  And yet, the hobby store is a dying entity?

While at the store one of the clerks was snapping at the customers.  I think the shock and sadness of the reality was hitting him and he wasn't too pleased about it. I spent over an hour at Hobby People today.  In that entire period of time not one single woman walked into the store.

That says something.

There was a certain fraternal order in the store.  While in line I was talking to a tradesman who probably was an electrician or a carpenter  He is deep, deep, deep into the hobby and all his money went into the hobby. He's a neat guy I wouldn't otherwise meet or get a chance to talk to unless I start flying gas powered planes at the RC parks.

I have the feeling that the pressures of a struggling set of stores may have helped lead to Paul Bender's death.  For a store that took the moniker of "Discount Hobby Stores" there was a sign on the window that being  said "We beat internet prices."   It's getting harder to do with large scale organizations like Horizon Hobbies and Tower Hobbies.   They have huge buying power and can leverage their suppliers for the lowest prices.  This makes it difficult for the small hobby store or regional store like Hobby People to compete.  Still,  these larger hobby store mass retailers can  also depend on their manufacturers or wholesalers to inventory and drop ship certin orders.  Orders are processed online and instructions are given to the where to ship the merchandise.   This means they never paid employees to touch the merchandise and they had no inventory costs.

How can any brick and mortar store compete with that?

If you think about all the cars, boat, quadcopters and planes that take batteries, motors, and speed controllers one other thing about the hobby is becoming clear.  As the number of these hobby items increase the cost of these items decrease.  Lower cost items, even with the same GTM means frewer profit dollars.

One of the customer asked "Hey, is a hobby store a good business to start?"  The salesman behind the counter nearly broke a smile when he said "Not in these days of Tower Hobbies."