LHS and the economic crisis
Are LHS's going to survive this crisis? Are soon going to be totally dependant on Tower Hobbies etc.
How's your LHS doing? |
Our LHS closed it's doors just before THANKSGIVING, and a NEW Store opened with a new owner (former manager of the old store) a week before Christmas in a new location.
The OLD Store closed on what should have been the start of the HOLIDAY Shopping Season (which had to hurt sales) and the new stored opened late enough to miss a lot of the holiday shopping. He's already struggling, and he's only been open a month. I hope and wish him success, but trying to compete with the TOWER's and STORMER's and so on is a tough business. They are solid companies with a strong customer base and GREAT prices. |
The short answer is NO, many hobby shops will fail.
The reason is caused by a positive feedback cycle in economics. A feedback cycle is where one action causes another action which in turn escalates the first action repeating the process. Local Hobby Shops are in direct competition with Mail Order shops like TowerHobbies. I like shopping online for large purchases because I save alot in taxes. Shipping is $7 and if I were to pay taxes it would be $20, so I am saving $13. Every purchase made at TH is less local revenue in the form of taxes for cities and states. In turn since the City and State governments have really big budgets, they will raise taxes when tax revenue begins to drop to cover those big budgets. With higher taxes this lowers the threshold for hobbyist to use a mail order vs. a local hobby shop. To further complicate the issue of lost sales to local hobby shops is the recession. During a recession many people have to take pay cuts or lose their job to others willing to work for less. With less money to spend, the fun things are the first to get shorted while the bills get the attention. There are so many other factors involved, but the main key for LHS is to start limiting inventory and build a cash reserve. It is hard enough for a LHS to compete with TowerHobbies because of the Economies of Scale. When LHS have to charge taxes and Tower does not, it becomes really hard to compete. This may violate some peoples thinking, but I feel taxes should be placed on mail orders at the facility location of shipment. |
I may be an optimist and not exactly business savvy, but I think this needs to get thrown at the manufacturers and distributors.
Yes the largest portion of RC is bashers and they could care less about local tracks. However, the high end, race manufacturers or distributors should be selling directly to the LHS that have tracks so they can compete with Tower. Bashers aren’t buying XRays, etc… If tracks close, they are losing customers if people have no where to go. Race Fees won’t keep a track open. |
Originally Posted by trailranger
(Post 5305095)
.....
Local Hobby Shops are in direct competition with Mail Order shops like TowerHobbies. I like shopping online for large purchases because I save alot in taxes. Shipping is $7 and if I were to pay taxes it would be $20, so I am saving $13. .... It won’t be long until laws catch up with the internet and Online retailers will be required to collect the state taxes. |
Originally Posted by trailranger
(Post 5305095)
I like shopping online for large purchases because I save alot in taxes. Shipping is $7 and if I were to pay taxes it would be $20, so I am saving $13. t.
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Ha ha, TwoTone and I were thinking the same thing. :lol:
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Originally Posted by trailranger
(Post 5305095)
Local Hobby Shops are in direct competition with Mail Order shops like TowerHobbies. I like shopping online for large purchases because I save alot in taxes. Shipping is $7 and if I were to pay taxes it would be $20, so I am saving $13. Every purchase made at TH is less local revenue in the form of taxes for cities and states.nt.
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Hobby shops do more than provide products, they also provide SERVICE. Very important difference. Sure, an internet retailer might be able to answer a question or two via email, but when you're just getting started in the hobby, and have a million questions, who can you rely upon? The LHS.
I believe very strongly in supporting the local hobby shops, even if their prices are a few dollars more. Why? Not only because of the customer service they provid, but also because of the convenience. What if you need a certain part 'right now' in order to finish a practice day or a race day? Are you gonna wait 3-5 business days to save $2 on a part that the shop already has in stock (rhetorical question)?! I also believe in supporting the local hobby shop b/c they can be the backbone of a local racing scene. And that's important, too. Support your local scene and it will grow! |
I think that once there is a set internet TAX ,either by the goverment or by state or both .things are going to change.The bigger internet companies will feel the effect first,they will have to pay to each state and/or goverment.This means man hours paid out to fill out paper work etc. That in turn will start raising prices to cover the cost.The local hobby shop will benifit in the long run .
I have been reading that such a tax could range from 5% to as much as 10%that would need to be paid again to the goverment and or each state.That means if you go by that, you would be adding between 5-20% to your online purchase.You $100 purchase will be $105 to $120 depending on the tax and if it has to be paid to both state and goverment. Again there is nothing set yet but a internet TAX in coming ,and i think it will be here sooner than later! sac |
Originally Posted by J.Filipow
(Post 5305279)
I also believe in supporting the local hobby shop b/c they can be the backbone of a local racing scene. And that's important, too. Support your local scene and it will grow! If possible, support your local hobby shop. |
I really don't want mine to close down so I have been buying 90% of all items from my LHS. Without a track to race at I wouldn't have anything to do with my RC stuff =/.
Buying a lot of little things from your LHS is always good since they make the most money (percentage wise) on some of the smaller items. Screws, washers, odd tools. |
I try to buy from my LHS when I can but sometimes it just doesn't make sense if they don't carry the stuff you're looking for. I have special ordered from one of the shops when it made sense. Luckily one of the shops will match internet prices but I don't abuse it as I do understand it's hard to compete with high volume internet stores.
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We hear this all the time and they always seem to close down. They do compete with the same vendors that sell them the product so it is a win win situation for the big dogs on the block. But when I hear alot of the folks around here say they want to help the shops out then I always wonder why the shops do not help the customers as well. The way I see it is that there are 2 points that will make someone shop elsewhere then there local shop. 1 being that they do not have or simply will not get the parts or product the customer wants. I have seen this time and time again. And 2nd they can get it 5 dollars cheaper online then at the shop. But then they pay 10 dollars in freight. Makes no sense. Really is a bad situation and to make it worse the economy holds a large part in it as well.
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here in boise idaho we have but one lhs. the other two died before the econemy did. so we have h.t,usa which is good and i shop there more often than not (because it is local) however. the prices are a tad steep and fluctuate with regularity. the parts that alot of us local racers need (we dont all run the same car) the lhs doesnt carry (ihave to order them anyway) and the lhs support of our local track is minimal at best (they are not the same).
that said if you need a part for a traxxas (any part) they have it. if you need a part for a losi 8ight they probably have a stock part (better than nothing) but if you run anything else (hyper 7 / x1crt / h.b. d8 / or?) yer pretty much s.o.l. still i hope they make it i dont mind paying a little more for my fuel and glow plugs if it means i can get one at 7 on a saturday night. but i think when i get my new ride for the year it will be online with the support equipment to go with it. and i know right off the bat just on the buggy i will save $300----- thats alot of support equipment! |
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