Replies

1. 
   sailalex | Oct 14, 2004 02:32pm | #1

   Sorry to hear that; I worry that such could happen in other locales. I really value our Woodcraft store ( located in a southern city) but as I ask the owner how things are going after 2 years , he say "okay", but not enthusiastically. Near a large city like Cleveland, one wonders why it is going out of business rather than the owner having a viable business that could be sold to someone. If it can happen in Cleveland, I suppose it can happen anywhere. Woodcraft stores are the only places to get quality woodworking supplies in many communities ; when we use them to view merchandize and then buy online for a few dollars less we run the risk that they won't be there in the future.

   I have no Woodcraft connections ; just a regular customer who is glad to have them available.

1. 
   MarkRoderick | Oct 14, 2004 04:11pm | #2

   The same thing has happened to the Woodworker's Warehouse chain:  bankrupt and defunct.

   I'm just guessing, but I see two main problems with the business. One, your customers are cheap. They come into your store to drool over the merchandise, but when they're finally ready to buy that $180 router they go to Amazon or Home Depot and get it for $5 less (then complain about the poor customer service). Two, you just can't put very much inventory in one of those stores. Look at all the woodworking tools and supplies there are out there in the tool catalogs all of us get. In a retail store you're carrying a small fraction of those items and therefore missing out on a large part of the revenue in the market.

   Woodworking is just a real tough, niche business, it seems to me. Right now I'd have to say the people doing it best are Lee Valley. I admire their business acumen, although I have no idea what their financial statement looks like.

1. 
   roblee | Oct 16, 2004 12:18am | #10

   Mark -

   Astute observations...

   Cheers -

   Rob

   (Stmts are just fine, BTW.... :) )

1. 
   lwj2 | Oct 16, 2004 04:07am | #11

   Seems that things haven't changed in thirty or so years.

   I worked for a camera shop when I got out of high school. Decent business, good folks. Then the discounters moved in. We'd have some customer that purchased a Nikon for 5% less than we could sell for wander in asking for help.

   After several of these folks had chewed up sales force time, Mr. Baker put up a sign offering instruction from selected staffers at $15/hour.

   Several of the folks that bought stuff from Bestco (local discounter down the street) bitched. Went back to Bestco. Oddly enough, the sales folks there barely knew how to load film into what they sold.

   This went on for about a year and a half, then tapered off. The folks that bought discount started buying lenses and other cameras from us because we could show them how to use them.

   Bestco eventually went toes-up. Baker's stayed in business until the Bakers decided to retire.

   You get what you pay for. When you don't pay much, you don't get much.

   My 2¢,

   Leon Jester, Roanoke VA

   Q: How do you know when a politician is lying?

   A: His lips are moving.

1. 
   DrWatson | Oct 17, 2004 09:52pm | #12

   One of the things I have not seen touched upon are the very thin margins in the woodworking equipment business.

   As a semi-retired CPA with experience with a couple of the largest retailers in the country, currently a partner with my wife in a retail business for 10 years and a former part timer at Woodworkers Warehouse(WW) I have had some relevant experience in this area.

   Yes, competing with the online retailers is tough. WW had about 100 stores and stocked them with a wide range of cast iron products. A lot of dollars on investment. Amazon can probably get by with a dozen or fewer Unisaws in inventory as opposed to 100 for WW and buy them at a lower price due to higher volume.

   An even larger problem lies in the thin margins on the stationary tools and most corded tools. Since our employee prices at WW were based on cost plus a small increment for handling we could tell about what cost was if we asked for our price on an item. For most of the stationary tools it was probably in the 12% to 20% range at most and 20% to 35% for corded tools. That left the company the accessories to mark up at 50% or more to try to squeak out a decent profit. There just wasn't enough volume in the lower margin items to compensate for the lack of margin and carrying cost.

   WW had several other problems in their methodology but I won't go into those since I have a football game to watch.

   Your average retailer needs either an initial markup of about 50% (the percentage of the selling price that goes to profit) or a heck of a lot of volume and/or extremely low overhead to survive.

   Woodcraft probably franchised that location because it was not profitable enough and they at least could recoup their investment from the franchisee, and make a profit on what he bought while he was in business.

   Storefront retailing of woodworking tools is a very difficult business. That is why the stores that do exist are few and far between.

2. 
   PlaneWood | Oct 14, 2004 05:01pm | #3

   A lot of this is being caused by the Internet and online shopping.  Also because of the increased communications resulting from the Internet.  In the past one would go into a store and pay what ever price they were asking, not knowing any better.

   I order most of my stuff online which includes using Ebay.  Even with shipping costs added in it still is a lot cheaper.    Shipping costs are about equal to local sales tax for a lot of things. 

   My take on all this?  Well one, the Internet is a good way to save money.   And two, maybe we should buy stock in shipping companies!  I saw a UPS truck the other day pulling a UPS trailer.  First time I have seen that.  That tells me something!

   Having been a computer professional all my working life, I predicted 12 years ago that the Internet would have a profound effect on the world.  We're just seeing the tip of the iceberg now.

   By the way, if your going to be marketing a new product, give it a catchy name that will be unique to assist people searching for it using Google!

   PlaneWood by Mike_in_Katy (maker of fine sawdust!)
   PlaneWood

1. 
   Jimma | Oct 14, 2004 06:55pm | #4

   PlaneWood, I think you're right on about the internet and people saving money, but I think the Woodcraft issue is more complex, more of a retailing thing. Why do I say this ? We had a company-owned Woodcraft store that carried a very large inventory of cast iron as well as accessories and other goodies including, gasp! -- a large inventory of Lie-Nielsen tools. They even kept a good selection of exotic and ordinary hardwoods. Still do. The staff was exceptionally informed about the inventory and, for the most part, would also qualify as seasoned woodworkers. In addition, the staff was helpful, even enthusiastic about being there for you. Then -- the store was converted to a franchise. The new owner had little retail experience and almost no woodworking knowledge. Gradually the seasoned staff was reduced to less than 40 hours per week, had their employee discounts cut and underwent a big turnover, although several of the "originals" are still there on a reduced schedule. Most importantly, there is a shift in "aura" with the owner being less welcoming and defintely not someone you'd seek out for woodworking or experience-based tool knowledge. It's hard to describe the difference because the store is still a great resource with almost all of the same kind of inventory, but you don't see many of the "old" customers anymore and the staff attitude has become less than passionate about woodworking and growing newbies to the craft. It's become a regular store; no flexibility and no "fun" and the staff has become fertive about spending "unproductive" time with customers. Whereas I once felt a loyalty to the store and looked forward to checking things out there almost weekly, I now seldom go there. It isn't really a matter of money, since the savings on most things other than major tools is paltry, it's the "something else" that is going away. Still, they have on the floor many of the big tools you see in the magazines, like One-Way and Powermatic lathes, not to mention many of the more common power machines, and you can put your hands on stuff that catalogs and on-sreen pictures can hardly compete with. And the service factor is still there because the home office still provides the backbone. But the store now has an element that's a bit off-puting -- not enought to keep you away if you really need something right now -- but enough so that the internet option is a lot more attractive than it was before the store changed personalities. So, I think the ability of the franchisee to project what woodworkers like and want, and for which in return are willing to pay slightly more, has a lot to do with with the viability and longevity of the stores given the huge resources, strength and policies of the parent company. (I'm intentionally not identifying the store location because there's always opportunity for improvement.)

1. 
   MarkRoderick | Oct 14, 2004 08:07pm | #5

   Here's my guess. The company was losing money when it was a company-owned store. The franchisee came in and had to cut costs to make it work financially. What you are seeing there is the reality of the industry in retail in general and a niche market like this in particular: you can't run a store as if it were 1957 and expect to make it. Consumers value low prices more than they value helpful and knowledgeable salespeople, when it boils right down to it.

1. 
   Jimma | Oct 14, 2004 08:46pm | #6

   Can't agree with you on this one, Mark, because the store has been one of the top grossing ones. It was even the regional office until the ownership transition. As a person who's been close to retail, I would say there are very few constants in the retail business, including the ones you mention, but there are some hints on the wall in this case. Even so, I believe the store is doing OK, so it may just come down to which of us is the better speculator as to which variables are most likely to be the operative ones in successful vs. failed stores. In the fast food, banking and many other businesses it's location that makes the difference. The store I've portrayed is in a good one with both walk-in and destination traffic even though the closing of a nearby home center has had an impact on the walk-in business. So, the question seems to boil down to whether price or service is weighing better in the balance. Having spent a number of years in the book business, I'ver seen it go both ways, but a poorly run shop has little chance of making it no matter what else is involved. You're right that usually it is the financials that determine the fate of a store, but the numbers only tell a part of the story and not the why part.

1. 
   sailalex | Oct 15, 2004 03:07pm | #7

   I agree with the comments about the Internet taking a lot of the business from the local retail units; customers today would rather use the store to "feel" the merchandise and then order online and save $5.  I, for one (definitely a minority), have experiencedwhat a growing number on this forum have experienced, i.e. poor quality tools. I was able to go into my Woodcraft store and IMMEDIATELY get an exchange without repacking the tool, getting UPS to pick it up, pay the shipping, then waiting weeks , if not months, to get a return from Amazon or other internet supplier. This level of service provided by my local store, in an age of declining quality of tools, is worth way more than the $5-10 I save  by shopping on the Internet.  

2. 
   CharlieD | Oct 15, 2004 07:43pm | #8

   Agreed; examining an item at a specialty store and then buying it on-line is cheesy, as well as a bad idea.

   The guys at my local WoodCraft (Denver) have been helpful in a large variety of ways, like teaching me to sharpen a scraper, something I never could seem to get from a magazine or book. And I can compare the quality of products, and consider the recommendations of staff. I can look through the books and decide which ones really have what I want. This issue is not just for WW stuff; when my wife and I wanted to buy a carpet steam cleaner recently, a person at the vacuum store suggested a Dirt Devil model as the best for what we wanted to spend. My wife wanted to look on-line or check at Wal-Mart; I convinced her that we owed it to the shop to buy from them. Later, when we wanted to buy a new vacuum, we went to the shop to buy a Simplicity; our previous one, sold to us by that same shop, had been great. They told us that the new ones were poorly built and recommended that we repair the old one. Holy cow. That's good service.

   If this trend keeps up, the country will change for the worse, just to save a few bucks per purchase.

   Charlie

   I tell you, we are here to fart around, and don't let anybody tell you different. --K Vonnegut

3. 
   Randal | Oct 15, 2004 10:57pm | #9

   Some people like myself live approximately 3 hours from the nearest Woodcraft ( or any other woodworking store), which makes purchasing via the internet a necessity at times.  If I lived near a full service woodworking store, I too would be willing to pay a little extra for personal service and expertice.