The LFS business model...

[JasonC]

This type of thing seems to make some sense to me... other LFS's aren't the enemy right now... Band together and push towards a common goal of providing better service and product than the big box can.

That being said, if margins are as tight as stated earlier, good luck trying to convince a cash strapped owner to invest in a whole new operation... Ladies and gentlemen, the Catch-22...

One thought I had was if LFSs could group together. They could pull together and get a warehouse in a rural area and buy dry goods in bulk. They could even start breeding fish for themselves, at least the ones that sell the most. isn't that how big als started their online site?

 

[ezrk]

I have two seperate thoughts on this, one as a fish person one as an observation about related businesses.

The other major hobby I participate in is wargaming, which means playing with toy soldiers now (which you can see on these forums, http://www.slitherine.com/forum/viewforum.php?f=163). Local game stores used to exist somewhat more broadly than they do now and they are having similar business problems to LFSes. Basically the internet is killing niche specialty shops IMO.

I still buy what I can at my local store (Game Parlour in Chantilly VA), but in many ways that is making a donation to them vs. buying from Amazon. Why? Because Game Parlour is effectively my "game club" and provides space for me play games with my friends and recruit other players. The local LFS don't have these side/secondary benefits...

I think pretty broadly we are seeing a trend in which commodity goods that you don't really need to "see" before buying is rapidly moving to the internet. Someone mentioned computer parts, well New Egg and Tiger Direct which have just about everything you could ever want. That said Fry's is still a going concern in some parts of hte country and we have Micro-center in VA/MD which is reasonably solid.

LFSes are not immune to this trend and it is going to be very difficult for them to compete with the internet. It is NOT just a price problem, though that is serious.

Which brings me to my view as a fish person. Wendy and I are both relatively new to keeping fish and thus largely missed the days when there were abundant good LFSes. So what we see is the state they are in now and honestly they have serious issues.

• They are not competitive on price.
• They are not competitive on selection, I can go online read various forums for reviews of a half dozen filters/pumps/whatever and buy one from Fosters and Smith, Big Als, Marine Depot, whatever. No local fish store carries more than a couple of brands and some things are simply unavailable. I have Eheim 1262s as return pumps in my sumps, where could I possibly get this locally? I decided I wanted Eheim cannister filters for my 55g, there was no way to source them locally.
• Wendy and I at one point were shopping for lights and went to numerous local stores. The selection for T5 HO lights was terrible and none were even set-up. We were willing to pay a premium to get a sense of what we wanted but we couldn't even do that. So we did pay a premium - online to Catalina Aquarium to get a 4 bulb fixture (for less than we would have paid for a two bulb fixture at an LFS) that let us experiment and figure out what we wanted. Many LFS I walk into lack even a reasonable selection of T5 HO bulbs, let alone fixtures.
• In general LFSes lack good knowledgeable sales people that are willing to spend time with serious customers. As you all know we have two new 110g tanks. We started looking for tanks/stands at local stores of all sorts but only about half the stores really seemed to want to sell us set-ups. So we went online.
• Local stores in general can't/won't or at the very least won't advertise that they can GET the fish you want. We bought 30 tropheus bulu/cherry spot in the ECC group buy. I have no confidence that I could get that number of quality tropheus in any way shape or form at an LFS in the area. The number of honestly terrible looking cichlids I have seen at VA/MD LFSes is pretty depressing.

Those are the specific problems, broadly I see the LFSes as being squeezed from the top and the bottom.

From the bottom, the big box stores are widely available, brightly light and for the most part more inviting than the LFSes for the person wanting a first time simple basic set-up. They are also more price competitive. We first dove in to cichlids without too much advice or thought, honestly we would have been just as well off going to a big box store as an LFS given the quality of advice we got.

From the top, the LFSes can't stock the variety/numbers of fish that the more serious hobbyish needs so they turn to the internet. They can't stock the variety of equipment so they turn to the internet. The quality of advice is generally lower than what you can get at a club and/or the internet so what role do LFSes play? The only thing you can't easily get on the internet is large tanks.

At the highest end even the extreme shipping charges of moving tanks (and stands) tends to wash out for custom stuff. What is worth noting is that Wendy and I would have been more than willing to work with (and pay a fairly significant fee) for an LFS that would work with custom/semi-custom stuff for us if they would a)arrange the details with the manufacturer, b)take possession of the stuff when shipped and c) then deliver it to us and get it into our house.

There are LFSes in the area that will do this, they are mostly marine places. One marine place wouldn't take us seriously that freshwater people really did want what is basically a marine set-up. Another did take us seriously but their custom maker was prohibitively expensive. That same place told us it was impossible to get starfire fronted tanks from Marineland while another was happy to place an order for one for us - but they couldn't get stands in any color we actually wanted...

The place we wound up buying from is effectively and LFS in another state that does three things that are interesting. They make their own tanks. They have a cabinet maker on contract that makes semi-custom stands and they will take out of state orders and ship.

Here is what I need from and LFS that would get my business in a serious way:

• Ability to get fish that I want. I would actually pay for an LFS to basically receive my shipment from Dave's, hold them for the few days or a week, acclimate them and then have me pick them up on a Saturday. Wendy and I are pretty busy and have in fact paid the Saturday premium so we don't have to take time off work to wait for fish.
• Ability to get equipment I want AND expert advice on setting up something beyond a simple aquarium. Delivery, which I am willing to pay for btw, is a nice bonus. We recently set-up two drilled 110s with sumps and wound up converting them over to Herbie set-ups. After a fair amount of fiddling and frustration we have them quiet, stable and are pretty happy with them...
• However, I would have paid a premium for a local store that I thought I could really trust to have helped through that process. I am not sure I have a store in the area like that, maybe some of the marine places. When I walk into your store suggesting I am willing to spend north of $3k on tanks, stands and equipment you should have a reasonable protocol for dealing with that, offering advice and trying to seal the deal. This seems to be rare for LFS....having your sales people, in non-marine specialized stores, obviously only interested in marine set-ups and having no real interest in selling that stuff to freshwater customers is not a recipe for success. Not following up, offering suggestions, etc is equally dubious. If the store is busy, which non were when we went in, offer to call back...If we ask for a quote on a custom tank at least consider that we might be serious and follow-up...

Too many LFS just can't figure out a value proposition that exceeds the internet, so they try to compete with the internet which is impossible.

 

[verbal]

This has been a great discussion. I think it is not just LFS that are struggling, but local independent stores of all types(I think hobbies especially).

I think the intermediate hobbyist has been the core business for the LFS. Even before the big box petstores there were fish sold in Walmart, Woolworth's etc. And I think mail order was significant for serious hobbyists even before the internet. For the intermediate hobbyist, I think the LFS served as a defacto fish club in addition to a source of supplies and livestock.

I think the intermediate hobbyist is disappearing. I think either people stop at 1 tank and it starts collecting dust after the fish die, or they end up with 10+ tanks and their weekends planned around fish club events.

I think if you look at the club's sponsor list, you see the new look of the aquarium related small business. You have importers and breeders who deal directly with customers and you have a pet store that is a "destination" store. Your Fish Stuff has a huge variety of fish foods and good selection in the areas where they carry products. And then you have a couple of sponsors that sell in a niche(Blackworms and driftwood) and have been pretty aggressive about engaging with fish clubs and online fish forums.

I think there is a place for B&M businesses carrying tropical fish and supplies, but I think it looks different than the pet stores of the past. One area that might succeed would be a high end focused store that serves as a showroom and has an affiliated aquarium service business. I think you almost have to include saltwater as part of the strategy, but I think there are some freshwater high-end areas that would be promising. Discus are one obvious area, and I think planted tanks and freshwater inverts(some of the crazy fancy shrimps) are an emerging high-end area. I think this would be the type of place that Ethan was looking for in his search for a tank.

 

[AndyNarwhal]

I think, and this is just my opinion, that the LFS needs to evolve into more of a service oriented business instead of a hardgood based retail outlet. What hardgoods they do carry should be specialized to differentiate them from the big box stores. Items such as live foods, breeding supplies, almond leaves, custom aquaria and cabinetry, and a large selection of quality freshwater and marine fish and invertebrates displayed in a combination of attractive displays and functional retail aquaria. Provide a comfortable seating area where hobbyists can gather and talk and help disseminate information to newcomers. Make the store a destination stop for out of towners with a strong web presence and an attractive and unique store.

But most importantly having a service arm to install and maintain aquaria for commercial and residential clients is important. This can be the lifeblood of the store and support the business but requires knowledgeable and reliable employees and is the hardest thing to maintain.

This model is already in effect in some stores across the country (Dallas North Aquarium is a good example) and won't work in all areas (rural areas will not be able to support a service arm). As the economy continues to improve, and as more mass media shows such as Tanked, Aquarium Kings, Nemo II (this fall) and the next Avatar movie (it will be under the oceans of Pandora supposedly) raise public awareness, we could see a resurgence in the installations of large aquaria which can only help out the LFS willing to take on the challenge and do quality work.

But it won't be easy, it requires highly trained, quality staff, and a lot of upfront expense to do it right which will be very challenging to initiate and maintain.

Andy

 

[ezrk]

I think, and this is just my opinion, that the LFS needs to evolve into more of a service oriented business instead of a hardgood based retail outlet. What hardgoods they do carry should be specialized to differentiate them from the big box stores.

A couple other thoughts.

The service part could encompass something between the current offerings which are the "full service" marine offerings and nothing. We would pay a reasonable amount to have someone from a store we trust come out to our tanks 1-2 times while we are on vacation and say do a water change for us. This is obviously much easier when they are coming out to do work on a system they sold and installed.

Hardgoods at the more advanced end don't need to be in the store, they need to be available. I see hardgood stock as a major cost for the stores and keep a large stock of slow moving stuff is really costly. What they need is experienced staff that can make really good suggestions and an ability to get the stuff for you. They can then afford to be more competitive with big box stores as they know they have a sale, rather than having to risk the merchandise sitting.

 

[AndyNarwhal]

Good points but they have their own difficulties.

In terms of maintenance for freshwater vs. saltwater there is a huge difference in cost/benefit ratio. A marine tank may have thousands to tens of thousands of dollars invested in equipment and livestock. Having a professional come out to service it at a hundred or so bucks a week/month is worth it. For a freshwater aquarium that has a few hundred dollars invested in it it's not worth it to most people. Hence the reason why maintenance accounts are so saltwater centric. It also helps that the more colorful fish are preferred by customers who are not hobbyists but want a nice fish tank in their home/business.

It all comes down to what one considers a reasonable rate. When I did maintenance I charged $39 an hour including travel time to the job (I didn't charge for the time to get back as was usually moving on to my next client rather than returning to the store). Very few jobs were less than 2 hours and most were 3 or more. Since I got out of the maintenance business I have been told my rates were reasonable to cheap and most places are anywhere from $50 to $100 an hour. I don't think the market I was in (Lancaster, PA and surrounding area) could have sustained much higher than that.

Not sure what you mean by having high end products available but not in stock. Technically that is available to anyone with a computer and a credit card. Ordering one of this and one of that forces a dealer to go through a distributor which means they aren't going to be competitive in price and it will be 1-2 weeks until it is available for pickup. It doesn't deliver on price or convenience to the consumer.

Smaller manufacturers with niche products often have direct to dealer pricing and distribution programs. This cuts the distributor out of the process and helps to keep pricing low. But manufacturers still have minimum order requirements and that means the dealer will still need to maintain inventory. It also means the dealer has to be selective about what they keep as they can't stock everything.

There are plenty of low end items that fall through the cracks of the BB store shelves. They may not be good sellers to the general market but they are popular with the advanced hobbyist and if the store is marketed properly to those hobbyists they won't be slow movers.

This is all more easily said than done however.
Andy

 

[ezrk]

Not sure what you mean by having high end products available but not in stock. Technically that is available to anyone with a computer and a credit card. Ordering one of this and one of that forces a dealer to go through a distributor which means they aren't going to be competitive in price and it will be 1-2 weeks until it is available for pickup. It doesn't deliver on price or convenience to the consumer.

I am thinking that for the more serious hobbyist setting up a new tank is not an impulse decision, so that fact that it may take some time doesn't really matter. Every tank I have set-up after my first has involved having most of the hardware sitting around my house for 2 weeks to 3 months as I get everything else ready.

If as part of putting together a "package" for a new tank they were able to get a wider variety of equipment in then that would be a plus. Yes, I could do the same on the internet (and I do) but the value proposition for the store has to come in from helping to get it set-up. Not everyone would take advantage of this, but some might.

 

[JasonC]

This has been a fantastic discussion... I just hope some of the LFS owners are reading/hearing about our concerns! The thread that Mchambers linked to was very interesting... it seemed to focus on two areas where LFS are falling short. First is the visual appeal of the store.. they railed at some length that stores should never be a dark, dingy, humid place, and that when you compare it to the BB's, how can you expect people new to the hobby to choose the dark and dank LFS over the clean and bright BB?

The second area that they seemed to be focused on was creating *some kind* of internet presence for the store... from QR codes on all the tanks that link to their/a website with info on the fish to web forums, to full e-commerce sites. Obviously a full blown e-commerce site is probably not doable by all small LFS's, but you have to give a hat-tip to stores like WetSpot who has done a very good job leveraging existing technologies (aquabid) to create a rather formidable online presence for live fish sales.

I think the bottom line of this thread was that LFS owners need to stop running their stores like it is the 70's and 80's still and get with the times.

Re the last few posts here, There is a very interesting idea brewing I think... basically admitting you are not going to beat the BB's at their own game, so change the target demographic? If you can't out price Petsmart on tetra products, why carry them... why not carry NLS or some of the Hikari specialty products instead? Why be just like Petco and sell tank after tank of ich covered fish, when instead, you can start practicing full quarantine on livestock and really up the quality of your fish? What about creating partnerships with some of the specialty vendors on the net and start dealing in custom tanks,cabinetry, or some of the beautiful driftwood that most in this area have no natural access to other than mail order? Cater the store more towards people who are moving up to the serious level in the hobby rather than the "Jimmy wants his first goldfish" crowd. Would this make LFS's more of a boutique market? Would that be better or worse?

This topic was discussed at some length at planetcatfish recently, by our own Shane Linder, among others:

http://www.planetcatfish.com/forum/viewtopic.php?f=2&t=33594

 

[ezrk]

Cater the store more towards people who are moving up to the serious level in the hobby rather than the "Jimmy wants his first goldfish" crowd. Would this make LFS's more of a boutique market? Would that be better or worse?

I don't know if this is a viable or sustainable business, but it is basically the business and LFS needs to be in to get more than minor amounts of the money I spend in the hobby. This may well not be worth it...

I strongly agree on the look and feel of the stores and think this has a few other aspects.

Display tanks at LFSes are a IMO a big deal. If you want to try and get the intro to the hobby 10 and 20g people, why not have a few nicely presented display tanks with interesting fish of appropriate breeds and quantities out for beginners.

Everyone seems to want to sell bettas, but the display of these poor fish is just awful...Show off some bettas in something other than a dixie cup.

 

[Andrew]

I had all of these suggestions and still couldn't make it work. So did Tropical Fish World and Exotic Aquatics.

You want fish stores to stick around, go spend money there. Even if it costs more. Otherwise, forget it.

The manufacturers and big fish distributors have all bitten the hands that feed them in favor of big box and online retail.

Problem is, no one ever bought their first fish tank online. Eventually Central, UPG and the other big guys who have shot the average LFS in the chest will go out of business too. Check their stock prices over the last five years.

 

[dogofwar]

The issues of cleanliness, use of technology, staff, etc. are primarily tactical. As an aside, as long as I can remember, LFS have been dank, poorly lit, foul smelling and generally staffed by characters (myself included). I haven't seen "clean, fresh smelling and well lit" as the litmus between successful and closed LFS (or else at least a couple of the remaining stores in our area would not be here...and a couple that are closed would still be open).

That said, I think the macro issue goes back to some of the points that Andy brought up: where in the LFS business model is there margin (outside of services)? Not much of anywhere...

Successful LFS have become an abberation vs. something that's in every shopping center.

It would be really interesting to survey folks coming and going from some of the remaining LFS (HOT, Congressional, Tropical Lagoon, etc.) about their level of experience in the hobby, what they bought, why, and why they came to the store (vs. "an alternative"). Who are the folks who actually buy from LFS?

But what I keep coming back to is: What role could our club - or clubs in general - have in supporting more people getting "hooked" on keeping fish (and cichlids specifically, of course)?

This is the question that is central to the sustainability of our hobby and club...

Matt

 

[dogofwar]

Too true...without LFS the necessary first step in the process is gone.

Matt

Problem is, no one ever bought their first fish tank online. Eventually Central, UPG and the other big guys who have shot the average LFS in the chest will go out of business too. Check their stock prices over the last five years.

 

[Nathan]

PVAS is doing several things, might want to post over there tony.

 

[Hawkman2000]

I actually talked to one of the guys at an LFS awhile ago. I asked him why he doesn't sponsor CCA and PVAS, he said that the clubs provide more competition for him than business.

WetSpot seems to be very successful. Looks like a good chunk of their business is through breeding. I really think more LFSs should do this. By sponsoring sites like CCA and ACA they could use the Breeders matrix so that they wouldn't be competing with each other, on breeding at least.

 

[ezrk]

You want fish stores to stick around, go spend money there. Even if it costs more. Otherwise, forget it.

It is not just a price problem, it is a merchandise availability problem. It is killing a lot more than fish stores. Heck my mother is a quilter and it is (apparently) killing fabric stores.

 

[mscichlid]

Times have changed for sure.

I think stores are now catering to the folks that make them the most money...aquarium idiots. Those folks who brag about how long they go between water changes and those who maintain multiple continent species in small tanks.

If an establishment has the capital to cater to the aquarium idiots and the advance hobbyist, I think they could prosper. Perfect example was the Aquarium Center before it changed hands. I would go to that store every Saturday just to see what fish they had and always bought something.

If there was a local store that had the equipment that I needed, it would be worth purchasing from them instead of ordering online and paying shipping.

Online entities are fufilling the desires of hobbyist.

More online entities now have access to exporters that would only sell fish to stores previously.

I have no coherent statements to make....

 

[verbal]

I think stores are now catering to the folks that make them the most money...aquarium idiots. Those folks who brag about how long they go between water changes and those who maintain multiple continent species in small tanks.

I think the big box stores have generally followed this model. In addition to turn over of livestock, there are also all the "silver bullet potions" that they sell to fix problems due to poor maintenance. I think petco is actually trying to get out of this model a bit, due to their reduction in medications.

 

[Nathan]

They got rid of the medications because people where using them on their other animals and not the over priced stuff they/vets sell.

 

[longstocking]

If I was to "grade" the customers I help I would say 50% of them are intermediate... some are even advanced. Now I am dealing with the cichlid customers and I do help a lot of regulars. They aren't idiots nor are they beginners. Yes, we have beginners as well but I honestly wouldn't say they cater to the newbie. Actually quite the opposite. They order expensive rare stuff ( when they can get their hands on it )... to get the serious hobbyist in.

Jim is a perfect example. comes into the store maybe once or twice a month... and the owners are always asking me what he wants. Sometimes they can get it... sometimes they can't. This is not because Jim is any different or "friends"... they do it with any customer that is a regular. Being a regular doesn't even mean you have to spend money every time you go in.... it just means you are open to buying at an LFS and a serious hobbyist.

The key thing is... stores CAN be cheaper than on-line. How much would you guys pay for a 1.5 inch blue orchid peacock? 12 plus shipping? They are 9.98 in the store right now. This is just one example.

Scales when they were open were sometimes cheaper as well.... I got P. typus for cheaper than they are on-line there. But again, YOU HAVE TO GO IN THE STORE AND FIND THE DEALS.

Heck, who doesn't like to window shop? No one says you have to buy... if you don't find something at a price you like.. no one is putting a gun to your head.

PLANTS!... One example... they are cheaper at HOT than they are at meetings most of the time. Anubias... we get larger ones in... ones people at the meeting pay 10-12 dollars for.... they are 5.98 there.

 

[dogofwar]

There are two different discussions going on here:

1) The LFS business model (what can stores do to remain profitable enough to stay open?)
2) How and why hobbyists should support them

I'm not convinced that the LFS business model can or should focus on true hobbyists.

Matt