Cost of opening a HiFi shop?

Discussion in 'Audio Hardware' started by Erocka2000, Apr 29, 2016.

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  1. rl1856

    rl1856 Forum Resident

    Location:
    SC
    Do you have a source of personal income outside of the proposed audio store ? A source that could last 3-5 years ?

    Will you drop ship or sell from inventory ?

    Will you embrace used equipment ?

    New and used music (vinyl, CD, DVD, SACD., DVD-A) ?

    Home Theater ?

    Mid Fi or High End ?

    Can you set aside space in your existing living arrangement to operate "by appointment" ?

    How comfortable are you with handling accounting, inventory, staffing etc, or will you outsource ?

    Can you install equipment in a home and can you fix equipment in your shop or in the field ?

    These questions must be answered before you begin to think of the approximate cost of opening for business.

    Good Luck.
     
  2. Perfect sound forever

    Perfect sound forever Well-Known Member

    Location:
    London
    What might be feasible is to do it as a sideline from your home (import some products that can't be obtained in yr area) but have a bloody good website showing it off.

    Good luck whatever you do.
     
  3. ggergm

    ggergm another spring another baseball season

    Location:
    Minnesota
    This is my fantasy hobby store. Called Turntables and Tubes, it would be a vinyl based brick and mortar shop opened 25-30 hours a week and closed when I was travelling. I'd post my cell phone number on the front door and be willing to talk to anybody who called for as long as they wanted when the front door was locked.

    The problem is the numbers. Even being a one man operation, I project I'd have to do close to $500,000 in sales a year to make a good living from the store. I'd also have to invest around $150,000 to $200,000 in capital to open the door and stock some products (I wouldn't want to be a demo-only operation, which makes every customer's purchase a special order). To do that level of sales as a part-time business in the tertiary, blue collar market of La Crosse, WI would be daunting. I'd consider opening the store in Rochester, MN, where I've lived in the past and has a higher income base courtesy of the Mayo Clinic, but then I'd be driving an hour to work and an hour home every day. Do I really want to do that?
     
    nitsuj and dadonred like this.
  4. stefanb

    stefanb Forum Resident

    Location:
    Toronto
    As someone who works for an OEM - Geographical distribution is huge. You have to protect your dealers and opening multiple doors close to each other is a great way to not do business. Same with online sales - MAP pricing policies are in place to protect your dealers. Serious infractions result in the removal of the sales agreement aka. you aren't an authorized dealer anymore if you break the rules.

    Also as someone who previously was a territory manager for a brand - It's your job to protect and build relationships with your accounts - If you open up doors in the same area that's also a great way to not do business.
     
    SandAndGlass and ggergm like this.
  5. Brother_Rael

    Brother_Rael Senior Member

    Sell headphones via an online store. Bricks and mortar hi-fi shops are in decline for good reason. The headphone market is booming.
     
  6. Salectric

    Salectric Senior Member

    Location:
    Maryland
    Ggergm, thanks for sharing the behind-the-scenes economic details of a retail store. I wish there was an easy link to your comments so that people complaining about "excessive" markups on equipment could be set straight. Buyers appreciate being able to hear a piece of equipment before they buy, but so many fail to realize that costs money.

    Those of us old enough to remember the 1960s will recall that all major cities and even most decent size towns had a true hifi store with Marantz, McIntosh, AR, KLH,etc. And when I walked in as a high school teenager with no money I was still treated with respect. Sales people answered my questions and were happy to demonstrate the equipment I couldn't afford, all because they knew that eventually I would be a customer. Those were the days!
     
    MEDeWire, Static Discharge and ggergm like this.
  7. jea48

    jea48 Forum Resident

    Location:
    Midwest, USA
    Team Electronics.....
    I still have one of their catalogs dated 1973.

    Back in the 1970s there were at least 7 or 8 B&M audio stores in my area.
    Now there are only two that I would classify as real audio/video B&W stores.

    I would add Magnepan to the list.
     
    Last edited: Apr 30, 2016
    sunspot42 and ggergm like this.
  8. jea48

    jea48 Forum Resident

    Location:
    Midwest, USA
    Sad but true for some.
    Marantz has turned out to be one of the worst.
     
  9. Ephi82

    Ephi82 Still have two ears working

    Location:
    S FL
    I love the creativity of promoting a very affordable way to upgrade the iTunes listening experience. He's figured out a way to get the earbuds out of the Millenials ears when at home!
     
  10. Peter Baird

    Peter Baird Well-Known Member

    Location:
    Connecticut
    Record/vinyl stores near me do good business. I would think a place for younger people (or really all age people) to test out headphones and DACs makes some sense. I would question more a brick-mortar shop that relied upon and focused on hifi equipment, even though I miss such places.
     
  11. jupiterboy

    jupiterboy Forum Residue

    Location:
    Buffalo, NY
    I think having a serious, well thought-out, budget system in a shop is most likely the best way to develop customers.
     
    nitsuj and ggergm like this.
  12. Jasonb

    Jasonb Forum Resident

    Crescendo opened up last year over on 38th in Wheat Ridge. Keep meaning to pop in.
     
    clhboa likes this.
  13. Isaac K.

    Isaac K. Forum Resident

    I wouldn't even consider it unless I could also offer in store repair for the products I sell.
     
    Dennis0675 likes this.
  14. IAMBLEST

    IAMBLEST Forum Resident

    Location:
    Dubai
    I wouldn't even want to imagine the logistics and storage of it all.

    Imagine having someone buy a set of 400kg magico speakers from you. How are you getting this and how are you setting this up for them?

    It's my dream to own something like this as well, but I doubt it would be an economic reality.
     
    Dennis0675 likes this.
  15. florandia

    florandia Forum Resident

    Location:
    Florida
    Do not forget customer service , like greeting customers with a cheery hello ,,,, I recently got criticized on this very forum for being offended when a vendor totally ignored me when entering their emporium .
    I have been involved in retail sales for a lot of years now and know that if you make the customer unwelcome you are going to end up bankrupt!
     
  16. bluesky

    bluesky Senior Member

    Location:
    south florida, usa
    CAN"T COMPETE with the internet sites, big stores, and stores selling low end.

    No one cares about quality anymore. Only a cheap price. Hardly anyone even knows quality anymore. No one cares.

    BAD IDEA.

    But a Good Idea ... to Lose a lot of BIG $$$ fast!!

    (Used to own a vintage musical instrument/equipment store. 95% of all equipment sold was top quality, no junk. Same thing. Big Mistake. Got real lucky though... only lost 24G. Could of been a lot worse.)

    ggergm is right.
     
    Last edited: Apr 30, 2016
  17. HiFi Guy

    HiFi Guy Forum Resident

    Location:
    Lakeland, FL
    I was in the business for 10 years. I'll let you in on another side of the business that can become a headache: trans shipping, and MAP.

    Let's say you are a dealer for brand X. Brand X in their dealer agreement specifies a MAP-minimum advertised price for each product in the line- which also happens to be list. Ever notice that lots of products are the same price everywhere? This is why. Sell below MAP, you can lose the line. Price fixing you say, maybe. So what? Get caught and the manufacturer continually "loses" your orders. It happens. I've seen it.

    Now, a dealer selling a system can discount these items if he chooses by doing a system price- say the MAP of all the items is $3,000- the dealer could discount to say $2800 by not listing the price for each item individually. No one can say which item or items were discounted. That's how to beat MAP and make a sale. Of course this only works when a customer buys multiple items, and the dealer can afford and is willing to take the risk.

    Trans shipping is a bit more evil. Let's say that I'm your competitor. I buy your lines from a dealer willing to sell them to me. I remove all evidence of what dealer sold them to me. I obliterate serial numbers. My supplier makes a few dollars quickly, and I kill your business by advertising your protected lines well under MAP. When the customer comes in, I gently and deftly persuade him towards my protected brands. Why? I sold my legitimate lines at MAP and still have the trans shipped items to advertise again to continue to screw with you. Again, I've seen it.
     
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  18. Ghostworld

    Ghostworld Senior Member

    Location:
    US
    "The store offers an impressive range of gear; complete audio system prices start at less than $2,000."

    That's a big step up from a pair of earbuds for most Millennials.
     
    patient_ot and ggergm like this.
  19. patient_ot

    patient_ot Senior Member

    Location:
    USA
    I'm on a turntable forum that has a lot of members in the 16-25 year old range. The majority of them just want the cheapest system they can get. They buy a new $200-400 TT and pair it with $100 speakers and one of those off-brand mini-amps...all purchased from Amazon. Upgrades aren't really a priority either, since they care more about colored vinyl and making their listening space look cool (LED lighting, IKEA furniture, records hung on walls) than anything related to hi-fi.
     
  20. nitsuj

    nitsuj Forum Resident

    Location:
    Midwest
    Love the concept. Make the store so comfortable and inviting that you yourself enjoy hanging out and talking/listening to music. LaCrosse would be tough, but if you could snag the store next to Deaf Ear Records (Coney Island Hotdogs?), and add some solid headphones/amp/dac mini setups (think dorm room), I think it could be a killer combo of location and convenience.
     
    ggergm likes this.
  21. Ephi82

    Ephi82 Still have two ears working

    Location:
    S FL
    There's a shop in a city abutting Boston that sells used instruments and amps, used audio gear and speakers and they also repair the type of stuff they sell. I think he's also picked up a new turntable line. They've been in business at least 15 years. I don't know if he'd every pick up more new stuff, he might make more on the used stuff?

    Another element of the success may be that he's in a city with university about a mile away.

    The people who work there seem to be stress free and really enjoy hanging with customers.
     
    nitsuj likes this.
  22. jea48

    jea48 Forum Resident

    Location:
    Midwest, USA
    Ways to get around MAP.

    1) The customer wants a 15% discount. The dealer/salesperson writes up the sales receipt showing a trade in allowance equally the price the piece of equipment was discounted. No actual trade-in existed.

    2) Discount on floor demo item. MAP does not apply.
    Open a factory fresh box unpack the piece of equipment from the box. What do you call it then?
     
  23. Blair G.

    Blair G. Senior Member

    Location:
    Delta, BC, Canada
    I've seen a few one man stores like the hobby model you outline.
    They never seem to be open and getting a hold of the person by phone or e-mail is next to impossible.
    It's obvious that either they don't have the desire to deal with small fry's like me, or they have a "real" job and just don't have the time.
    The other issue is, as you mention, so many are essentially demo only set-ups. Every purchase is special order therefore rarely any return privileges. Part of me understands, another part dislikes the restrictions and inflexibility of such a system.
    And I know a couple of home based "stores" that will offer little or no discount despite the fact they have zero overhead, other than the demo equipment itself.

    I have no doubt it's a challenge to run an audio store these days regardless of the format.
    But it's also pretty hard as the buyer when there is little selection to actually hear, and limited options (other than taking a huge hit and selling your gear used) if you get the product home and it isn't a good fit despite all of your time and research.
     
    patient_ot likes this.
  24. SandAndGlass

    SandAndGlass Twilight Forum Resident


    I believe that MAP = Mininum Advertised Price, the lowest price tht you can publicly advertise, newspaper, web site, poster in store window.

    However, a manufacturer cannot dictate to anyone what that individual dealer can actually sell his product for.

    There are very few things that I ever purchase at full MSRP, I don't believe that I have ever paid full price for any audio component that I have purchased in my life (and never will).
     
  25. BayouTiger

    BayouTiger Forum Resident

    They absolutely can dictate the sales price. It is a clause in their contract. Whether it is enforceable or not may be debatable, and there are certainly ways around it, but I can say that to me, if a dealer plays loose and fast with the rules for his suppliers, what can I expect as a customer? MSRP is an arbitrary price any way. Something is either worth the price or its not. I would rather have a published, set price, than play some stupid game of fake discounts to end up at the same price just to feel good about my negotiating prowess. At least at the retain level. I live in the wholesale world, I get all the practice I need when it comes to negotiation.
     
    HiFi Guy likes this.
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