What,s happening to all the hobby shops-FSM-JAN 2011

I don't know how it is in other places but around here you pay tax on any inventory asset for a period of 5 years after which you are able to declare it obsolete and remove it from the inventory role. thus eliminating it as a tax liability,

This is why it is so critical to have an understanding of your local market, so you don't saddle yourself with such a burden and also why you see so many stores selling an item at cost (or perhaps just enough over to cover a previous tax payment) to relieve themselves of the prospect of paying the tax on it.

This is one of the reasons you are seeing more and more motorcycle shops (my area of expertise) moving away from stocking items and ordering them in when needed. Why take the chance of having to pay for an item you didn't sell when you can put the burden of stocking it on the distributor?

The closer it gets to the end of the year, the more most shops enforce their "pay before order" policies as well as demanding deposits on repair work.

Thanks PWB, well explained...

I guess the idea is to 'incentivize' efficiency by encouraging businesses to only stock the products they can sell within a given time frame.

Still, and I hope this doesn't look like a political statement, it does not seem 'right' to me to repeatedly tax stock. It certainly discourages retailers from holding onto less popular stock. And, in this economic time, it seems to me that if we are looking to help small business, specifically the 'mom and pop' stores, that this would be more helpful (moratorium on inventory tax) than income tax relief. After all, if you have little income, you pay little tax, but if you hold inventory, you get hammered regardless of income.

There's still a couple of good LHS in the DFW, TX area.  Roys in Hurst... good selection of kits and Tamiya paint, plus an awesome selection of things like glues and putties.  Hobbytown in Colleyville also has a strong kit selection, and Tamiya and MM paints.  Hobby Lobby is everywhere here, but they carry next to nothing in models.  Good, cheap selections of things like thin brass rod and such, though.  And Model Aircraft Laboratories in Irving... lots of rarer kits, Vallejo paint, Gunze & Allclad on the shelf, etc.

They're all much, much more expensive for kits than online, though.  Paint is pretty much a wash as is most tools.  I only build in 1/32, so the kits tend to be more expensive to begin with, and that price differential gets magnified a LOT more at the LHS than cheaper, smaller kits.  Hobbytown has the Trumpeter bubbletop P-47 (the 'nose art' box) for $95.  Picked it up for $55 on eBay.  MAL has the awesome Tamiya Spit for $129... ebay rarely gets above $90.  

Paint selection can get me in the store, and it's frustrating when they're out of stuff, but OTOH Sprue Brothers has been just as bad.  If I have a particular shopping list for an aircraft paint scheme, SB will almost certainly be out of 1 in 3 paints I'm interested in.

If they can get their kit prices down while maintaining good stock of the other essential items, they'll keep folks coming in the door.