flies tied by 9 year olds in bengladesh isn't going to affect the shop's bottom line. He'll drop his annual 75 bucks for 100 foreign flies from someone else online. (I'm assuming, as is the case with most fly shops the vast majority of the flies are of this variety).
Some shops (TCO included) have most of their flies from the mass marketed foreign tied variety. But a lot of local shops have locally tied flies. Usually a mix between tied by employees and tied by others in the area and sold to the shop. Certainly, if you go to the Feathered Hook, FFP, etc., the flies in one store look NOTHING like the ones in the neighboring store, nor anything you can buy online.
Disclaimer: I'm betting most shops have a mix of locally tied and mass produced stuff, really what we're talking about is whether that mix is 20/80 or 80/20.
A question for anyone in the business, do shops take in more money on flies or tying materials?
Many stores say they don't make anything really on flies. Others say it's the source of their business due to the high turnover. I'm strongly guessing the difference lies mostly in the above question. If you are turning around mass produced flies from overseas for $2.00 a pop, yes, you make money doing that. On the other hand, if you're paying employees to tie, or buying from a local custom tier, and you sell for $2.50 and streamers for $5.00 you may only make a few cents.
If you're not making money on flies, then their purpose is simply to get fishermen to come through the front door. Look, if I'm on a week long fishing trip, and thorax style sulphurs have been the ticket and I thus run out of them, I'm heading over to the local shop to get more. If I like their flies better than elsewhere, I will return, occasionally picking up tippet and shot and other necessities which they do turn a profit on. Eventually I'll have to add that pattern to my own tying portfolio, and since I liked that shop's version best, I'll ask the owner how they make theirs. He'll show me the exact materials they use and give me a tutorial, and I'll buy that stuff from him. Eventually repeated interactions like this, and I've grown some loyalty to this shop. Now when I want a new rod or pair of waders, that's my first stop.
i.e. having quality flies is a loyalty getter for bigger ticket items and repeat business.
The big profit items are rods, waders, clothes, packs, clothes, etc. And the reason the local shop has trouble competing with Cabelas is the price THEY pay for those items. i.e. a Sage will specify that it's XYZ model sell for $220 MSRP. Everywhere. No discounts. But it'll sell that rod to the shop for $150. Or if that shop buys 5, $140 each. If that shop buys 25, $130 each. So larger retailers are thus favored by getting merchandise cheaper and thus taking a higher margin on it.
TCO works on the same principle as Cabelas and Bass Pro in that regard. TCO may have 4 or 5 shops, but it's 1 customer. So it can make bulk orders (not to the degree of Cabelas, but still more than the shop with 1 location), and thus take a higher margin while selling for the same price.
The caveat is that different brands are different. All of them set retail prices. But some want to just sell more, and thus do more of the markdowns for large retailers. Others want to be viewed as the chosen brand of the small specialty shop, and the markdowns are less or non-existent. You can pretty much figure out what brands do what by what shops carry what.
