Hornby discounts

[Chrisr40]

Evening all

 

Just seen this on my local news website

 

http://www.kentonline.co.uk/kent-business/county-news/model-maker-Hornby-profit-warning-new-chief-executive-cancels-plans-discount-stock-sandwich-margate-133785/

[Steamport Southport]

I like the Maunsell Mogul.

 

 

 

Jason

[Ian Hargrave]

Evening all

Just seen this on my local news website

http://www.kentonline.co.uk/kent-business/county-news/model-maker-Hornby-profit-warning-new-chief-executive-cancels-plans-discount-stock-sandwich-margate-133785/

Obviously means to run a tight ship.Hope they can hold their nerve and he gets a grip.Massive discounting may be good for the punters but in the long term it sends out the wrong message and is indicative of systemic failure.

[Guest Midland Mole]

Good to see they have learned something considering heavy discounting was one of factors that got them in this mess in the first place, and tarnished their reputation with many retailers.

I really do hope the new CEO continues to make decisions like this and turns them around.

Alex

[Widnes Model Centre]

Good to see they have learned something considering heavy discounting was one of factors that got them in this mess in the first place, and tarnished their reputation with many retailers.

I really do hope the new CEO continues to make decisions like this and turns them around.

Alex

 

Totally agree Alex.

[OOgaugeJaf]

I personally think Hornby are about knackered. There are not going to be many takers for £170 standard 4's. I was speaking with friends at a recent show. O gauge is the new area for RTR modellers £190 for an O gauge Jinty. I spoke to a few people who were selling up thier OO to fund O. I appreciate prices are rising but its now gettting out of the reach of the average modeller and earner. I heard that from many folk baulking over the prices at NRM Shildon. The only saving grace is that Oxford are managing to keep costs down.

[adb968008]

So if there’s stock in the warehouse, no one has bought...

 

And they aren’t going to discount it...

 

What do they plan to do with it ?

 

If no one bought it in the first place, something was wrong with it, the statement suggests they don’t believe it’s the price that’s wrong after all they just put them up.

 

I guess k1’s, B17’s are going to be in the catalog for sometime.

 

But if that tied up cash was to put the stops further production, MNs, Duchesses, Pecketts and 87’s could end up being rare?

Edited October 17, 2017 by adb968008

[Sweeps]

Slightly off topic, I know they've been there for years but I always thought Margate was a daft place for a visitor centre. It's quite out of the way and no one's going to visit from the sea. Birmingham - Manchester, Leeds easy to get to for millions of folk

[Clearwater]

So if there’s stock in the warehouse, no one has bought...

And they aren’t going to discount it...

What do they plan to do with it ?

If no one bought it in the first place, something was wrong with it, the statement suggests they don’t believe it’s the price that’s wrong after all they just put them up.

Agreed... we'll see in a year or two's time. Made me wonder how much stock Oxford carries - they may have a more relaxed attitude to clearing stock levels and be happy to hold until it sells.

[Butler Henderson]

Stock sat in the warehouse is how Hornby worked for many years. Records in Pat Hammonds books on Triang/Triang Hornby/Hornby show items produced in few production runs but in the catalogue for many years until cleared not only from the warehouse but also from shop shelves - back in the days of shops being Service Centres.

[JSpencer]

The heavy discounting on previous runs has made current runs really hard to shift. Hornby just released another batch of class 71s, but previous batches can still be picked up with a discount.

 

The same could be said for Kings, S15s and many others. Discounting is good in small doses but ultimately means your margins are negated or even worse negative which in turn equates to losses.

 

It would be more logical to prune back programs (though that will mean staff losses) to something more sustainable. Something discounting on a large scale is not. Programs need to be tactical, listening to customers next fashions.

[Steamport Southport]

Stock sat in the warehouse is how Hornby worked for many years. Records in Pat Hammonds books on Triang/Triang Hornby/Hornby show items produced in few production runs but in the catalogue for many years until cleared not only from the warehouse but also from shop shelves - back in the days of shops being Service Centres.

 

I agree. I remember the days when if you wanted something that was in the catalogue then you could go to your local shop and actually buy it. If they didn't have it then they would get it in.

 

But you try and tell the young people today that... and they won't believe ya'.

 

 

 

Jason

[woodenhead]

I think what they mean is deep discounting, the sort of stuff that really gets to retailers when they have bought stuff at a higher rate and end up with stock they themselves can't sell.

 

There will be ways and means of clearing stock working with retailers that won't alienate retailers.

 

Also if people expect big discounts then they hold off buying it makes the situation worse for the retailers.

 

Maybe what we will see is a more sensible entry price point.

[andyman7]

So if there’s stock in the warehouse, no one has bought...

 

And they aren’t going to discount it...

 

What do they plan to do with it ?

 

If no one bought it in the first place, something was wrong with it, the statement suggests they don’t believe it’s the price that’s wrong after all they just put them up.

 

I guess k1’s, B17’s are going to be in the catalog for sometime.

 

But if that tied up cash was to put the stops further production, MNs, Duchesses, Pecketts and 87’s could end up being rare?

There's a difference between stock that's not selling at all, and stock that sells over a period but that is dumped at deep discount to raise cash fast. It is the latter that is the problem, destabilising the market. The Class 71 is a relatively recent release, and the discounting happened only a few weeks after release. In times past, those stocks would have been trickled out over a couple of years.

 

Pricing of models is very subjective, I appreciate that £150+ for a model does put it out of reach for some but when you look at the quality of these models, the price is not unreasonable - especially when compared to a kit built model to the same standard 30+ years ago. Having observed debates on this and other forums over the years, I can attest that you simply can't keep everybody happy - for every person who wants the model built down to a price, there is another who wants no corner cut. The manufacturers have a balancing act to get right, and they won't please everyone.

[Dunsignalling]

The situation with the Class 71 etc. is fast becoming the norm. The crux of the matter is that follow-up batches have been arriving long before the initial runs have sold through. There are examples of six different versions of a loco that was first launched over a year ago being readily obtainable, including at least some of the earliest ones.

 

Hornby's production scheduling over the past two years has been hopeless bordering on suicidal. They have themselves created the conditions where they are forced to deep discount second phase models from day one. Year Two really does need to mean Year Two, not Month Five, and Year Three releases shouldn't be in the plan at all. 

 

As of now, it may well cost Hornby less to carry surplus stock that hasn't already been distributed to retailers than they stand to lose from shifting it through ever deeper discounting. 

 

Hopefully, the new boss will padlock the overstocks away until the words "more than 10 in stock" appear a good deal less often in  entries describing 12+ month-old Hornby locos on box-shifters web pages.

 

John

Edited October 18, 2017 by Dunsignalling

[alexl102]

I personally think Hornby are about knackered. There are not going to be many takers for £170 standard 4's. I was speaking with friends at a recent show. O gauge is the new area for RTR modellers £190 for an O gauge Jinty. I spoke to a few people who were selling up thier OO to fund O. I appreciate prices are rising but its now gettting out of the reach of the average modeller and earner. I heard that from many folk baulking over the prices at NRM Shildon. The only saving grace is that Oxford are managing to keep costs down.

 

Realistically the largest proportion of modellers are not going to switch to O gauge. It's too big to have any form of decent layout in the average-sized, garage, shed or room, and I don't know what you have to be earning to view £190 for a Jinty as reasonable but in the current economy most people aren't earning it. Especially when a BR MK1 coach will set you back £250 (compared to £21 - 49 in OO) and a tender loco £500-700. If you've got the room to run a branch line setup with a medium-sized loco and 3 coaches, that's around £1,250 before track or scenery.

 

Surely if there's to be a big shift it'd be to N, where prices are still fairly sensible and you can fit far more in a limited space?

 

There's a difference between stock that's not selling at all, and stock that sells over a period but that is dumped at deep discount to raise cash fast. It is the latter that is the problem, destabilising the market. The Class 71 is a relatively recent release, and the discounting happened only a few weeks after release. In times past, those stocks would have been trickled out over a couple of years.

 

Pricing of models is very subjective, I appreciate that £150+ for a model does put it out of reach for some but when you look at the quality of these models, the price is not unreasonable - especially when compared to a kit built model to the same standard 30+ years ago. Having observed debates on this and other forums over the years, I can attest that you simply can't keep everybody happy - for every person who wants the model built down to a price, there is another who wants no corner cut. The manufacturers have a balancing act to get right, and they won't please everyone.

 

The problem is that these amazing quality, £150+ models are way out of reach of average Joe who has a mortgage, a car and a family to keep unless it's the only thing they spend their spare cash on. Not many people for example could afford to hold a football season ticket at a league club and buy a few brand new models each year.

And the bigger problem still is that even Railroad models are rising out of the affordability range of younger people. The BR MK1s at £20ish are fine, but if you want a steam engine any bigger than an LMS 3F 0-6-0 (£64), you are looking at a minimum of £85. So those of us without that money turn to the second hand market and Hornby lose out. Hornby need to be attracting more 'casual' modellers, because I don't think there are enough serious modellers in the younger generations (speaking as someone in their 20s) to keep the cashflow coming through long-term, though I hope I'm wrong.

 

Please understand where I'm coming from here: I like Hornby. I love their products, their aim to secure quality in everything, I like the concept of the Railroad range (even if the name still makes me cringe) and I love the attempts to engage more with their customer base through stuff like the Engine Shed. I want them to succeed wholeheartedly and I want to buy from them. But if I looked at my collection and decided I want to add, say, a J94 for example, I just could not justify forking out £85 for one at the end of the day - and that is the reality for many people.

Edited October 17, 2017 by alexl102

[Clive Mark]

I personally think Hornby are about knackered. There are not going to be many takers for £170 standard 4's. I was speaking with friends at a recent show. O gauge is the new area for RTR modellers £190 for an O gauge Jinty. I spoke to a few people who were selling up thier OO to fund O. I appreciate prices are rising but its now gettting out of the reach of the average modeller and earner. I heard that from many folk baulking over the prices at NRM Shildon. The only saving grace is that Oxford are managing to keep costs down.

 

And what about £190 for Rebuilt Scot Seaforth Highlander....or £170 for Black Five. I think they really are pushing their luck this time....But we've all said that before and they seem to get away with it.

[tamperman36]

There are several issues affecting our hobby at the moment, costs of production and shipping which could be looked at and possibly improved with bringing production back to Britain. Now we get all the people saying its cheaper in China but the cost of the production over there is rising as the Chineese government are making western companies pay more to improve there workers living standards, and also the shipping costs are rising as shipping companies are tightening there belts.

 

Another problem with sales is the amount of small local model shops that have closed down as the internet has reduced high street footfall and people have less disposable money in there pockets. The current prices have gone a fair way to killing the hobby. Once little Johnny would have saved up £40 - £50 and bought a new loco, now they save  that much and buy an Xbox game as they need 3 times that for a loco. The big internet stores offer discounted costs which then help to drive the local model shops out of business.

 

The current Chineese production process has also vastly affected the once impressive spares supply which also brought in revenue. Modellers used to keep there models running by carrying out a lot of maintenance and repairs themselves, whereas now if they get a problem with the modern models they require a service center for a repair. With local model shops closing down this then makes repairs harder and more expensive to carry out and thus people start to think twice about buying a brand new model and look at preowned.

[LBRJ]

Seems a bit like tying ones hand behind ones back when there is not yet a need to do that.

I don't think that deep discounting is a good idea as a strategy, but to emphatically state you are not going to do it will certainly raise the alarm klaxon if and when it is done to ease the cash flow at some future point.

[woodenhead]

Seems a bit like tying ones hand behind ones back when there is not yet a need to do that.

I don't think that deep discounting is a good idea as a strategy, but to emphatically state you are not going to do it will certainly raise the alarm klaxon if and when it is done to ease the cash flow at some future point.

Maybe the point of announcing it was to stabilise with their retailer network who were expecting another pre Christmas dump and perhaps holding off from ordering stock lest they find themselves being undercut again.

 

You need the confidence of your retailers otherwise stock levels in the warehouse will rise, as Hornby don't do concessions now every item sold to a retailer is cash in the bank and moves the risk of non sale away from them and into the network.

[Coryton]

Another problem with sales is the amount of small local model shops that have closed down as the internet has reduced high street footfall and people have less disposable money in there pockets. The current prices have gone a fair way to killing the hobby. Once little Johnny would have saved up £40 - £50 and bought a new loco, now they save  that much and buy an Xbox game as they need 3 times that for a loco. The big internet stores offer discounted costs which then help to drive the local model shops out of business.

 

 

I think if you include an allowance for inflation, then the difference between current prices and those in the past isn't as large as it looks.

 

On the other hand, you could argue that a modern locomotive is worse value for money, because it is likely to be less robust than in the past and there is no guarantee that if you need repairs you will be able to get the parts.

[Clearwater]

[quote name="Dunsignalling" post="2891654"

Hopefully, the new boss will padlock the overstocks away until the words "more than 10 in stock" appear a good deal less often in entries describing 12+ month-old Hornby locos on box-shifters web pages.

 

John

 

Don’t forget that storage is not a free option.

[Legend]

So if there’s stock in the warehouse, no one has bought...

And they aren’t going to discount it...

What do they plan to do with it ?

If no one bought it in the first place, something was wrong with it, the statement suggests they don’t believe it’s the price that’s wrong after all they just put them up.

I guess k1’s, B17’s are going to be in the catalog for sometime.

But if that tied up cash was to put the stops further production, MNs, Duchesses, Pecketts and 87’s could end up being rare?

But maybe there is not so much stock in the warehouse considering that the last regime also tried to reduce stock and indeed sold off large chunks at a discount. So maybe now it's bottomed out. The secret is then to make the correct amount of new stock to prevent a further build up, in fact ideally not have stock at all,but have a sell out.

 

I agree from Hornbys point of view they need to extract the maximum amount of cash from the enthusiast to help their profitability. To me this means new models where they can actually charge a premium for it, not further releases of K1s etc . There is an essential truth that some locos can be repeated every few years e.g. Kings, Castles, MNs , WCs , A3,A4 Duchesses and Black5s . Ironically more mundane locos like J15s , Drummond 700s ,S15, k1s ,B17s. Probably not. What they also need to realise , though, is the enthusiast is not a bottomless pit. There is a limit to what they will pay. Judging that sweet spot is what it's all about

Edited October 18, 2017 by Legend

[Guest]

Realistically the largest proportion of modellers are not going to switch to O gauge.

 

Absolutely. RTR availability and pricing of O gauge is good, but being able to afford a few off the shelf items in the larger scale does not mean I have the space to run them. We're currently in the process of selling a large Victorian home and we will need to rent for 18 months before leaving the area altogether. Looking at the available rentals, I'm not surprised to see that the room sizes of "modern" 3 bed semis are a touch on the small side. Factor in a family still living at home, work, interests that do not solely revolve around model railways etc etc... and OO is not dead yet. Given the choice of a BLT with a 4 coach capacity in OO or an inglenook with a Class 08 and a couple of wagons in O, I know which I'd prefer.

I'm actually quite glad there will be no online scrum at the Hornby website this year. Previous years have resulted in endless moans on this forum about availability, P&P, delivery times etc, even when folk are getting an absolute bargain. Not to mention all the cheap train sets and train packs that were snapped up in bulk and then split and listed on ebay for a vast profit. Greed knows no bounds, apparently. You really can't please some people.

Making do with what's available, accepting that prices are rising, and perhaps being a bit selective about purchases is certainly the way forward for me.

[Froxfield2012]

Price is one thing, quality another.  Of two Hornby Kings purchased, one turned up with the wiring in the tender shorting out whenI tried to use a DCC decoder and the other with the mechanical lubricator loose in the box and a broken cab handrail.  Now, at the price paid of around a £100 per loco this MIGHT be acceptable.  I might feel very different if I had paid nearer £200 each!  Hornby have added lots of good detail, but this is fragile and they need to be sure they can get the product to the customer in good condition if they are going to hold higher prices?