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Hornby Discount Limits





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#1 melmerby

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Posted 17 September 2018 - 21:43

Hi all

 

I haven't seen it elsewhere so apologise if this has already been mentioned.

 

Had an e-mail from Derails to say that from 2019 Hornby will be imposing a 10% discount limit for the first 6 weeks after release of any new item..

 

Keith


Edited by melmerby, 17 September 2018 - 21:45 .

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#2 Trains4U

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Posted 17 September 2018 - 21:52

I have heard this too, but not had official confirmation.
I expect a letter is waiting (we are closed Mondays)
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#3 Les1952

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Posted 17 September 2018 - 22:16

Isn't this no more than is done by other manufacturers-

If I'm right Heljan has just joined Bachmann in the practice.

I may be wrong, but it will protect local model shops a bit, and cheapskates like me can afford to wait a bit for their models if we really want them cheap.

Les
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#4 melmerby

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Posted 17 September 2018 - 22:48

I thought the current limit was 15%?

 

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#5 sawyermodels

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Posted 17 September 2018 - 23:11

We've had the letter from Hornby. It arrived Saturday.
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#6 adb968008

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Posted 17 September 2018 - 23:17

Whilst I understand the desire to avoid the cut throating of new lines and preserve margin for retailers...
There is too oppourtunity for consumers... just hold off the Pre-orders.

I used to have, c2012-2014 dozens of items on Pre-order, often at years in advance, to lock in prices, the result was I bought everything, need it or not, cheap.

Once this was no longer sustainable, and retailers changed policy, I reduced Pre-orders, to only those that were advanced /reliable to be delivered in the same year, so I got to understand the price, budget my year and in most cases the promises were delivered... i’m Still generally buying 2 or 3 of a new class.

But as the herd has moved towards short term price covenants, I know where this leads me..
Why Pre-order at all ?

In all honesty, i’m Probably not going to Pre-order, and wait and see what shows up. - it’s actually a good new strategy that could make sense if the price incentive has gone... why ?

1. Very little immediately sells out, apart from must have new releases, even those are sitting on the shelves longer than they used to.., aside of the APT-E, R3555 and the 3 Pecketts, few other new toolings have gone viral and wiped out.. you can still find them in dark corners of ebay at RRP or less prices.

2. The other thing that’s changed is the “stock up” mentality.. buy 1 or 2 on release, but the grab a left over bargain a few years down the road, resulting in 3 or 4.
The games changed prices are way higher than 2 years ago, indeed instead of stocking up for extra toys, tonight I’ve just dumped 70 on ebay.. it’s not the price..it’s lack of space, I’ve just binned my 3’s and 4’s (actually in some it’s my 12/13th’s).. This summer I’ve passed on several bargains, for want of just having too much.

3. Reduced risk, nopre-order allows you to see if the release is a bum, I can make an informed choice on to buy, to wait or not to buy... that’s new territory for me.. which I did try already..result was I passed on Caen and the Green 47xx for exactly that reason, and 6 weeks on, that urge to own...well kinda turned into 50033, 37114 instead... Caen now is ebay fodder..i’ll Just await the event to bite a bargain, the 47xx.. well I’ve got the black one that’ll do.

Before we all cry the end of immediate discounts, think about it... if you don’t Pre-order, you get to see it first.. if it’s must have, go ahead. If, like most, they are nice to have.. wait 6 weeks.. you might just find it’s actually interest waned and you may skip it and your wallet may thank you.

There is one flaw in Hornbys announcement, ABGee in Ripley, whom wholesale to the internet traders.. how will this be enforced on the ebay traders ?, whom, if not enforceable, would now suddenly have a huge advantage over the high street ?

The train has quite definitely left the station... the restriction of discounts could save me, and you, space and money.... it might not be a bad thing to calm down the hobby, if at best it only delays the revenue stream for 6 weeks, but if a release is a bum.. it’s gonna bite the manufacturers hard, much harder than it used to, as the retailers won’t need to pre-order and can equally avoid the risk after release.

Edited by adb968008, 18 September 2018 - 07:59 .

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#7 Legend

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Posted 18 September 2018 - 06:15

Sad that yet another manufacturer going down this route . I know it’s supposed to protect smaller shops but does it really . The only issue is things that are likely to be in short supply eg Blue Merchant Navy , perhaps where you might want to pre order to make sure you get one . I don’t desperately need anything, it’s only Model Railways after all , so I’ll just wait it out and see if there’s anything I fancy in the bargain bins.
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#8 adb968008

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Posted 18 September 2018 - 07:29

Sad that yet another manufacturer going down this route . I know it’s supposed to protect smaller shops but does it really . The only issue is things that are likely to be in short supply eg Blue Merchant Navy , perhaps where you might want to pre order to make sure you get one . I don’t desperately need anything, it’s only Model Railways after all , so I’ll just wait it out and see if there’s anything I fancy in the bargain bins.

There’s a lot of assumptions on the Blue Merchant Navy.

We don’t know the size of the production run, but like the black peckett, i’m Sure those advanced orders (nearly 2 years upfront) allowed the manufacturers time to size the demand and order the production run accordingly. Whilst it was sold out long before release, no one was complaining of stock shortages when they arrived... was it a good guess, or a batch sized to demand, set to a specific cut off date ?

Everyone’s got black Pecketts...no shortage, unlike the 1st three, and i’m Sure retailers fattened up their initial orders, though it was sold out in advance to further orders.

Black Peckett could become a metaphor for Black Swan in the hobby, where by Manufacturers adopt a strategy of undersizing a 1st new release batch to secure a sell out, and bump up the demand for a second release, which may end up swamping the market.

Merchant navy in blue could be the same, that is if they’ve been watching the Pre-orders and made n-1, it’s worth noting whilst everyone talks of huge demand.. Hornbys Pre-order allocation hasn’t sold out yet...so there is more than enough planned to go around...
https://www.hornby.c...ection/asc.html
is it smaller demand or too much supply ? - 6 weeks after release we will find out, but if they make a booboo, in future without a pre-order, they might be left staring at them next to the 71’s and k2’s that have been in stock for a few years.

In the future, with no incentive to pre-order and more incentive to wait, that market knowledge, security of sale quantities “pipeline” is lost and guessing begins.... if Pre-orders collapse, is the price ?, the prototype selected ? The economy ? Over ordering in the past ? and what % do you attribute to it ?

The risk here is sales targets are never lower.., yet the rationale to discounting is over supply, which means production should be lower... Making too many and not letting your resellers sell it cheaper just means you end up owning the stock for longer.. cake and eat it conflict comes to mind.

Edited by adb968008, 18 September 2018 - 09:12 .

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#9 Manitoba

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Posted 18 September 2018 - 07:39

Wondering how the principle of limiting discounts squares with the legal points in the attached link.

https://www.gov.uk/g...69/RPM_60SS.pdf

Phil
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#10 jjb1970

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Posted 18 September 2018 - 08:47

I wonder if part of the motivation of Hornby, Heljan et al is to take a small shot at the big shops who are now de-facto manufacturers in competition with the more established suppliers? Certainly if I was Hornby (or Bachmann) I'd see no reason to do any favours for a company steadily developing its own range in competition to my own products. So helping their competitors by removing the competitive advantage they've used to expand market share might be a neat way of having a little go at them.

 

I'm with those who opt out of the pre-order thing anyway. I'd much rather just wait and make my own decision whether or not to buy a model once the production models are released. If I miss a release, well c'est la vie, it's not like there is a shortage of new releases. I did pre-order the NRM/Rapido APT as that was a particularly special release, a train I'd always wanted in model form and never expected to see in RTR form. And Rapido are probably the only OO supplier I'd take on trust and put my money in the pot on trust that they'll do a good job. I was familiar with their North American models before they entered the OO game so knew just how much care and attention they give to their product. That was, however, the exception for me and I'm happy to just wait and take my chances.


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#11 bike2steam

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Posted 18 September 2018 - 08:59

Wasn't there an 'Act Of Parliament' to do away with RPM in 1956 ????



#12 jjb1970

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Posted 18 September 2018 - 09:02

Wondering how the principle of limiting discounts squares with the legal points in the attached link.

https://www.gov.uk/g...69/RPM_60SS.pdf

Phil

 

I'm guessing they are relying on model trains being a micro-niche (in terms of the retail sector it's probably a statistically insignificant segment) for entirely discretionary "luxury" purchases and that as such the authorities have better things to do.



#13 bike2steam

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Posted 18 September 2018 - 09:05

There is one flaw in Hornbys announcement, ABGee in Ripley, whom wholesale to the internet traders.

 

I used to get my Hornby stock from them, and that started over 20 years ago, they were a damn sight better,easier, and quicker to do business with than Hornby. :sungum:


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#14 Phil Parker

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Posted 18 September 2018 - 09:08

There is one flaw in Hornbys announcement, ABGee in Ripley, whom wholesale to the internet traders.. how will this be enforced on the ebay traders ?, whom, if not enforceable, would now suddenly have a huge advantage over the high street ?
 

 

As long as ABGeedon't discount, I'm sure the world is happy for the eBay sellers to re-sell at a loss. Everyone except said sellers bank manager of course. 


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#15 rembrow

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Posted 18 September 2018 - 09:17

There is a different factor with Hornby, that could significantly affect pre orders, even at smaller retailers. Hornby has a different practice on price increases prior to product release, compared to Bachmann and Heljan. Hornby have, until now, maintained the original price to the retailer, when the product was ordered. This has given retailers the benefit of early ordering. Many retailers pass on tbis benefit to customers who pre ordered at an early stage before any wholesale and retail rrp rise. If now Hornby increase prices before release, which is possible for delayed 2018 products, I assume retailers will have to apply the 2019 prices witj up to 10% reduction, but will have paid for the product at 2018 wholesale price. This analogy assumes that Hornby are not changing their retailer terms of applying the price when the order was made terms.
This really means there is no longer a benefit in pre ordering. This must be a disadvantage to both retailers and Hornby, as one of the gauges of the selling potential of a model is reduced or lost.
Although I lost my local retailer this year, due to closure, I would think that if retailers have to apply the rrp at release, less up to 10%, it will have a detrimental affect on regular purchasers staying with their local retailer as it is likely to lead to more shopping around after 6 weeks, as few Hornby releases sell out that quickly.
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#16 adb968008

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Posted 18 September 2018 - 09:24

As long as ABGeedon't discount, I'm sure the world is happy for the eBay sellers to re-sell at a loss. Everyone except said sellers bank manager of course.

I like Bike2Steam used to have an account with them, and surprisingly I still have their pricelists, and Hornbys direct trade prices (1991-96)...
A lot may have changed in 27 years, but back then it was only 1.5% difference, and VAT for the unregistered, which was a cost for some.

But I’d assume as a wholesaler they still are cheaper than RRP as otherwise they wouldn’t sell very much to the trade ?

The main point being... what stops the internet e-tailer under cutting the high street in that first 6 weeks ?
Case in point I just bought the new class 50 at prices way discounted from one such online retailer (£117) who approx every month does a dump of Hornby’s newest releases, in volumes >1 each.. I don’t know where he sources his new releases, but he doesn’t espouse a shop, not even close proximity to his return postal address... but he’s becoming a must follow...
There’s a lot of anonymous people on the internet, some who have retail premises and use pseudoym online accounts to sell their wares. Who’s going to regulate him and those like him, whom are legitimate, offer returns, warranty and have excellant feedback, and in the future have advantage over the high street for 6 weeks ? The risk is this becomes the new battleground for cut throat discounting?

Edited by adb968008, 18 September 2018 - 09:36 .


#17 JSpencer

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Posted 18 September 2018 - 09:32

I wonder if part of the motivation of Hornby, Heljan et al is to take a small shot at the big shops who are now de-facto manufacturers in competition with the more established suppliers? Certainly if I was Hornby (or Bachmann) I'd see no reason to do any favours for a company steadily developing its own range in competition to my own products. So helping their competitors by removing the competitive advantage they've used to expand market share might be a neat way of having a little go at them.

 

 

They could just say to the shop in question that if you are manufacturing, then you are no longer a shop and we no longer supply you. On the other hand, Hornby started selling directly anyway, so they cannot have it both ways.

 

In anycase, fixing discount gives big shops more incentive to manufacture more.



#18 jjb1970

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Posted 18 September 2018 - 09:39

They could just say to the shop in question that if you are manufacturing, then you are no longer a shop and we no longer supply you. On the other hand, Hornby started selling directly anyway, so they cannot have it both ways.

In anycase, fixing discount gives big shops more incentive to manufacture more.


I don't dispute the inconsistency but nevertheless from the perspective of the older suppliers it must be quite nice to even out things to the benefit of shops who aren't also competing as manufacturers.
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#19 brushman47544

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Posted 18 September 2018 - 09:39

As a purchaser, I have no problem with the concept that retailers have to limit the discount they offer for a limited period. If I really want something, I am willing to pay the higher price if it means I am assured to get it, which should be more likely if there are fewer pre-orders. It also means that I can wait for reviews (e.g. on here) in case there are build/accuracy/quality issues that might put me off buying, which you can't easily avoid if you have to pre-order to guarantee getting something.

 

But I do wonder how the maximum initial discount will work for Hornby because, as others have said, they can't control what someone charges if they buy from the wholesaler ABGee not Hornby direct. Indeed it could have the effect of driving more retailers towards ABGee if it means they can undercut retailers who buy direct from Hornby. The only issue might be a guarantee of supply - does Hornby supply stocks of every model to ABGee, and in sufficient quantity for ABGee to fulfil all its orders? If not but Hornby does (I appreciate that doesn't happen now), might this encourage retailers to buy from Hornby direct?



#20 phil-b259

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Posted 18 September 2018 - 09:51

Wondering how the principle of limiting discounts squares with the legal points in the attached link.

https://www.gov.uk/g...69/RPM_60SS.pdf

Phil

 

 

Wasn't there an 'Act Of Parliament' to do away with RPM in 1956 ????

 

You are rather missing the point.

 

Nowhere in UK legislation does it say manufacturers HAVE to supply any retailer with their products - if it did then most franchised car dealers would disappear overnight!

 

It is perfectly legal for a manufacturer to refuse to supply a retailer should they discount the manufacturers product lines to heavily in order to protect the value of the product being sold.

 

What is not allowed is for manufacturers to insist that a product must be sold at a given price by the retailers it supplies - and it is only that aspect which trading standards etc can enforce.

 

So Bachmann, Heljan and Hornby are acting perfectly legally by saying that they will not supply retailers with their products if the retailer offers discounts grater than 15% / 10% for the first 6 weeks after the manufacturer starts shipping the product to retailers.

 

 

More widely railway modellers need to get real - why should they routinely expect / demand discounts in the first place? In my view discounting should be left until it is needed for a genuine reason - say shifting stuff that has been hanging around on retailers shelves for ages or as part of a one off special promotion.


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#21 JSpencer

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Posted 18 September 2018 - 09:55

With Bachmann, I already lost all incentive to pre-order.

 

We are all well informed in the hobby these days. I really don't think it will make an IOTA difference in saving small model shops on the high street when the high street itself is dead unless it is in the middle of something historic and worth visiting.

In my case, I'm not even in the UK. When I do visit an historical place with such a shop, it is closed (most tourist shops in such areas stay open until 8pm - Model shops seem to stick with 9 to 5 but I suspect most business is actually 11 to 7 -- again if you don't fit the local market you loose the sale to online that is their 24hrs/7days).

 

Like most, I'll wait for release, read reviews and people comments on here before deciding to buy. Shops will have a hell of a time anticipating quantities to pre-order (unless they big with tonnes of sales data to draw on).

 

It is possible in that time, the novelty of the new model will were off and I won't buy it anyway.

In my experience, the items which give me greatest pleasure running on the railway were not those that cost the most. Some pre-ordered items have been bit of a let down for the price paid for them. Where pre-ordering worked well was with Kernow's Bulleids. I ordered and paid early, was rewarded with two beautiful models that run well each £30 cheaper than if I had waited. Here pre-ordering/paying was rewarding.

Conversely, the Bachmann crane.... I'm of half a mind to cancel it and wait now. 


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#22 Phil Parker

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Posted 18 September 2018 - 10:19

With Bachmann, I already lost all incentive to pre-order.

 

We are all well informed in the hobby these days. I really don't think it will make an IOTA difference in saving small model shops on the high street when the high street itself is dead unless it is in the middle of something historic and worth visiting.

In my case, I'm not even in the UK. When I do visit an historical place with such a shop, it is closed (most tourist shops in such areas stay open until 8pm - Model shops seem to stick with 9 to 5 but I suspect most business is actually 11 to 7 -- again if you don't fit the local market you loose the sale to online that is their 24hrs/7days).

 

Like most, I'll wait for release, read reviews and people comments on here before deciding to buy. Shops will have a hell of a time anticipating quantities to pre-order (unless they big with tonnes of sales data to draw on).

 

 

I think you are extrapolating from yourself and assuming you are a typical shopper. Unless someone is really into the hobby and an RMweb member, the chances are they aren't that well informed. A quick look at Facebook shows forums where people plainly know very little, and that's for those who are keen enough to join any forum. On here, we are well informed, but are we the majority of the market?

 

Of those who are well informed, reading posts on here would suggest most are NOT willing to wait for release and reading reviews. The numbers who claim to have many hundreds of pounds of pre-orders shocks me, but it's so vital for them to get the latest model, they will take the risk. 

 

And the general high-street might be on its last legs, but very few model shops can afford to be there and pick lower-rent areas with good parking. People will still travel for specialist shops, although to be fair, most shops now have a web presence anyway so aren't relying on people walking through the door. Hattons is a good example of this - you can walk in but most people buy online. Since you need a front door for Bachmann and Peco products, there will be model shops for some time.


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#23 Free At Last

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Posted 18 September 2018 - 11:07

QuoteHattons is a good example of this - you can walk in but most people buy online. Since you need a front door for Bachmann and Peco products, there will be model shops for some time.

 


I wonder how much Hattons are a good example of this, yes you can walk in, but only if you get there by car or taxi.


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#24 The Stationmaster

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Posted 18 September 2018 - 11:21

I think this all goes a lot further, and is more complex, than we are tending to see it.  

 

Firstly Hornby (and others) will obviously have some concern about the spread of commissioning and other new entrants to the overall model railway business especially if the overall size of the market cake is little changed but is being cut into smaller slices for each 'manufacturer'.  This is working in two ways and one of those is that many retailers are getting much shrewder about the number of models they pre-order.  This is partly because of Hornby's history over the past few years but also because of the impact discounters are still having on potential sales, and because there are lots of commissions/new entrants in the marketplace who are inevitably taking market share, almost wholly via direct sales.  Thus if Hornby can exercise some influence over retail price discounts they are probably seeing it as protecting pre-ordering which in turn means protecting the size of their orders from the factories.  

 

I suspect it also means, to Hornby at any rate, that they might think they have found a way of adversely affecting the business model of those who do still try to sharply discount - some might regard that as a rather Machiavellian idea but you never know.  In other words although Hornby might not like the idea of retailers who offer rock bottom prices on their models while selling their own commissions at top level prices there isn't much they can do about it because ceasing to supply such retailers would be cutting off their nose to spite their face.  So instead they reduce the initial margin on sales of their models (not just model railways I presume?) to that which some smaller retailers can probably already afford so they won't suffer but the big discounters might.

 

The second area takes us back to my earlier point that Hornby no doubt hope it will encourage the 'ordinary' retailers to order more because they would now be more likely to sell it compared with a discounter who is prepared to knock off the full 15%.  However I seriously wonder if that will work because many smaller retailers tend, I believe, to restrict their pre-ordering for other reasons, such as the way the overall market is now working with the various commissioners and new entrants taking a share of the existing cake as well as the treat posed by the deeper discounters.  Indeed numerous posts on RMweb would suggest that is a sensible policy because it is quite common to see comments along the lines of 'I'll wait until the price comes down and won't pre-order' often accompanied by 'I won't be bothered if I miss out anyway'.

 

Which obviously takes us a stage further because in all likelihood there seems a good chance that the 10% approach might not deliver what Hornby want it to deliver.  Pre-orders from smaller retailers might not improve because a 'sophisticated' (posh word for skinflint) section of the market will continue to look for a pricing race to the bottom and won't necessarily care if it doesn't buy a particular model or item.  The worse aspect of this is however that if pre-orders to Hornby don't change models or future proposals (especially the latter) will be up against much stricter financial criteria within the business and consequently might never appear.   This is where Hornby's lack of innovation in UK model railway marketing, in particular, could create further problems for the business overall as simply fiddling with retail discounts as a perceived tool for hopefully changing how the market works doesn't strike me as recognising how the current model railway market actually works.

 

Coming on from that it seems obvious to me that Hornby needs to take a much more radical and better thought through approach to the rapidly changing UK model railway market.  Bachmann is already showing - notwithstanding its horrendous supply problems - that innovation can work but we see none of that from  Hornby and we have actually seen regression in its approach to marketing over the past year with some previously good ideas knocked on the head or dropped and a return to some rather old fashioned ways of doing things which sit uneasily in the age of rapid communication and a rapidly changing market.  The first step is obviously to select and make things in the higher price ranges which people want to buy - Hornby can produce the goods as several examples over the past few years have shown but that takes us to the second part of the equation which is making those things in the correct number which will result in a sell out from the warehouse and which will achieve the right return.  After some past gaffs it has been a little surprising to me to see Year 2/3 models appearing where Year 1 output still lurks on the shelves or (under the previous regime) was sold off cheap to achieve cash flow and sales totals.  LCD has, very sensibly in my view, put a block on that 'fire sale' approach but that does increasingly mean getting it right first time on picking the right things and selling them

with sufficient profit on the investment.

 

Hornby's development team do seem to have been very astute in picking out things which would sell and be 'highly rated' by an appreciative market and we simply don't yet know what is going to follow their ability to pick up the sort of things the market wanted.  Here of course lies a huge advantage for the commissioners because they are generally close to the market, often have an excellent knowledge of the prototype railway and some of its history and pick up from their customers what amounts to 'market intelligence'.   Something incidentally which Hornby's development folk were rather good at as well when given free rein to meet and interact with customers etc.   So closeness to the market and an ability to innovate in a rapidly moving market seem to be essential in order to get the right products - that means a lot more than a man in a nice suit saying to somebody 'oh and that's another steam train we make'.  And wish lists aren't everything as some others have very successfully shown.

 

That's a starting point for the high end but also have what in theory is a lower end market - it's got a brand but in reality not much else and it has a confusing pricing structure in relation to the overall market.   It's been said many times before but Railroad needs a darned good sort out and re-marketing, I'll say no more.

 

Then we come to how marketing and selling interacts with the overall market, the retailers, and us - the end customers.  time to leave fortress Sandwich and get out there actually building relationships with all of those market areas and not ignoring them or trying to fob them off.  Just look at how some of the innovators do it - there's a lot more to market interaction than farcebook and an annual model launch/catalogue.  The market, certainly the end market, craves news and novelty and and significant parts of it wants to interact with real people in the supply end.  Is that a waste of time for folk in the supply end - not if it boosts your bottom line it isn't.  Much more to it of course because selling also involves pricing as well as product and it involves retailer discounts.  So how's this for a radical approach - offer a larger trade discount or better payment terms on higher price range products to smaller retailers than the usual across the board trade discount;  that would really help them compete with the bigger discounters - really prove that Hornby supports the smaller retailers, then they might increase their orders.


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#25 phil-b259

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Posted 18 September 2018 - 11:24

I wonder how much Hattons are a good example of this, yes you can walk in, but only if you get there by car or taxi.

 

And?

 

Why do you expect model railway retailers to be treated differently from any other sort of retail premiss?

 

There are hundreds of thousands of retail premiss across the UK which you can only realistically get to by motor vehicles - should they all shut down / be faced with some form of surcharge on account of that fact?

 

The reality is that retail in all sectors has been steadily moving away from shoppers coming on foot / public transport in favour of the car for decades now - hence why even large 'in town' shopping malls like that at Stratford still come with large car parks even though there is excellent public transport available.

 

Similarly online retailing is not going to vanish either - although it would help if HM Treasury got its finger out and overhauled the tax system which massively penalises those retailers who have a proper shop, particularly as they are keen to dump ever more funding responsibilities on councils (which are going up in the long term) while at the same time making said councils rely on a funding model that is generating less money (business rates) year on year to fund said responsibilities.


Edited by phil-b259, 18 September 2018 - 11:38 .