Hornby's Nat Southworth responds to RMweb members' Q&A.

[Andy Y]

RMweb members were recently invited to pose questions for Nat Southworth, Hornby's Sales and Brand Director. The questions were certainly challenging and Nat has given honest responses although specific percentages as a response to Question 7 can't be given due to market sensitivities.

 

 

1.
Does Hornby have plans to update models which have been in the range for many years to contemporary standards or will they concentrate on items they haven't produced before; and what would be the criteria for making decisions like that?

Yes we have plans and with the increased competition entering the model railways market we won’t share them in a public forum.

 

 

2.
There are examples of products such as Hornby's latest King Arthur, R3010, where the production model varies from that which has been illustrated in catalogues. What are the reasons behind this, should the changes be communicated to the consumer and are there any other models likely to be affected?

The catalogue is printed and accurate at a moment in time. We recognise that our website allows us to make our information more up to date and relevant. The entire Hornby brand team will have input into what is shared and our reactions to the feedback it generates.

 

 

3.
Can we expect to see more in N gauge or was the Brighton Belle a one off? Hornby have a lot of models in OO that would sell in N it would be good to see Hornby widening it horizons.

Yes there will be more N Gauge

 

 

4.
Perhaps foolishly I am on Facebook, I regularly get sent messages from Hornby which can only be described as trivial in nature. The lack of information coming from the company recently regarding the availability of models and the resultant rumour fest has damaged the reputation of the company in the eyes of many enthusiasts. Many of us feel that this has been quite unnecessary.  What steps is Hornby taking now so that in future it will use all the avenues, specifically including RMweb, open to it to be far more transparent regarding changes to models, their availability and arrival in the shops. Is there anyone actually responsible for communications to consumers at Hornby? Why does Hornby not engage more directly with RMweb if their stated goal is "to have an increasing dialog with their customer base and gauge reaction to product and marketing initiative"? 

The simplest answer to this question is check our website for the latest information on a consumer delivery date. All of our retailers have access to our inbound delivery dates via our IT system and they also receive updates weekly via an email newsletter. Quite often our retail partners communicate this information via their own newsletters. From an RMWeb point of view we monitor the threads and try to respond. This is the second time in six months we’ve done a Q&A with Andy York and we intend to continue to try to reach all the modellers more effectively.

 

 

5.
At the beginning of 2014 and mid-year during the Hornby open event with the modelling press, it was stated that the supply problems from the factories in China had been resolved and Hornby were confident of getting most of the 2014 new tooling to the market, during 2014. At the later event, or just after, expected dates of availability were given for the new tooling locos, with only the J15 not expected until 2015. However from info gleaned, only the 2-HAL was released this year, the K1, Class 700, D16 and Crosti are not now expected until 2015, in many ways a poorer performance for new model releases than 2014. What went wrong? Have supplier issues again caused delays. Are we expected to have confidence in next year’s model programme with so much still outstanding yet again?

 

We are frustrated about the supply chain. Bachmann held a conference explaining their own views on manufacturing earlier in the year and Hornby’s city updates mention our challenges both have been well reported. For Hornby the picture is improving. The facts are it is better than 2014 but it is still not good enough. The sales team have been advised of false dawns before but our confidence is definitely increasing based on the updates from our sourcing team. 2015 will be better based on the investment in people and processes. We can see these improvements internally but they will take a little while longer to consistently flow into the retailers and into the consumers’ hands.

 

 

6.
With the trade margin having previously been slashed to improve your profitability at the expense of your retailers, how do you explain having 128 items in a "fire sale" just before Christmas at prices substantially cheaper than a retailer can buy from you under the new trade terms? Do you regard it as a success that you only improved your UK model railway turnover by 5% when the price rise and reduced margin you imposed on your retailers alone should be worth far more than that, so effectively despite having produced more models this year your turnover has still fallen? Will you be open and honest about your future intentions with your retailers or do you just intend to keep stringing them along until you have forced enough people to buy direct that you can just ditch them all?

 

We are committed to our retailers and recognise that the large majority of our sales will continue to come from traditional retail outlets. The most significant improvement that we can deliver for this part of our business will be the reliability of our deliveries and consistent quality of our product.

Our web channel has been in existence since 2004 and it satisfies two requirements. Firstly, it allows us to present our brand and product ranges to all consumers around the globe in a positive professional way. It is easily updatable and offers insight into technical specifications of product. Within this requirement it is often the first point of call and directs an interested consumer to where their nearest stockist is located.  Since the 1^st July 2014 we have directed 79,444 consumer requests to our retail partners through the website. The second requirement satisfies a direct request from a certain consumer segment who wish to buy directly from the brand. This is common in nearly every business sector today.

For the last 2 years we have engaged in a Black Friday promotion and the sales period is very short. It offers consumers a chance to pick up a bargain and reinvigorates the market. We have learned a lot from this activity and we will improve our communication for our retail customers and our consumers.

 

 

7.
The recent Hornby interim report said:
“During 2013/14, our product delivery to order ratio ran at 59% for the Hornby brand for the year. For 2014/15 this number was 65% reflecting a slight improvement but not a satisfactory performance and we expect better numbers in the second half. Our customers would prefer a more structured and planned approach to deliveries of model rail product and the teams in Europe and Hong Kong are working hard towards delivering this in 2015.”

While I am pleased to see an improvement in product delivery to order ratio for the first half of 2014/15, the inability to satisfy orders has created a great deal of frustration amongst retailers and end customers alike and particularly so recently. 65% is still a long way from 100%. Why is this so low? It is pleasing to see executive focus and the accountability to shareholders to share this (and other performance metrics) but when, with new logistics and operations people on board and ERP solutions being implemented, should customers expect a double digit improvement in this metric? The recent Hornby interim report said: ”During 2013/14, our product delivery to order ratio ran at 59% for the Hornby brand for the year. For 2014/15 this number was 65% reflecting a slight improvement but not a satisfactory performance and we expect better numbers in the second half. Our customers would prefer a more structured and planned approach to deliveries of model rail product and the teams in Europe and Hong Kong are working hard towards delivering this in 2015.”

 

I can assure you that everyone within Hornby wants supply chain to be simply part of our service delivery as opposed to a key discussion point every city update. The goal is to deliver consistency, and visibility all at the right moment in time in order to grow our business alongside our retail partners. We have had to completely redesign our operating model in China and this has taken longer than initially anticipated but the improvements are starting to be seen. We expect them to continue but clearly there is still some way to go.

 

8.
What is the range of variance by product in product delivery to order ratio? One presumes that some items are supplied at 100%, but anecdotal evidence suggests that for some recent items the product delivery to order ratio is as low as 30%. This causes lots of frustration. Cancelled items are of course 0% and arguably cancellation might be a more palatable solution than 'some customers are permitted to receive product'. Can safeguards be put in place regarding production slots to mitigate disappointment on such a grand scale on specific items or is this pre-calculated to cut losses on less strategic products such that fulfilment of newer, more visible items are supplied at a higher rate versus orders? 

 

We have had a long period of unpredictability and as such it has been very hard to balance supply and demand. During this period there has been an increased trend of “pre-order” which we recognise is our consumers’ efforts to guarantee the desired model. As we improve our supply chain we believe we will improve our ability to satisfy this demand. We acknowledge that we and retailers have under called demand and as such we need to increase our volumes to get closer to this.

 

 

9.
Railroad, as branding, initially seemed to be aimed at the more cost conscious market segment but as prices have risen there seems to be less distinction in terms of price and detail between new Railroad items and new and old main range items. Is it intentional that there is blurring between the ranges or should we see greater distinction between the ranges?

 

The original line is “blurred”. We want to correct this and it is important we understand the reasons for consumers to buy into this range. We’ve just completed a major programme of consumer research which involved listening groups and accompanied shops so that we have greater insight into the way people are buying into the Hornby brand.  For us it is a long term ongoing project and the benefits will be seen from 2016.

 

 

10.
How do Hornby decide what models to make from their existing range each year? I ask because it looks like the Board are made up of businessmen, not necessarily with lots of railway knowledge. So are they aware that models such as Black 5s, Castles, West countries and A3s probably would be in constant demand whereas models like P2s and Radials are likely to have much lower ongoing demand. Do they have a panel of people advising them or is it just the case they rest models for a few years at a time in rotation?

 

Each brand has a team of people working on the product lines and you are right the Board of Directors are certainly not experts on all things Hornby, Scalextric, Airfix, Humbrol, and Corgi. The teams have experienced product experts as either engineers, designers or researchers. These are complemented by a network of experts from within industry or very knowledgeable on the historical context. They will assist the teams in getting it right along the development process and we listen to the feedback from consumers/retailers and passionate forum users also. It is a team effort to get it right.

 

 

11.
Hornby in line with just about every other producer using China for the manufacture of its models has suffered serious delays between conception of a model and final delivery to Europe.  Where does Nat see the major bottlenecks to be:

1 Identification of a suitable manufacturer

2  CAD and detailed design

3 Tooling construction

4  Production - moulding, metal work etc.

5  Assembly

6  Painting and printing

7  Dispatch to Europe

or something else?

 

This year our European and Hong Kong teams have introduced a new critical path process from inception through to delivery. We have done this in full knowledge we would identify areas of improvement all through the chain. So there isn’t one specific bottleneck. We’re actively looking for improvement throughout the process.

 

 

12.
The last year or so has seen more businesses coming to the market with products which will compete for the consumer’s pound with the established brands in addition to selected retailers now choosing to build a range of exclusive products. This is leading to increased duplication; how do you feel about this as an established brand and do you believe that it is sustainable? Addressing sustainability it’s evident that recent announcements are for products which are unlikely to see a viable market beyond the first production runs; how do you feel this will play out over the coming years?

 

I think it is a very exciting time if you are a model railway enthusiast. Duplication means choice and that means we have to make sure that we are your first choice. This means we have to get a grip of the issues raised in all these questions at the same time as new entrants come into the market. We recognise that we attract both positive and negative commentary about every action we make. Hornby is a very proud British company with a team of very passionate employees and we have a very proud history which has experienced highs and lows. Many commentators have acknowledged a strong Hornby is good for the hobby, and I can assure you that Hornby is getting stronger and the increased competition will actually aide us in this.

 

 

We'll be bringing you news of Hornby's full announcements as usual for 2015 on the 17th December.

[woodenhead]

Not read the other answers, went straight to my question - YES!! There will be more N gauge from Hornby

[Oldddudders]

A career in the Diplomatic Corps awaits this chap if he wishes to change horses.

[woodenhead]

Which is why I am so happy as his response on N gauge was completely affirmative, looking forward to 17th December, there might actually be something in it for me.

 

I refuse to froth about it though, I'll just quietly await the announcements...

[Matabiau]

We seem to have (more or less) found the paddle, which is handy cos the canoe had a really big hole in it........

 

Unfortunately everyone at Hornby seems to be paddling in different directions! Only the confirmation of future N gauge releases was concrete, the rest seemed like marketing waffle, a poor and unconvincing attempt at avoiding the question. Point 6 in particular seems to contradict Hornby's web behavior. The two Black Friday sales in question have been nothing but a fiasco and totally uncontrolled. On both occasions Hornby have sold more items than they have available and are unwilling to resolve the problem and bad feeling that this causes.

[APOLLO]

[4630]

I'm afraid when I read through Nat's carefully crafted replies I just get cross.

[Ozexpatriate]

The questions were certainly challenging and Nat has given honest responses although specific percentages as a response to Question 7 can't be given due to market sensitivities.

Thanks Andy. I appreciate your roll up of all the questions we collectively posed and the answers were largely as I anticipated. I do appreciate Nat taking the time to interact with us here on RMweb.

 

If I lived in the UK, I think would purchase sufficient Hornby PLC stock to attend the shareholders' annual general meeting and pose similar questions there. The "market sensitivities" concern wouldn't be applicable in that situation.

[micklner]

Having read the majority of  the replies , they are a load of waffle .

 

The only ones thats actually answer the questions are 

 

1 and 3 

 

Re 4

 

When has `Hornby ever responded on a actual thread on here ? 6 monthly replies are not replying to individual threads.

[Talltim]

Bit disappointed my question wasn't asked, I thought it was quite non-contentious!

[woodenhead]

But what were people expecting some sort of admission that Hornby were moving completely online and damn all the model shops, that you were lucky to get what you got with Exeter and that they have rushed out three models to counter new market entrants.

 

If there was any bad news or major shift in sales channels they would announce it officially to it's shareholders not via an enthusiast web forum.

 

Hornby people will tell us what they can within the restrictions of a listed company and there will be a PR angle.

 

At least they speak to us, where are Dapol who did some similar mischievous business at Warley with discounts. 

[Mike Storey]

Ian is right. Disappointing, management-speak, with next to no straight answers (apart from the N gauge response) or willingness to share. His repeated assertions about the Hornby "brand" says it all really. I nearly choked on my bile where he states that the Hornby website is engaging with its consumers and that full technical details can be found with each product. Baloney!! I note that no question was posed as to why their contact email service almost never responds to anybody, let alone to their stated aim of "within 5 days". If he seriously thinks that condescending to answer a Q&A twice a year will bring loyalty and understanding, he is deluded. They may well be tackling their key production difficulties, but his 1990's "Quality Through People and Processes" jargon, or ISO 9000/01, does not convey the shock and awe it did then. There is no engagement, just marketing.

 

However, many thanks for progressing this Andy. Tricky to keep the right side of being respectful of their public company status and the "engagement" he purports to pursue. I worked for a major, publicly quoted company, rather larger than Hornby.....Railtrack plc. We were not allowed to dodge straightforward questions due to shareholder sensitivity. On the other hand, look what happened. Very tricky, indeed. Fear (passivity) succeeds over active campaigning?

 

That said, the Blue/Grey 4VEP arrives very soon and on the shelves by 9th (if their website is to be believed). If this is significantly superior to the original version (particularly windowed inner compartments, hidden motor, correct motor bogie attachment), I will gratefully acknowledge that Hornby have stepped up.

[33212]

Twaddle answers...but thanks...

[ruggedpeak]

Sales channels - this is a direct quote from the 2014 Annual Report (p.13)

 

"The Group formulates its business strategy, including the website and direct to consumer channels, based on the changing retail dynamics. An increased focus on direct web based selling, selling directly at exhibitions and other events and expanding own retail concession network are all being developed to protect the brand position."

 

I think retailers can be clear where they stand. Compare and contrast  http://Bachmann.co.uk/details.php?id=220Must have missed the Hornby one.....

 

I think this, like Mr Southworth's comments, show a focus on "brand" rather than "product". The comparison above with Railtrack is a little unfair given the mess RT got itself into, but an interesting parallel insofar as Railtrack was an engineering and asset management company that did everything it could to avoid both engineering and asset management. The danger is that Hornby is becoming a collection of brands and not a toy/model manufacturer. However it has missed the point that the brands are underpinned by the quality of the toys and models they produce. My armchair view is that Mr S should not really be thinking about brands at all until the company has got itself back to being able to be a competent toy/model producer.

 

The restrictions about being listed are bunkum - there is plenty they could say if they wanted to, and frankly need to in the current climate.

 

It is clear they desperately need someone to replace Mr K, someone who can relate to the customers and share their passion and interest. However I don't think they have any idea how much Mr K did to keep them afloat over many years. Compare and contrast with say Rapido, which I appreciate is at the opposite end of the spectrum. If the N Pendolino happens and the APT-E is a success, I have little doubt they will smash their way into the UK market and leave a wrecked Hornby in their wake.

 

However much it might not meet the Board's lofty aspirations of being a brand management company rather than a manufacturer, the reality is the UK model rail market is fundamental to the company, as its own figures show. Neglect that and move away from it and they are taking a massive risk. Much more efforts should be going into the trains.

 

It may be informative to see Mr S's LinkedIn profile for his background. I'm not sure qualifications in accounting and marketing are a good combo for passionate straight talking!

 

https://uk.linkedin.com/pub/nat-southworth-acma-cgma/a/92b/1

 

I sincerely hope that behind the waffle is some real action that will bear fruit soon.

[Mike Storey]

Sales channels - this is a direct quote from the 2014 Annual Report (p.13)

 

"The Group formulates its business strategy, including the website and direct to consumer channels, based on the changing retail dynamics. An increased focus on direct web based selling, selling directly at exhibitions and other events and expanding own retail concession network are all being developed to protect the brand position."

 

I think this, like Mr Southworth's comments, show a focus on "brand" rather than "product". The comparison above with Railtrack is a little unfair given the mess RT got itself into, but an interesting parallel insofar as Railtrack was an engineering and asset management company that did everything it could to avoid both engineering and asset management. The danger is that Hornby is becoming a collection of brands and not a toy/model manufacturer. However it has missed the point that the brands are underpinned by the quality of the toys and models they produce. My armchair view is that Mr S should not really be thinking about brands at all until the company has got itself back to being able to be a competent toy/model producer.

 

The restrictions about being listed are bunkum - there is plenty they could say if they wanted to, and frankly need to in the current climate.

 

It is clear they desperately need someone to replace Mr K, someone who can relate to the customers and share their passion and interest. However I don't think they have any idea how much Mr K did to keep them afloat over many years. Compare and contrast with say Rapido, which I appreciate is at the opposite end of the spectrum. If the N Pendolino happens and the APT-E is a success, I have little doubt they will smash their way into the UK market and leave a wrecked Hornby in their wake.

 

However much it might not meet the Board's lofty aspirations of being a brand management company rather than a manufacturer, the harsh is the UK model rail market is fundamental to the company, as its own figures show. Neglect that and move away from it and they are taking a massive risk. Much more efforts should be going into the trains. I am hoping that in 2015 we will see some positive results that belie the lacklustre responses we have had.

 

It may be informative to see Mr S's LinkedIn profile for his background. I'm not sure qualifications in accounting and marketing are a good combo for passionate straight talking!

 

https://uk.linkedin.com/pub/nat-southworth-acma-cgma/a/92b/1

 

I think you have summarised the parallel between Raitrack and Hornby very well. The only difference is that nobody died in one case.

[Mike Storey]

What Id really like to know (having read the "answers" above a little more carefully - as one does) is how one can take a brand that is something of an instution way beyond its core market, that has a devoted following ready to buy the product; and still make an almsot totaly disaster out of it...and thenstill happily collect the over-inflated wages one gets for over-seeing such a debacle?

 

See "banking".......

[Godfrey Glyn]

Andy, many thanks for this, and also thanks to Nat for taking the time to reply. Nat has had to walk a very careful path, as Mike Storey has already said. Clearly at present we are not the most important audience, the City comes first. I guess a tangible response will only be seen in deeds and not words so I for one will hope to see more useful information coming from Hornby via this Forum, their Website and by their use of Facebook et al. I hope the management at Hornby realise that we are cross with them because most of us want them to succeed and from our (albeit limited) perspective there are things within their control that they could do so much better.

Godfrey

[ruggedpeak]

Point 6 in particular seems to contradict Hornby's web behavior. The two Black Friday sales in question have been nothing but a fiasco and totally uncontrolled. On both occasions Hornby have sold more items than they have available and are unwilling to resolve the problem and bad feeling that this causes.

 

They have commented (sort of!) here http://www.Hornby.com/news/Hornby-delivery-delays/

 

And to be fair the masters of logistics and destroying the High Street, Amazon, have had exactly the same problems. Amazon Prime members have not been getting their Prime delivery service despite paying for it. Not an excuse for Hornby, and personally Black Friday is another tawdry import from the US that is cheap and tacky and they would be well advised to avoid except for stock clearance.

 

However with a bit of marketing nous that could be turned into a brand strengthening opportunity for both customers and retailers rather than the current lazy car-crash of a sale they currently have. Frankly Mr S the company needs to up its game, be passionate about the products and us the paying punters, and forget all this high faluting brand nonsense. The brand will follow the product if you get the product right. Which you haven't yet.

[Les1952]

I have a feeling that it is "the city comes first" is part of the problem.......its punters who come first !

 

I've been told by the former Managing Director of a publicly listed company that the first duty if you are City Listed is to your shareholders.  EVERYTHING else is subservient to that, including customers.  He left after a year or so for a field where he could put customers first......

 

All the very best

Les

[ruggedpeak]

I've been told by the former Managing Director of a publicly listed company that the first duty if you are City Listed is to your shareholders.  EVERYTHING else is subservient to that, including customers.  He left after a year or so for a field where he could put customers first......

 

The idea that there is a primary duty to shareholders is a complete and utter load of nonsense, a myth perpetuated by the ignorant and City liars. If anyone at Hornby thinks that then they need sacking for stupidity and being unfit to run a company. Indeed under UK law directors are required to consider a wide range of things, not just shareholders. There is extensive literature on the myth of shareholder capitalism. And of course if you destroy your customer base and fail to deliver what the market wants to make short term profits, how does that help shareholders in the long run or maximise value?

[JSpencer]

Quite predictably I suppose, this is like watching the Prime Minister (or president where I live) reply to public questions on the telly and then gathering public opinions at the end.

 

I don,t know whether to laugh or cry really.

 

So did anyone think the exercise brought any value? For me no, there is much more passion and humanity in Simon Kohlers excellent blogs. How about the designers presenting themselves and showing us what they are working on? Talking us through some of the choices and challenges?

Maybe we can see where they are coming from and point out silly things before it is too late. We would start seeing the much more value in the exercise then.

 

Thanks Nat for the replies, I see a tendency to address the problem from a corporate sense. This would be fair for a company with a billion dollar turnover but it's too cumbersome for a much smaller company like a Hornby.

[JohnR]

Very disappointing. The answers were mostly marketing speak - such a contrast to what would have been the case if Simon Kohler was still in place!

[Adams442T]

Thanks to Andy for conducting this exercise. The replies though are just the guarded responses you might expect from a 'Company Man'. Apart from the forecast expansion of 'N' gauge there was nothing in it really.(and presumably these will then only be available either to buy direct or through concessions)

 

However the answers to Questions 2 & 6 were, I felt, particularly disingenuous, and the whole, 'proud to be working for a great British company' shtick is something I heard time and time again from William Britains Marketing Managers, right up to the day before they sold out to an American company.

[TheSignalEngineer]

. To quote one of your managers a year or two ago "I have never worked in Retail so I don't know what it is like"

Looking at the profiles of some of their senior managers it seems that there was some experience with such bastions of retail as Woolworth and JJB Sports.

[Dunsignalling]

As someone else has mentioned, the only concrete information is that there will be more N gauge.

 

As for the rest, this sort of "openness" is very much what US political commentators would call "motherhood and apple pie", i.e stating the bleeding obvious that they think we want to hear; it achieves nothing.

 

The reality is: If Hornby get their collective a**e in gear, they will survive; if not, they won't. Either way, the outcome will be decided within two years IMHO. 

 

I have bought and enjoyed a lot of Hornby models over the years and would like to carry on doing so - just without the stress of wondering if I'll actually get the ones I have pre-ordered. I got so fed up waiting for another Rebuilt WC that I bought a second-hand one to rename and cancelled my order.

 

I can't do that with the 700s but my Adams Radials (multiple) will come in boxes labelled 'Oxford Rail' unless Hornby can convince me, fairly rapidly, that theirs will be better and/or cheaper and that I can trust them to supply my local dealer with sufficient stock to make pre-ordering mean something.

 

If Hornby were to disappear, it would be messy but "other railway models are available" and we know from what happened to Airfix and Mainline that many items would eventually re-emerge under other labels. I am not, by any means, past caring but it really wouldn't be the end of the world.

 

However, it is clear that others are very attached to "The Brand" if the level of posting on Hornby threads compared to every other subject is anything to go by.

 

John

 

Edited to get certain words in the right order!