Prices increases at a well known retailer!

[Maltazer]

It's no different from your local supermarket.  Some items are cheaper than the rivals, and some prices take the p*ss, only for it all to be reversed a few weeks later.

 

It only works because people don't bother to check, or just keep shopping at the same place for convenience, regardless.

 

Retailers take advantage of this inertia.  The only solution is to shop around, and if you're buying online, that's hardly the most challenging thing to do.

 

Mal

[phil-b259]

Well said!! No doubt some people don't moan about anything and are millionaires?! lol

You are still missing my point. If Hatton's are applying a 20% discount on RRP, then remove that discount the headline price has NOT technically risen - all that has happened is the discount has been removed. Yes it means the amount you pay has gone up but as with ALL discounts, be they on food, clothes, cars or energy bills the removal of discounts should be something purchasers should expect from time to time. Purchasers who assume that discounts will continue for eternity are thus flaking a rather foolish assumption however you construe it.

 

Another way to look at the principle is this - if you go for a mortgage, most lenders only consider the base salary even if you have consistently been doing 30hrs paid overtime every month for the past 5 years. This is because they cannot garuntee these extra non contracted hours will continue. In a similar vein just because for the past decade Hattons have given generous discounts on the published RRP does not mean they will continue to be able to do so.

 

However I do apreciate that for some this rise will indeed have an impact on their ability to purchase items going forward and it is true to say that such a large increase happening all at once does create cash flow issues. However that does not change the basic fact that drawing up a budget / purchasing list based on severe discounts - be it model railways, home furnishings, cars, food, etc is not sustainable in the long term.

Edited July 15, 2015 by phil-b259

[antrobuscp]

I agree very much with PCW's comments above. I have always thought that Hattons and the other "box shifters" may well end up being the ones to be hit hardest by the reduced profit margins for exactly the reasons set out. Historically, I've always felt that Hattons was run in a financially hard headed fashion, moving with the times, embracing the web, trying to price attractively, providing good service, etc. That scenario has worked well for them but the world has changed and the volume sales will not be there as in the past. The used sales and the commissioned models are part of their response to maintain the bottom line.

 

Certainly, their overheads must be greater now with larger retail premises and a warehouse to support compared with the days of 180 Smithdown Road, and my impression on recent visits is that there is reduced staffing in the shop.

 

I hope it all works as Hattons are the nearest model shop to me.

[Lady_Ava_Hay]

I think a lot of modern retailing is driven by computers. If I am correct, then Hattons and others would be advised of availability by the manufacturer and that would be fed into a computer loaded with discounts for volume and surplus stock also entered. This would generate a retail price and a predicted profit.

 

Something tells me that the manufacturers have moved the goalposts and are now restricting supplies and advance bulk ordering which were powerful tools for a manufacturer to convince backers that all stock was pre sold so a predicted cash flow could then be used to secure funding.

 

All these calculations have been re-written based on supply price increases, contracted amounts perhaps with less warranty implications from China. A complex equation that had to be re-written to ensure survival. Somehow I doubt that any human being has actually sat down and worked it all out in pen and ink.

 

It is entirely possible that the manufacturers have shared/imposed this computer generated business model with the likes of Hattons. This would account for savage and unexplained price increases.

 

My one sole beef is that I think that Hornby's losses have been generated by other products than the model rail one. But such a manufacturer will need to plough on and convince the backers that the losses were one offs and that the new business model will rectify and recover such losses.

 

It is also true that once these systems settle down they can be tweaked to give different results. So we may see rapid increases over a short time followed by a longish period during which those models that have stuck in the system start to be discounted again.

 

it is a truth that most dealers are desparately over stocked and many do not have the same systems in operation, thus the playing field is levelled for the smaller retailer most of whom probably regard Hattons as being a mortal enemy to them.

[ParkeNd]

If the lowest price is what matters then take your chance on EBay. For cameras this means grey imports with meaningless guarantees. For model trains it can mean almost anything.

 

But if honesty, reliability, and dependability come into your requirements then Hattons will be a better bet even if the price is not rock bottom.

[phil-b259]

Hold on one minute...I can assure you that I am not a "spoilt child" and suggest you refrain from personal insults. 

 

 

I appologise if i offended you, but that is how the tone of your posting came across to me.

[34theletterbetweenB&D]

...But if honesty, reliability, and dependability come into your requirements then Hattons will be a better bet even if the price is not rock bottom.

I'll pay a little more for this gladly, whether it is Hattons or my local retailer, both of whom are 'no quibble' when there is a problem.

 

I have a list of model railway retailers as long as my arm, who assessed by their behaviour have not the slightest interest in complying with applicable law. Having obtained the refund or replacement for the faulty item - which is like drawing teeth - that is the last sale they make to me. (I am happy to reattach small details that have fallen off, wiring that is poorly soldered etc. etc. on brand new models: the kind of fault I am talking about is in the class of motor dead, parts missing or serious bodywork damage.)

[Legend]

Perhaps there's another way to look at it?

Hornby have lost millions and millions of pounds over the last few years. That means they have been subsidising the price of every Hornby model you have bought.

That couldn't go on forever and prices have now risen to a more realistic level (where I, at least, hope they will start making a profit again - becoming a sustainable business).

Do we express our gratitude for their years of subsidies? No: we now complain bitterly that everything costs too much!

Paul

Hornbys troubles were more about getting product on the shelves. Had they managed to do that there was a ready market out there and they could have transformed their losses into profits easily. Frank Martin completely failed to sort out the supply chain, and although there are still difficulties it appears the current management have done much more to sort this out. So they haven't been subsidising the hobby , just failed to deliver their plan

 

As to "get used to higher prices and stop moaning" I must admit this had me spluttering over the cornflakes! Call it what you like, observation , whingeing, moaning, but if you don't comment and accept everything then prices will inevitably rise

 

There are still bargains to be had at Hattons and elsewhere. Not on new releases, but after they've been out for a few years one of two things have happened,the models sold out or it's sitting on shelves and being offered at a discount. Fortunately we don't all like the same things , so there are bargains around. Ultimately you decide whether to buy or not. I certainly won't be buying a Bachmann Autocoach at £70.

 

Good points on strong £GBP making imports less expensive ( does depend if you've bough currency ahead at a certain rate though) . Might help allieviate these huge labour costs increases. What no sign of that?............thought not

[Fenman]

Hornbys troubles were more about getting product on the shelves. ...

 

But if that's all the story, why has every single model railway manufacturer pitched their (new, higher) prices at the same level as Hornby? Are they all profiteering monsters trying to squeeze the most out of us?

 

Dave Lewis has assured us that there are plenty of the right sort of factories in China with spare capacity, so I assume he doesn't have supply problems: yet his pricing strikes me as not out of kilter with everyone else (this is not a criticism: I still think what I am buying is rather good value).

 

Paul

[Legend]

And why shouldn't people discuss and compare the price of products from different suppliers, certain shops have got previous for hiking costs on old items that they have in stock and increase it when the manufacturer increases the RRP. We are told today by the UK Government that CPI is now 0% and RPI is 1%.The pound is strong and has been for some time so imports should be more competitive, this does not reflect in the pricing of model railway products, so are we being taken for a ride ????

Some on this site take it as a personal affront when others criticize pricing, as I've said before each to their own people are entitled to their own opinion. Please respect the views of others before launching at them.

Spot on Black 5 Bear. I just wish there was an agree 100 times button!

 

So we are quick to hear about increased Chinese labour costs, necessitating immediate increase in prices. But the sound is deafening when it comes to factors going the other way, high £GBP, low oil costs ( and possibly even lower once Iran back on line), low freight costs. 0 inflation.......someone tell Bachmann!

[Trains4U]

And why shouldn't people discuss and compare the price of products from different suppliers, certain shops have got previous for hiking costs on old items that they have in stock and increase it when the manufacturer increases the RRP. We are told today by the UK Government that CPI is now 0% and RPI is 1%.The pound is strong and has been for some time so imports should be more competitive, this does not reflect in the pricing of model railway products, so are we being taken for a ride ????

Some on this site take it as a personal affront when others criticize pricing, as I've said before each to their own people are entitled to their own opinion. Please respect the views of others before launching at them.

 

I'm afraid this post is astonishingly unfair.

 

We tried, for many years to avoid increasing prices on existing stocks when RRPs changed. 

unfortunately, the rate of inflation on model railway stock has increased dramatically, and we, as retailers, have no control over the prices charged.

 

there are two things that must be understood here.

 

1.  Volume of sales is down - the manufacturers need to make or improve on previous year's profits - to do so on the back of declining unit sales is to improve their margin - as with previous posts, the manufacturers are catching up with themselves, moving from subsidising product, or operating on tiny margins, to moving towards more sustainable margins.

 

Unfortunately that has meant a squeeze on retailer margins from some quarters, or a large increase in price from others.

 

2.  How can you expect a business to survive if it cannot afford to replace what it sells - the margins, especially when competing, are slim.

Take a loco sold at £85 - RRP is £100, but it is sold at £85 as the market demands it - however it cost £70 to buy in. (I'm excluding VAT calculations for simplicity)

 

The RRP changes to £115

 

The sale price is immediately increased from £85 to £98

 

Why?  because to replace the item from the supplier would cost £81

 

In that instance, if the price were not increased, there would be approximately £3.30  (After VAT this time) from a sale of £85 with which to pay rent, rates, wages, utilities and invest in business growth.

 

The business would be better off selling a few packs of rail joiners.

 

The original argument was fair when we as retailers were facing 2-3% annual rises, but in these days of 10-25% it is just not possible to continue in that way and maintain a viable business.

[bigP]

--

Edited January 30, 2021 by bigP
Deleted

[Black 5 Bear]

I'm afraid this post is astonishingly unfair.

 

We tried, for many years to avoid increasing prices on existing stocks when RRPs changed. 

unfortunately, the rate of inflation on model railway stock has increased dramatically, and we, as retailers, have no control over the prices charged.

 

there are two things that must be understood here.

 

1.  Volume of sales is down - the manufacturers need to make or improve on previous year's profits - to do so on the back of declining unit sales is to improve their margin - as with previous posts, the manufacturers are catching up with themselves, moving from subsidising product, or operating on tiny margins, to moving towards more sustainable margins.

 

Unfortunately that has meant a squeeze on retailer margins from some quarters, or a large increase in price from others.

 

2.  How can you expect a business to survive if it cannot afford to replace what it sells - the margins, especially when competing, are slim.

Take a loco sold at £85 - RRP is £100, but it is sold at £85 as the market demands it - however it cost £70 to buy in. (I'm excluding VAT calculations for simplicity)

 

The RRP changes to £115

 

The sale price is immediately increased from £85 to £98

 

Why?  because to replace the item from the supplier would cost £81

 

In that instance, if the price were not increased, there would be approximately £3.30  (After VAT this time) from a sale of £85 with which to pay rent, rates, wages, utilities and invest in business growth.

 

The business would be better off selling a few packs of rail joiners.

 

The original argument was fair when we as retailers were facing 2-3% annual rises, but in these days of 10-25% it is just not possible to continue in that way and maintain a viable business.

Gareth,

Having been a customer of yours in the past, I consider your pricing structure to be very fair with good customer service. This is a welcome contrast from some other retailers I could mention. I fully understand that you are in business to make a living and have overheads, please take it as read that my comments do not apply to Trains4U.

Unfortunately price hiking does happen on old stock and has been clearly evident recently. Would a car dealer be able to sell an old model at the RRP of a new model ??? I think not !!!! 

[dibber25]

Absolutely agree with the comments from T4U above. Would also add that the size of organisation and the number of staff to be paid varies widely across businesses. A large business with a considerable number of 'back-room' staff will need to make enough margin to cover all their wages, national insurance etc. The late Keith Hatton once showed me how he operated his pricing system. He carried it all in his head and on a vast pile of pieces of paper! I imagine that the current Hattons operation has had to come up with something just as efficient but simpler and computerised. Such systems also have to be paid for out of the margin made on sales. 

CHRIS LEIGH

[Clearwater]

To the point on CPI/RPI - yes that's low but it's not relevant. Both are basket measures of costs in the economy as a whole. Model trains are a tiny tiny segment overall of the economy and are not a driver of overall RPI. However, as costs associated with their production rise, for profit for manufacturers and retailers to remain (and without profit they won't exist) the price in the shop can go up by a multiple of RPI. Other costs, eg mortgages form a way larger part of household expenditure and have fallen significantly due to the very low base rates. Also, petrol costs have fallen sharply over the last year.

[PhilH]

However far back down the chain one goes, and it would appear that we have now reached manufacturing stage in some of the posts above, someone somewhere is taking the pee with rises in the magnitude of 20-30%. 

 

Sorry, but there is no set of circumstances which demand immediate hikes of that order.

[Fenman]

... someone somewhere is taking the pee with rises in the magnitude of 20-30%.

 

Sorry, but there is no set of circumstances which demand immediate hikes of that order.

Costs rising by 20-30%?

 

Paul

[Gwiwer]

I have for some time suspected that Hattons prices were unsustainable.

 

For a great many items they were often (not always) the cheapest by far.  Factor in the very notional amount usually required for shipping - three wagons and some couplers on their way to Australia right now for just £3 P&P as an example - and their prices and service were hard to beat.

 

Notwithstanding that I chose and still choose to support another retailer when ever possible and also use a couple more on a semi-regular basis for a number of reasons.

 

It isn't rocket science to understand that when the majority of retailers offer something at, say £100, but Hattons list it at £88 then there is some serious cutting of profit margins going on in pursuit of maximised sales.  After all when you sell 100 of an item at £1 profit you make £100; if you sell 9 at £10 profit you make only £90.  I have before now referred to Hattons as the Modeller's Tesco on the grounds that both stores "pile it high and sell it cheap".

 

Ultimately that business model may not be sound.  Tesco is in deep do-dah and Hattons looks to have been forced to go the same way - lift prices to around what the rest of the market is asking in order to stay in the game.

 

I'm also not convinced that their big-time entry into second-hand items has served them well but only they know the figures involved.  I now see them offering tatty non-runners at give-away prices where at first they asked more (in some cases) than the items cost new - even when the same item could still be bought new more cheaply and often elsewhere.

 

We are also now seeing the effects of the recent Chinese price rises coming through across the board and of the majors imposing some restrictions on terms of trade such as Hornby's attempt to manage without retailers and Bachmann's limit to discounting.

 

As always it pays to shop around.  The ball is still in our court as end consumers.

[PhilH]

Costs rising by 20-30%?

 

Paul

 

That's the point though, which costs? Oil is as cheap as it has been for a while, labour costs increase but not by the quoted amount, and as has been pointed out the pound is quite strong at the moment.

 

It must be something that is peculiar to model railways because, to the best of my knowledge, no other prices in my life have gone up by that amount.

Edited July 15, 2015 by PhilH

[Trains4U]

However far back down the chain one goes, and it would appear that we have now reached manufacturing stage in some of the posts above, someone somewhere is taking the pee with rises in the magnitude of 20-30%. 

 

Sorry, but there is no set of circumstances which demand immediate hikes of that order.

 

I kind of agree with you here, but it is a bit unfair to place the balme squarely on the retailer, which the OP suggests.

 

The end consumer does not have visibility of the retailer's cost prices, margins  and overheads

 

The retailer does not have visibility of the manufacturer's cost prices, margins or overheads

 

the manufacturer probably does not have visibility of their factory's cost prices, margins and overheads

 

The factories probably don't have visibility of their supplier's cost prices, margins and overheads etc....

 

Each party down the line has an impact on overall cost - and whilst the OP is clearly directed at Hatton's, it is a bit unreasonable to push the burden of blame onto them (or anyone else down the chain for that matter) when the commercial aspects are unknown.

[Fenman]

That's the point though, which costs? Oil is as cheap as it has been for a while, labour costs increase but not by the quoted amount, and as has been pointed out the pound is quite strong at the moment.

 

It must be something that is peculiar to model railways because, to the best of my knowledge, no other prices in my life have gone up by that amount.

 

I think it may well be: why do you think Hornby has been making losses of millions and millions of pounds?

 

Do you think that loss-making could go on forever? If not, do you think their shareholders should continue to subsidise your model railway purchases, but at slightly decreasing rates each year until - when? - Hornby finally goes back into the black? Because that way you wouldn't face a massive one-off price rise? That seems to me like an unreasonable demand on Hornby's shareholders.

 

We also know that everyone else's prices have gone up by similar amounts: don't you think that, if there was a huge margin, at least one of the smaller players might decide their niche was low-cost models? But none of them have.

 

I dunno. Most of us have only a tiny fraction of the facts that underpin the commercial decisions of all the players in this game. We'll never know everything - or possibly even most of it. So we just have to ask ourselves before every purchase: "do I think this is good value for money?". If it is then buy it; if it isn't then don't.

 

Paul

[cheesysmith]

I think people are confusing what the retailer can afford to sell at, and stay in business (let's be honest here, hattons would gladly sell for less than anybody else to make sales IF they could and still make a profit), and the fact that the UK in general is overpriced in what the consumer pays. Model railways may have been cheep lately, but even then not as cheep as what American prices are. And before anybody says economy of scale, how many manufacturers make a model of the SD40? So the sales of that will be split, compared to the UK version, the 66?

 

As a quick example, does anybody know what the price of the Hornby railroad HAA when last made in the uk? Comparing it with the price now adjusted for inflation would be enlightening.

 

Ps-has Bachmann USA had their price rise of 20 to 30%? And if so, what comments were said over there?

[Fenman]

... Model railways may have been cheep lately, but even then not as cheep as what American prices are. And before anybody says economy of scale, how many manufacturers make a model of the SD40? So the sales of that will be split, compared to the UK version, the 66? ...

 

Surely a better comparator for an SD40 is something like a Class 37 or 47? Where the market is split...

 

... Ps-has Bachmann USA had their price rise of 20 to 30%? And if so, what comments were said over there?

 

Yes, it appears there have been steep rises in the US, too, and they have been greeted by a chorus of people who are very unhappy. Economic unreality seems to be a fact of life everywhere.

 

Paul

 

[JohnR]

Dont forget, Hattons are in business to make a profit. If they feel they need to raise prices, theyre not doing it because they dont want the sales - its that the prices they were charging were too low to make a profit.

 

People seem to want something for nothing these days.

[Hroth]

Dunno what the fuss is about.

 

If Hattons are too dear, then its your perogative as a fickle customer to shop about and buy off whoever is currently undercutting their prices.