Hornby secure £18 million loan

[Trains4U]

I have said this before, but needs repeating, we ran out of 33 Matt Black Acrylic in November 2016. That is nearly two years ago and still the wait goes on. No one from Hornby has ever explained the problem. Unfortunately many others in their Humbrol range have gone the same way. Paint stand looks like we cannot be bothered ordering, so untrue! We sell lots of other brands, Humbrol is still the choice of many but their patience ran out when you cannot get even basic colours.

 

We sell more paint than you can shake a stick at - Our Humbrol stand is in the same state.  Some new paints are trickling through, but it really is in a sorry state.

 

Humbrol has always been our biggest selling line, but we introduced AMMO by Mig in April, and that is now close to overtaking Humbrol in sales volume.   Both availabilty and quality are better, and lots of modellers have converted, perhaps never to go back.

Edited September 6, 2018 by Trains4U

[Phil Parker]

JSpencer - Absolutely agree with regard to Humbrol paint - the matt black acrylic was out of stock for months. I complained to my retailer and he suggested I try Revell instead. Now I go straight to the Revell stand - no idea whether Humbrol ever issued new stock or not, so I'm a lost customer as a result of not being able to obtain one small pot of paint. (CJL)

 

Not just you. I have managed to find the off pot of enamel 33 BUT when my stocks were depleted I also found a shop selling Revell who sell 3 shades of black (https://philsworkbench.blogspot.com/2018/08/three-flavours-of-black.html).

 

As it happens I prefer something other than pure black for modelling so I'm happy. But, if two of the more prominent modellers in magazines have gone Revell, that might be more of an issue. In this case, the loss is potentially more than a single customer. I tend to use Humbrol products because of their wide availability, but if they are hard to get then there are others. I won't recommend something readers can't easily find. 

[Wicor Models]

We sell more paint than you can shake a stick at - Our Humbrol stand is in the same state.  Some new paints are trickling through, but it really is in a sorry state.

 

Humbrol has always been our biggest selling line, but we introduced AMMO by Mig in April, and that is now close to overtaking Humbrol in sales volume.   Both availabilty and quality are better, and lots of modellers have converted, perhaps never to go back.

 

Like you Gareth we sell so much paint, even our Games Workshop rep can't believe how much of their paint we sell. and I can honestly say in the 25 years we have been trading the MIG paint range is one of the few products that have sold from the day we put the stand in.  We have had grown men almost in tears because we are now stocking MIG paints, powders, washes and textures.  We stopped Humbrol acrylics a couple of years ago as the supply was poor and the quality even poorer.  The Revell acrylics are really good and we've stocked them since their introduction some 12-15 years ago.

[dibber25]

Not just you. I have managed to find the off pot of enamel 33 BUT when my stocks were depleted I also found a shop selling Revell who sell 3 shades of black (https://philsworkbench.blogspot.com/2018/08/three-flavours-of-black.html).

 

As it happens I prefer something other than pure black for modelling so I'm happy. But, if two of the more prominent modellers in magazines have gone Revell, that might be more of an issue. In this case, the loss is potentially more than a single customer. I tend to use Humbrol products because of their wide availability, but if they are hard to get then there are others. I won't recommend something readers can't easily find. 

 

I'm in T4U most weeks buying materials for magazine jobs. In my view, matt white and matt black are basics that I will always want to have in stock. I've no patience with a paint company that can't keep them on the shelves. It would be like going into a DIY warehouse and being unable to buy Magnolia! That said, I find Humbrol's aerosols to be extremely good. The gloss varnish gives an exceptional high gloss finish which is perfect for the job I'm on at present. Their aerosols remain useable, too, unlike Railmatch which I find clog and become useless after the first use. They are use once and throw away because the nozzles block, no matter how careful I am. (CJL)

[The Stationmaster]

Bachmann and Peco simply refuse to supply anyone who doesn't have a bricks'n'mortar shop. That's what they are giving to them already. No shop=no stock. 

 

As long as Hornby sells at RRP, the shops can discount and still get their cut to keep them viable, and no-one needs to set up a significant fulfilment section at Sandwich. 

 

You may be happy to let the hobby roll over and die, but fortunately, others aren't.

 

Hornby had (and might still have?) the same policy of only supplying retailers with a 'bricks & mortar' premises and a pal of mine who was in the model trade delighted in reporting to his Hornby rep 'retailers' who didn't have proper business premises (usually they worked their business from home).  I don't know if Hornby still apply that policy but unfortunately the toy & model trade wholesaler used by Hornby doesn't care who they sell to and don't check if buyers have a proper business premises from which they operate - all they are concerned about is being paid.

[ThaneofFife]

i wonder what a very rough annual cost would be to run even a modest sized model shop with staff insurance utilities stock display cabinets and fitting out security business rates rent maintenance etc.

it doesn't take much imagination to think you need to sell an awful lot of stock before you even reach the break even point.

Edited September 7, 2018 by ThaneofFife

[Mike Storey]

We sell more paint than you can shake a stick at - Our Humbrol stand is in the same state.  Some new paints are trickling through, but it really is in a sorry state.

 

Humbrol has always been our biggest selling line, but we introduced AMMO by Mig in April, and that is now close to overtaking Humbrol in sales volume.   Both availabilty and quality are better, and lots of modellers have converted, perhaps never to go back.

 

Trains4U has been innovative, both in location, expansion and in-store promotion, let alone a very impressive on-line presence (largely due to Gareth). It is a business model that has worked, despite everything (including some -in-house problems at one stage). Similarly, another extraordinary success story has been The Hobby Shop in Faversham, which has moved to another high street site, double the size, but which also has an extremely good on-line site, and which is quickly and effectively responsive to on-line queries. Faversham is not a cheap place in which to do business, but it is supportive of local concerns, hence it retains a USP as a location, compared to its neighbours, bar Canterbury (but Canterbury is too expensive now for almost anyone). There are others, such as in York, Frizinghall (Bradford) and elsewhere, just as successful.

 

So the bricks'n'mortars business model still works, well below the Hattons mega-model, but it needs people gifted at business as well as with passion for their products. Whilst Hornby have been a mixed friend of such businesses (and I really hope that key has turned), it should not be a front for blame, where a large number of retailers have simply been inept businesspeople.

[Trains4U]

(largely due to Gareth).

Oh, I’m not so sure

I’m barely there, what with my “proper” job as a Retail IT Business Analyst.

 

Steve and I have a very strong team behind us who run the shop, keep our eBay presence going and my wife, Juliette who keeps up with all the advertising, social media and stock control. (And can often be spotted in the office)

 

It’s they who really deserve the credit.

[Dan Griffin]

 I also found a shop selling Revell who sell 3 shades of black

 

 

And 50 shades of grey Phil??   :laugh:  

[dibber25]

And 50 shades of grey Phil??   :laugh:  

 

That's the thing about 50 shades of grey - if you can get matt white and matt black you can have 50 shades or more if you want! (CJL)

[Coryton]

Humbrol do a nice range of paint, but each time I want to buy some, the racks are empty. Do they expect I'm going to wait months or years for them to do a new batch of mat black? No, I'll buy Tamiya or some other brand in stock. The Humbrol brand will die if they cannot keep this supplied.

 

I was going to click "agree", till I got to "Humbrol do a nice range of paint".

 

So far as acrylics go, I have not been very impressed. Maybe the enamels are better.

[Coryton]

Like you Gareth we sell so much paint, even our Games Workshop rep can't believe how much of their paint we sell. and I can honestly say in the 25 years we have been trading the MIG paint range is one of the few products that have sold from the day we put the stand in.  We have had grown men almost in tears because we are now stocking MIG paints, powders, washes and textures.  We stopped Humbrol acrylics a couple of years ago as the supply was poor and the quality even poorer.  The Revell acrylics are really good and we've stocked them since their introduction some 12-15 years ago.

 

If the MIG paint is anything like Vallejo (it seems to come in much the same bottles) then it will be very good.

[Wicor Models]

If the MIG paint is anything like Vallejo (it seems to come in much the same bottles) then it will be very good.

 

We turned down Valejo several years ago because the quality was no improvement on Tamiya that we stocked at the time.  MIG is superb and now Expo are the UK distributors should be more widely available.  If Hornby could produce a Humbrol acrylic of similar quality and with consistent supply then I would stock them again but you can't keep running out of matt black, silver and all the other popular colours, likewise with Hornby track we need a reliable supply of all their fast moving track items otherwise we have to offer a cheaper version made in England.

[jjb1970]

So the bricks'n'mortars business model still works, well below the Hattons mega-model, but it needs people gifted at business as well as with passion for their products. Whilst Hornby have been a mixed friend of such businesses (and I really hope that key has turned), it should not be a front for blame, where a large number of retailers have simply been inept businesspeople.

 

I think that cuts right to the heart of any discussion on the business side of the hobby. As with anything in life, some are better at doing certain things than others. Some at extremely competent and have vision in running a business, others are incompetent and with a whole spectrum in-between. We often see arguments that such and such doesn't work because so and so in the business said it doesn't work, well it may not work for that particular company or individual but it is a meaningless statement in terms of other companies or individuals. In my own sector I wish I had a pound for every time I have been assured that something wasn't practical, couldn't be done etc etc knowing full well that a company had already done it and made it work commercially. People sometimes find it to be not so palatable is that in business there are winners and losers and whether a business wins or loses is in no small part down to its own decisions. This is as true of the suppliers as shops, we can look at Rapido of an example of a supplier with a head honcho is not only rather charismatic and blessed with a good sense of humour but clearly as sharp as a tack when it comes to running a model business and who isn't in the habit of screwing up. We could point to other suppliers where other opinions would be offered. Equally with retail models, a bricks and mortar shop can work, so can online models and so can direct sales by suppliers if well executed.

[jjb1970]

We turned down Valejo several years ago because the quality was no improvement on Tamiya that we stocked at the time.  MIG is superb and now Expo are the UK distributors should be more widely available.  If Hornby could produce a Humbrol acrylic of similar quality and with consistent supply then I would stock them again but you can't keep running out of matt black, silver and all the other popular colours, likewise with Hornby track we need a reliable supply of all their fast moving track items otherwise we have to offer a cheaper version made in England.

 

If MIG is better, and also available then that's the range to stock. I certainly wouldn't proceed based on a sentimental attachment to Humbrol (or Hornby track). Personally I use Tamiya and Revell acrylics which are available locally.

[adb968008]

So the sum of the last page is Humbrol is a cash cow that’s not being milked.

Edited September 8, 2018 by adb968008

[Trains4U]

So the sum of the last page is Humbrol is a cash cow that’s not being milked.

Well we would certainly sell a lot more if we had it in stock.

 

Last Saturday I served a gentleman who was buying an Airfix Hurricane.

He wanted all the paints in acrylic

Of the 12 he wanted, only five could be sourced from the humbrol range.

 

So Hornby lost seven sales to Revell and Mig

 

It’s only a few quid to them, but multiplied across the country, for the last 18 months, adds up to a lot of lost revenue

[Clearwater]

Well we would certainly sell a lot more if we had it in stock.

Last Saturday I served a gentleman who was buying an Airfix Hurricane.

He wanted all the paints in acrylic

Of the 12 he wanted, only five could be sourced from the humbrol range.

So Hornby lost seven sales to Revell and Mig

It’s only a few quid to them, but multiplied across the country, for the last 18 months, adds up to a lot of lost revenue

If you say 2 customers per shop per week with 5 tins, 500 shops (no idea how many UK shops but let's go with that) and say a 50p margin to Hornby per tin, you're talking about lost margin of £130k per annum. Not massive but not immaterial against the company's EBITDA.

 

I suspect the percentage margins to both Hornby and retailers are higher on consumables like paint than on bigger ticket items.

 

David

[adb968008]

If you say 2 customers per shop per week with 5 tins, 500 shops (no idea how many UK shops but let's go with that) and say a 50p margin to Hornby per tin, you're talking about lost margin of £130k per annum. Not massive but not immaterial against the company's EBITDA.

 

I suspect the percentage margins to both Hornby and retailers are higher on consumables like paint than on bigger ticket items.

 

David

I'm actually thinking a different way..

 

Hornby is good at models (and accessories generally made from plastic).. it appears not to be good at paint.

maybe it should leverage this, by selling or licensing use of the Humbrol name to someone who could mix/ make paint, and at the same time Hornby could offer it's distribution system as a means to allow that company to access the market and customer base.

 

Hornby gets greater value from it's distribution system, the market gets Humbrol and someone who can make paint and make money.

Hornby makes money at minimal cost.

Edited September 8, 2018 by adb968008

[Clearwater]

I'm actually thinking a different way..

 

Hornby is good at models (and accessories generally made from plastic).. it appears not to be good at paint.

maybe it should leverage this, by selling or licensing use of the Humbrol name to someone who could mix/ make paint, and at the same time Hornby could offer it's distribution system as a means to allow that company to access the market and customer base.

 

Hornby gets greater value from it's distribution system, the market gets Humbrol and someone who can make paint and make money.

Hornby makes money at minimal cost.

Yes - makes sense to explore that or alternatively just sell the brand. A logical small MBO. Reduces headcount, risk and management burden. Issue is whether management have the band width to consider relative to the bigger issues they face. Same is true of the licensing option you propose.

[Coryton]

We turned down Valejo several years ago because the quality was no improvement on Tamiya that we stocked at the time.  MIG is superb and now Expo are the UK distributors should be more widely available.  If Hornby could produce a Humbrol acrylic of similar quality and with consistent supply then I would stock them again but you can't keep running out of matt black, silver and all the other popular colours, likewise with Hornby track we need a reliable supply of all their fast moving track items otherwise we have to offer a cheaper version made in England.

 

I thought Humbrol paint was made in the UK now.

 

(And for my purposes (brush painting) I've found Vallejo to be a lot better than Tamiya, which seems to take a lot more coats to get a good coverage).

[adb968008]

Issue is whether management have the band width to consider relative to the bigger issues they face.

That’s probably why there is no paint available, lack of inertia.

I doubt watching paint dry at Hornby is the most interesting of their product lines.

 

Many years ago, as a student I did the swap meet circuit, as an income as a student, my most profitable line was track pins.. I sourced them myself, got a few “smoky” student mates to bag them, as pointless repetitive things seemed to entertain them at night... 1mn nails, turned into 7p bags of track pins, with approx 100 in, sold at 50p per bag... There was no way I was going to bag em.

did rather well out of it...

 

It’s about finding horses for courses... Hornby I don’t think is the right horse for Humbrol, but doesn’t mean there isn’t money to be made, just set it up the right way with the right team and let them get on with it.

Edited September 9, 2018 by adb968008

[Widnes Model Centre]

Just to give a rough idea, just doing my takings. We sold £232.08p of paints today. Last Saturday we sold £199.42p.  Very few were Humbrol.

[Mike Storey]

Something about Hornby's marketing is working here in France. In the few retail chains (not hobby shops, which are even rarer here than in the UK now) that stock hobby materials, it is normally just Revell and Humbrol paints on sale. Not that the Humbrol rack is usually full, but more seems to be available overall than is described by many on here for UK shops.

 

In one case, my usual haunt, Darty, their website has at least 150 types of Humbrol enamel, and all, bar one, are shown as "in stock". Perhaps Hornby have been sending it here by mistake?

[Mike Storey]

Oh, I’m not so sure

I’m barely there, what with my “proper” job as a Retail IT Business Analyst.

 

Steve and I have a very strong team behind us who run the shop, keep our eBay presence going and my wife, Juliette who keeps up with all the advertising, social media and stock control. (And can often be spotted in the office)

 

It’s they who really deserve the credit.

 

Maybe, but don't tell Steve. He thinks you do it all......... just sayin'.