Hornby model shop Tiers system

[Phil Parker]

Press release from Hornby:

 

Without doubt these last 15 months or more have proved incredibly challenging for us all due to Covid -19. As with many other manufacturers we have been faced since March 2020 with ensuring that our supply chain remained open and was able to meet the increased demand created by the abundance of leisure time that many of us faced when we were confined to our homes due to the lockdown restrictions.

Our overseas partners also faced some unprecedented challenges both in maintaining a demanding schedule of development but also the increased manufacturing requirements that we were asking of them.

It is unfortunate that as our new product plans, many of which had been laid out some two or three years previous were scheduled to come to fruition during 2020 just when Covid 19 struck. Just prior to the World going into lockdown the new Hornby model railway range, which included some truly amazing products, was launched and so successful was the new Hornby range that we were instantly faced with an immediate and unprecedented demand. Prior to the release and trying to learn from previous years experiences we created an allocation system which we hoped would prevent retailers placing large orders first and therefore by default reserving all the planned production. Although this allocation system worked to a degree it was far from being ideal, with the obvious limitations became apparent as 2020 unfolded, and because of this we believed that the system still needed to be refined.

As we moved into 2021 and acknowledging that the allocation system was not functioning as hoped we decided to introduce a Tier system with each of our existing retailers being placed in one of three tiers.

Tier 1 relates to those retailers that amongst other things maintain a clean and well laid out store and who promote several if not all of the Hornby Hobbies ranges, which includes as well as Hornby railways, Scalextric, Airfix, Humbrol and Corgi. These retailers invariably have an effective website and mail order service but more importantly they would also be able to provide help and guidance to their customers.

Those who have been nominated to Tier 2 tend to be the types of outlet that will also include heritage centres or museums. Those outlets designated Tier 2 must also be able to offer help, support and advice for their customers and are willing to promote Hornby products. Tier 2 retailers will include those on-line retailers who are also prepared to offer help, support and guidance to their customers.

Moving onto Tier 3. Amongst the retailers in this category will be those that may not have ‘bricks & mortar’ premises and more than likely trade mainly on-line with limited support. Such Tier 3 designated retailers may also manufacture their own branded model railway items which might possibly conflict with those produced by Hornby Hobbies Ltd. The Tier 3 store, if there is one may also be poorly laid out, untidy and consequently uninviting.

With such a tier system in place those in Tier 1 will quite naturally receive priority on deliveries especially where a product may be in high demand with low or restrictive quantities available. More importantly the Tier system will restrict the possibilities of orders being favoured to just one or a handful of accounts and therefore allowing for a more even and fair distribution.

The increased demand we have seen over this last year has been very welcome, but it has also had a knock on effect. To smooth production we have decided to restrict the manufacture of several of the new items so that our vendors can focus on efficiencies in an effort to improve their production and volume capabilities. This does mean that the release of some keenly awaited products will be delayed by up to 6 months from their original anticipated release date. We appreciate that in the short term this will cause a degree of disappointment, but in the long term we believe by relieving some of the pressure from our suppliers we will be able to return to a more consistent and reliable release date programme once the recalibration has been achieved.

Making such key and fundamental changes to our distribution operation has not been an easy task and we accept that for some our actions may not appear ideal but what is clear is that we cannot continue with the frustrations for both ourselves, our customers and the model rail enthusiasts that the old allocation system was undoubtedly causing. As is the phrase so common these days, the system is broken and it with such radical steps as has been laid out that we believe will result in a much smoother and less frustrating distribution of our products.
 

[woodenhead]

So there we have it, from the horses mouth:

 

Moving onto Tier 3. Amongst the retailers in this category will be those that may not have ‘bricks & mortar’ premises and more than likely trade mainly on-line with limited support. Such Tier 3 designated retailers may also manufacture their own branded model railway items which might possibly conflict with those produced by Hornby Hobbies Ltd. The Tier 3 store, if there is one may also be poorly laid out, untidy and consequently uninviting.

 

If you buy into the Hornby brand, sell more than just trains and offer a true customer experience you get first dibs, if you are a competitor or just want to shift boxes of trains and nothing else you get nowt from the new pile, just what's left.

 

From a brand perspective, it makes sense, but it does feel like the 'competitor' bit was just added on to stop anyone else muscling in and at the same time take Hattons out.  As I've said before, it's levelling the playing field with Bachmann who do something quite similar.  But Hornby have upped it slightly by putting in customer service and neatness of premises, that feels like a veiled threat, i.e. do as you're told or we move you down the tiers.

[Chris M]

In other words. If traders want a full allocation of popular Hornby products they must also take all of the other Hornby brands as well. This will not be good for small specialist model railway shops. 
I heard that shops have to agree to not discount new items when they first appear. 
One local model shop I use has dropped Hornby because of their attitude to small shops. The owner seemed to be very angry with the way Hornby wanted to dictate terms to him.

 

The big two seem to have put the squeeze on Hattons . I’m neither friend or critic of Hattons but I do hope they continue to be a successful company.

Edited May 25, 2021 by Chris M
Spelling

[Kris]

What that makes clears is that retailers who are not in tier 1 do have the opportunity to move up.

[Harlequin]

If you want to be a successful manufacturer but you have supply chain problems do you,

   A. Fix the supply chain and try to meet the demand for your products

or

  B. Pass the problems on to your retailers and end-customers

 

?

 

[GWR-fan]

Surely a competent manufacturer will have some idea as to the volume of a planned production run and would convey allocations to their retailers. 

 

Quote:  "  Prior to the release and trying to learn from previous years experiences we created an allocation system which we hoped would prevent retailers placing large orders first and therefore by default reserving all the planned production. "

 

No responsible retailer is going to take pre-orders unless they haven an indication of what numbers of each item they have been allocated.  A responsible retailer would also not exceed their allocation.  Ideally,  expressions of interest should precede pre-orders.  This would give the manufacturer an idea as to the popularity of the item to predict a production volume.  I find it hard to believe that two or three large retailers would absorb the majority of the production run thus restricting sales to smaller retailers and that Hornby would have allowed this to happen in the past.  The excuse seems more like blame shifting and an excuse for their current method of online sales and listing discounted current release items through Amazon.

[Kris]

15 minutes ago, woodenhead said:

But Hornby have upped it slightly by putting in customer service and neatness of premises, that feels like a veiled threat, i.e. do as you're told or we move you down the tiers.

It sounds more like they are trying to protect a brand image - They don't want Hornby to be associated with untidiness and unhelpfulness. 

[GWRtrainman]

8 minutes ago, Chris M said:

In other words. If traders want a full allocation of popular Hornby products they must also take all of the other Hornby brands as well. This will not be good for small specialist model railway shops. 
I heard that shops have to agree to not discount new items when they first appear. 
One local model shop I use has dropped Hornby because of their attitude to small shops. The owner seemed to be very angry with the way Hornby wanted to dictate terms to him.

 

The big two seem to have put the squeeze on Hattons . I’m neither friend or critic of Hattons but I do hope they continue to be a successful company.

'In other words' - well provided they mean something completely different to the Press Release.  :-)  Perhaps you should just write your own - oh wait you have done...

 

 

[LimboBrit]

I can't help but feel that end user frustration has only increased since the introduction of this policy because of the lack of communication on Hornby's part. Hornby needs to communicate which model releases will be delayed. If manufacturing capacity in the light of increased demand is an issue I can understand their decision to prioritise volumes for certain models at the expense of other model release dates. I don't see their new tier system as having anything to do with any manufacturing challenges of COVID-19. It is simply a new sales strategy which one may or may not agree with.

[Enterprisingwestern]

 

Big stick marketing, I thought we'd left that behind many years ago, it seems customer choice is going out of the window.

Re-introducing RPM next?

 

Mike.

[phil-b259]

7 minutes ago, Enterprisingwestern said:

 

Big stick marketing, I thought we'd left that behind many years ago, it seems customer choice is going out of the window.

Re-introducing RPM next?

 

Mike.

 

Be thankful Hornby haven't decided to junk model shops completely!

 

Given the way retail has been changing over the past few years that could easily have been the route the board decided to go down.

[spamcan61]

Personally I'm far more interested in how friendly / knowledgeable / helpful a retailer is than whether the shop meets Hornby's apparently arbitrary tidiness standard. < rolls eyes >

Edited May 25, 2021 by spamcan61

[Ian Hargrave]

8 minutes ago, Kris said:

It sounds more like they are trying to protect a brand image - They don't want Hornby to be associated with untidiness and unhelpfulness. 

  
And that’s a can of worms in itself. Who makes the value judgement and using what criteria ? It seems to me that at bottom it is a supply chain issue which is understandable. But a short while ago didn’t Hornby announce that they were in a healthy position with this ? There are too many imponderables and complexities here and scope for more problems. Still,we shall see.At least we’ve had a response thanks  to diplomacy from HQ RMWEB and that is positive in itself 

 

 

 

[newbryford]

Tier 1 and 3 seem well defined.

No explanation of what tier 2 benefits are.

[phil-b259]

17 minutes ago, Kris said:

It sounds more like they are trying to protect a brand image - They don't want Hornby to be associated with untidiness and unhelpfulness. 

 

Hmm, not so sure that is the primary driver. Its bit like a bank who goes round closing branches but also promises to invest loads in the ones which stay open. Great for some but not so good for those who find say limited public transport options prevent them from being able to get to those centres of excellence the bank is keeping open.

 

Still, tis the way of the world these days and I don't blame business from looking to protect itself from the massive changes the internet has caused....

[Enterprisingwestern]

 

I can think of quite a few model shops, both currently and in the past, which Hornby wouldn't touch with the proverbial, but which had an excellent knowledgable owner, and they would get my vote over the shiny emporiums (Beatties/Zodiac et al) Hornby seem to think is the future of railway modelling.

 

Mike.

[Michael Hodgson]

2 minutes ago, spamcan61 said:

Personally I'm far more interested in how friendly / knowledgeable / helpful a retailer is than whether the shop meets Hornby's arbitrary tidiness standard. < rolls eyes >

Both are subjective assessments.  And somebody who is usually very helpful might get out of bed on the wrong side sometimes.

 

"Tidy" in a manufacturer's eyes probably means our products prominently on display and everybody else's products shoved away in a heap in the far corner, if not hidden under the counter.

[Enterprisingwestern]

2 minutes ago, newbryford said:

Tier 1 and 3 seem well defined.

No explanation of what tier 2 benefits are.

 

If you sit under the table you might just get some scraps.

 

Mike.

[phil-b259]

3 minutes ago, Ian Hargrave said:

  
And that’s a can of worms in itself. Who makes the value judgement and using what criteria ? It seems to me that at bottom it is a supply chain issue which is understandable. But a short while ago didn’t Hornby announce that they were in a healthy position with this ? There are too many imponderables and complexities here and scope for more problems. Still,we shall see.At least we’ve had a response thanks  to diplomacy from HQ RMWEB and that is positive in itself 

 

 

 

I think this is less about supply chain issues and more a strategic repositioning of the companys relationships with dealers taking advantage of current disruptions in supply as a fig leaf.

 

Think about it - making retailers stock all Hornby group items and putting in place significant 'standards' retail premises must meet will inevitably have the side effect of reducing the number of Hornby dealers and channelling sales through a few key players.

 

Its what companies in the banking and more general retail have been doing for years - and potentially makes it easier to move to an online only retailer in future years as buyers have adapted to the changes.

[GWR-fan]

Could the tier system also be a method to keep retailers "in line"?  From previous postings from retailers on other threads in the past it seems that Hornby's terms of service can be quite forceful as in the abortive attempt a few years back to restrict sales to international customers.   Failure to abide with those terms could lead to a recalculation of a store's tier rating or the perceived threat thereof.   

[CUCKOO LINE]

4 minutes ago, Michael Hodgson said:

Both are subjective assessments.  And somebody who is usually very helpful might get out of bed on the wrong side sometimes.

 

"Tidy" in a manufacturer's eyes probably means our products prominently on display and everybody else's products shoved away in a heap in the far corner, if not hidden under the counter.

But you also need to look at the wider customer. I have known shops that have been untidy, crammed with stuff haphazardly that have been an experienced modellers/collectors  [paradise, but if I was a starter out or a less experience enthusiast I would not know where to start in such a place. Cluttered = OK for the old hands, Ordered and well laid out is good for the Novice, but both benefit from good advice/support.

[Brian Indge]

Well this “Press release” could have been written by a Novellist, as it’s the biggest load of fiction I have seen for a long time.

Hornby invited the trade to Margate in January last year to view and place orders for new products. For them to tell the purchaser you might want to order so many of certain models but we cannot let you have more than a fraction of your requirements is ridiculous and bad management. If covid was such a problem, Hornby should have cancelled this years intended releases and increased production of last years, some of which will be 12 months late anyway.

 

This is another example of not having your own production facility.

[CUCKOO LINE]

1 minute ago, Brian Indge said:

Well this “Press release” could have been written by a Novellist, as it’s the biggest load of fiction I have seen for a long time.

Hornby invited the trade to Margate in January last year to view and place orders for new products. For them to tell the purchaser you might want to order so many of certain models but we cannot let you have more than a fraction of your requirements is ridiculous and bad management. If covid was such a problem, Hornby should have cancelled this years intended releases and increased production of last years, some of which will be 12 months late anyway.

 

This is another example of not having your own production facility.

and infexibility and possible long lead times in your supply chain

[Robin Brasher]

Hornby's statement explains why I was able to get a limited edition of the Rocket from the Swanage Railway shop and not from well known retailers who supply mail orders.  It looks like the railway shop is in tier two whereas the mail order shops are in tier 3.

 

The Rocket was not a must have model as it is unlikely ever to have visited the Swanage Railway that I am modelling. It is not impossible for the replica of the Rocket to visit the Swanage Railway in the future and my model shows what it would look like if it did.

 

 

[APOLLO]

This all points to serious supply problems from China - though Hornby will not state that outright.

 

And I reckon the way the world is going it will not get better anytime soon.

 

Brit15