Hornby's financial updates to the Stock Market

[Clearwater]

But you can only do this in context. It does depend on the base. I would say RMweb has more enthusiasts on it , rather than the dad and son clientele referred to above. The enthusiast market is less price conscious and is more prepared ,sometimes it seems ,any price to get the model it wants, whereas for others the price is much more of a disincentive. Sometimes it feels rather like a salmon swimming against the current even mentioning price on here, and daring to mention that some manufacturers may well be exploiting the lack of price elasticity in enthusiasts!

I'm sure rmweb does have more enthusiasts than most places - you'd be surprised if it didn't. As you say, the enthusiast is likely to want more detail and be prepared to pay for it. I'd also be surprised if the models they want are going to be the ones the train set market will be buying. Hornby have rarely not had a set out based on a crudely detailed Flying Scotsman - that's what sells in volume to the "let's buy a train set" shopper. No-one disputes that some of those will morph into finesxale kit builders or afficiandos of obscure prototypes but most will look for their next purchase to be a highly recognised prototype - e.g. mallard. Note another loco rarely out of production, in the railroad range (and now with TTS). I'll wager will sell way more than the Q6 or B12 nevermind the J50 or 72xx.

 

Given the latter are targeted at the more inelastic end of the market (and that doesn't mean that some will not choose to pay just that enough will to increase Hornby's overall profit), they rightly analyse that more will be prepared to pay more for a detailed model than the compromises required to make it cheaper.

 

Now let's look at how Kohler and co tried to resolve this dilemma. They realised they have a bifocated market and tried to "design clever" to produce base and detailed models from the same tools. For various reasons, was widely slated on here and didn't work.

 

Back to the title of this thread. Hornby make losses. Their pricing / production / marking / product mix (inc nom-model rail) has been wrong. It's hard to accuse a company that is making a loss of profiteering.

 

David

[phil gollin]

.

 

I  KNOW that prices are going to rise; increase in Chinese wages, devalued pound and possibly due to factors internal to the manufacturers.  Maybe the increases will be reasonable, maybe not, I (and "we") cannot really know.  Back in the 70's there was a lot of opportunist jumping on the bandwagon, but also manufacturers and retailers went to the wall.

 

So what am I to do ?  Whilst not strictly on a fixed income, I do not have infinite resources, and any way, I have other things to spend money on.

 

Having given this a lot of thought since the leak that Hornby prices are going to go up DUE TO MY CIRCUMSTANCES I have decided to swallow my disappointment and accept things instead of moaning (too much).

 

Why ?

 

Lots of reasons ;

 

1:  There are lots of (Southern Region) items I still want and the only way I/we can get them is if the manufacturers find it profitable enough to produce them.

 

2:  I only have ONE layout, and even if I did rebuild it only a certain amount of space  -  I cannot buy 20 locos and as many, if not more, items of rolling stock every year - there isn't enough space.  So I will settle for less numbers but up to the present quality (or even better).  I can understand if people decide otherwise, each to their own.

 

3:  The problem with this is the actual nerve of buying items.  Take the 4-COR EMU, which I really would would like(and probably the class I would buy most of).  5 years ago I would expect to get it for £130-odd, at present a repeat of the Bachmann 4-CEP is about £230+.  I see no reason for the huge hike in price, but that is where we are (the 2-EPB likewise).  This means that whilst 5 years ago I might have expected a 4-COR for £150 to 175, now it will be £275 PLUS !  (I expect it to be nearer £300, that's something like £70 each for 3 coaches plus £90 for the power coach - but you can cut it other ways.)

 

4:  So, whilst I might like 6 (3 x pairs) 4-CORs at £300+ that is £1800 - quite a lot of money !   Now if they do 3 releases (A, B and C) over 5 years that would help, but the trouble is you don't know how many releases they will do (nor how the price will increase).  That makes the problem worse.

 

5:  Now IF the manufacturers do a low quality 4-COR for, say, £200 instead of £300, does it really help MY PARTICULAR CIRCUMSTANCES ?  Obviously I save a nominal £600, but I probably won't buy any more (lack of space) and if their detail is lacking I will be disappointed every time I look at them.  (Others will see this differently.)

 

My considered attitude is that detail is worth it BECAUSE of a lack of space.

 

.

[coachmann]

So why have the r-t-r companies gone in for more detail? Persuasion from the 'scale modellers' seems unlikely, so it must be down to the core buyers/big spenders appreciating it. After all, who asked for the pre-group liveries that have been applied to a few locos? I suspect the canny RTR companies created this collectors market. I feel this sector will always be disparate and small and so those expecting full ranges of pre-group coaches are peeing in the wind. Why? Because I would have thought the RTR companies would have spotted the early LMS liveries from 1923-33 but they haven't (roughly 85 % of my coach output was for that era up until three years ago), nor have they noticed GWR full panelled livery. Yet one can buy SR and LNER coaches from that era. 

 

Hornby and Bachmann are only just waking up to coaching stock and so there are gaping gaps at the moment. LMS followers have Stanier coaches but no 60' composite apart from the BR-built 'Portholes'. LNER Gresley followers have all-door coaches but none of the post 1931 stock which tended to last longer into BR days. Not even a Dining Car which is odd when both companies market 'big green express engines'! Even the GWR that many say is the most popular of the pr-1923 companies has only just got a good set of coaches covering 1923-29 (but none in that period's livery) and 1948-51 Hawksworth stock which is almost wholly outside of the GWR's existence.

[The Stationmaster]

I clicked on your link and all the prices are in US dollars.

 

John

 

A clever move on Hornby's part perhaps?  (or a typo?)

[jjb1970]

It is called competition.

 

Bachmann went to China and produced models with better details and blackened wheels. They were demonstrably better than the contemporary Hornby items.

 

Hornby responded with the rebuilt Merchant Navy to produce a product of comparable quality.

 

People don't still produce bicycles the way they did in 1985 either.

 

If there has been an 'arms race' to use your analogy, it has been the race to announce the cream from the top of wishlist polls and stake a claim to manufacture it - resulting in frequent duplication of plans, and in several cases duplication of releases. 

 

You might be surprised with bicycles. Not only do people still make bicycles using decades old technology and techniques, some artisan frame builders have waiting lists stretching far into the future as they can't keep up with demand.

 

I don't think many want to return to pre-China levels of detail, but there is a point where you have to ask - are manufacturers adding detail and features because it makes the model better or are they doing it because they can and because competitors do it so they can't be seen to have missed the bus? For example, copious separate details on the underside of models that you can only see if you turn it upside down. Nice? Yes. Useful or necessary? No, I'd rather have an easy access DCC socket as per the Bachmann Class 350 or LE Models ETR220 on the underside. If you collect models then going for maximum detail is probably what you want, if you run models on a layout then there is a compromise between detail and running.

[autocoach]

I clicked on your link and all the prices are in US dollars.

 

John

Not that far off as I understand contracts with the model manufacturers in China are in $ for stable exchange rates. I would hope Hornby has well protected themselves with forward exchange rate contracts. 

[phil gollin]

....... I would hope Hornby has well protected themselves with forward exchange rate contracts. 

.

 

I agree, and on that basis any IMMEDIATE increase is rather premature.

 

However, as "buying forward" is a continuing process Companies such as Hornby and Bachmann will need to be entering agreements now for much further ahead and the rates they will obtain will PROBABLY be much worse than at present, not only reflecting the worse exchange rates but also the uncertainty of where rates might be in the future.

 

I am sure all this is reported somewhere, but the main media seem blissfully unaware and don't think serious reporting of such important issues matter to ordinary people.

 

.

[DonnyRailMan]

Just hope the price of a bowl of rice dose not go up ,that would be a double

wami  price hike for us the paying public .

[ruggedpeak]

The bottom line is Hornby absolutely have to have products that sell and sell quickly to survive. It is also clear to me that the right subject matters done to a decent standard will do exactly that. The Pecketts are exactly that, the right product at the right time. SImilarly Dapol, their HIA's flew off the shelves despite a few flaws (undermining the "wagons don't sell" meme). I suspect their 68's in both scales won't be around for long either, nor the 59's. There is money around for the right products. Hornby need to nail this and get the cash coming in. They don't need fancy marketing or digital guff, the Engine Shed seems to do the trick, just get the right models out there.

 

And avoid the nonsense of coreless motors and other exclusionary, incompatible features. If a new model is not sufficiently well detailed and has a coreless motor you are effectively excluding a large part of the potential market, which does not seem wise to me. This is an emerging issue that may hit some manufacturers in the future. Many of us don't want to be sucked into the digital blackhole of expense, forced upgrades and other nonsense. If you can't make a model that is compatible with established and proven systems then understand your market opportunity may be limited.

[ruggedpeak]

I am also surprised that they don't make TTS readily available as a separate item, as they'd make a fortune. As we've seen with some models, TTS is a fantastic innovation but putting it on the wrong models does no one any favours e.g. the Caledonian 67. TTS makes DCC more palatable and reasonable for modellers.

 

I suspect this would do more to ease cashflow and get indies on side than anything else. As with most things digital the bulk of the cost is in the creation of it, not the manufacturing, so it is low risk and low up front cost as TTS has already been created and paid for. Sell only to indies (if that's allowed) and they'll love you for it. TTS freely available is the shake up the DCC market needs as it is presently cornered with expensive kit.

[bigherb]

 

 

And avoid the nonsense of coreless motors and other exclusionary, incompatible features. If a new model is not sufficiently well detailed and has a coreless motor you are effectively excluding a large part of the potential market, which does not seem wise to me. This is an emerging issue that may hit some manufacturers in the future. Many of us don't want to be sucked into the digital blackhole of expense, forced upgrades and other nonsense. If you can't make a model that is compatible with established and proven systems then understand your market opportunity may be limited.

Amen to that.

[DonnyRailMan]

I am also surprised that they don't make TTS readily available as a separate item, as they'd make a fortune.

 

I agree 100%.

[phil-b259]

 

And avoid the nonsense of coreless motors and other exclusionary, incompatible features. If a new model is not sufficiently well detailed and has a coreless motor you are effectively excluding a large part of the potential market, which does not seem wise to me. This is an emerging issue that may hit some manufacturers in the future. Many of us don't want to be sucked into the digital blackhole of expense, forced upgrades and other nonsense. If you can't make a model that is compatible with established and proven systems then understand your market opportunity may be limited.

 

Technology changes with time and just as Microsoft eventually ditched support for Windows XP, so it follows there comes a point where Hornby will decide its time to move on. Coreless motors don't have to mean DCC - they just restrict the types of DC controllers you can use. Yes some people will have invested heavily in non compatible controllers - but how is that any different from spending lots of money on compute software or hardware only to find that many years down the line you cannot use it due to technological advances.

[RJS1977]

 

 

 If a new model is not sufficiently well detailed and has a coreless motor you are effectively excluding a large part of the potential market, which does not seem wise to me.

 

I'm not sure about this - certainly as far as the "not sufficiently well detailed" part goes. I firmly believe that if a manufacturer brings out a low-budget model of a previously unreleased prototype (e.g. Adelante, Class 800 or perhaps even something like a Gas Turbine), people who want a model of that particular loco/unit will still buy it, and the market will be opened up to people who couldn't afford a more expensive model.

 

The Bachmann Skarloey is a case in point - whilst clearly a toy model (albeit retailing at Peckett prices, largely due to the licensing fees - had it not been for that, I reckon it could have been obtainable for around the £50 mark) - as it's the only RTR model of a 'Talyllyn' style loco, importers in the UK have seen them flying off the shelves (one importer said his US wholesaler had sold him more than all his US retailers put together!). Likewise I'm sure that if Hornby were to bring out a better-proportioned 'Toby', anyone wanting a RTR J70 would buy it, irrespective of the lack of detail.

 

There are still a lot of unreleased industrial types out there, which would be well-suited to Junior layouts but which would probably sell well to anyone wanting a model of that particular class. If someone wanted say a Bagnall 0-4-0F, would the fact it was produced without sprung buffers or a fully-detailed cab interior really put them off buying it if the price was commensurate with that?

 

This may (or may not) also apply to prototypes which *have* previously been released by other manufacturers but are now unobtainable (e.g. Class 14).

[rob D2]

There's a fine line between too little detail and too much.

 

Hornbys 09 and 60 and bordering on too much fine detail for items that have to be handled - but they are still great models.

 

I'd rather risk knocking s bit off than old school moulded on detail TBH.

 

 

In terms of modern image, Hornby feels like a rudderless Marie celeste at present and that's what worries me most.

[ruggedpeak]

 but how is that any different from spending lots of money on compute software or hardware only to find that many years down the line you cannot use it due to technological advances.

Why should we forced into a business model that is specifically designed to create artificial obselesence to rob me of my hard earned cash to enrich others, which is exactly the business model of Microsoft, Apple and others? That and not paying taxes. I've had models for 40 years that still work with some TLC, and there is no good reason I should not be able to still be using them when (if!) I retire. I expect to be able to use those models and ones I buy today without having to invest in expensive kit I won't be able to afford, nor have the eyesight or co-ordindation required to mess about with chips and tiny wires. I model to model and play trains. Perhaps you can explain why I should be forced to spend money I won't have in the future to be able to make my trains works and engage in this hobby? DCC long term is a money pit for those who buy into it.

Edited October 16, 2016 by ruggedpeak

[Broadway Clive]

Technology changes with time and just as Microsoft eventually ditched support for Windows XP, so it follows there comes a point where Hornby will decide its time to move on. Coreless motors don't have to mean DCC - they just restrict the types of DC controllers you can use. Yes some people will have invested heavily in non compatible controllers - but how is that any different from spending lots of money on compute software or hardware only to find that many years down the line you cannot use it due to technological advances.

 

Not quite so simple if one needs the steady speed control of feedback controllers to allow hands free use through curves and gradients some of which may be out of sight off scene. A model, unlike a real train has much less inertia and the loco speed will otherwise quickly change in an unrealistic way, particularly in relation to its train. One of the big advantages of analogue is the ease of adding automatic and fail safe operating features without adding to the burden of the operator. Its nothing whatsoever to do with money for many of us. 

[RJS1977]

Quite. My father's loft layout features an end-to-end branch line where two trains shuttle alternately, and a main line where three or four trains can lap independently with timed station stops and signal stops where necessary to prevent trains rear-ending each other (usually). This is all controlled by a number of reed switches (£1 each), relays (ditto) and 555 timer circuits (50p each). Yes, it's quite complex, but far less so then my club colleague's layout which operates a similar block system with DCC. There is no programming involved in our system so no obsolescence due to operating system upgrades and we know exactly how each component works - so if something goes wrong, it is relatively easy to track down the fault and replace the errant item with no major cost outlay.

[JSpencer]

Mean while in the continental toy shops, Marklin are providing cheap battery powered toys, roughly imitating actual prototypes that will run on HO track:

 

In simple terms Jouef et al cannot compete, but maybe they should join the club or allow Markilin to sell in the UK these items under Hornby's brand name with a Hornby as distributer.

 

Photo taken yesterday in a toy shop near Paris, and it seems that kids can move to model railways later on easily unlike the Hornby system.

 

 

[RJS1977]

If memory serves there are (or at least were) two Hornby battery (or clockwork) systems. 

 

One system, aimed at younger children, had snap-together plastic track and so was incompatible with mainstream 00 but had the advantage that it was easy for small children to assemble.

 

The other system used regular Hornby set track, which meant it was compatible with the main range, but the track had to be assembled by older children/adults.

[ChesterModelCentre]

These products ARE available in the UK, I have been selling them for more than 12 months. They are not distributed by Horny.

[Clearwater]

I've seen them at several model shows. Key target market research, my 4 year old, suggests they will be a hit. he's told me that he thinks Father Christmas may bring him one....

[jjb1970]

They have them (or did have them) at the LT Museum shop in Covent Garden.

[Legend]

These products ARE available in the UK, I have been selling them for more than 12 months. They are not distributed by Horny.

Yep seen these. I think they've got magnetic couplings . I'd imagine something like a HST or one of these new class 800 things would go down pretty well. If you remember Hornby were introducing a new range off starter sets . I think they announced it at toy fair , not sure if they still going ahead, but no doubt it's to compete with this Marklin system

[Clearwater]

I reckon either aHST or Pendolino version would sell like the proverbial hot cakes.