Hornby's financial updates to the Stock Market

[ruggedpeak]

I think RJS1977 makes a really good point . There might be some cheap train sets around (although not that cheap compared to some other activities) . But how fulfilling is it having an 0-4-0 with three trucks running around an oval, compared to say an XBox game or computer game? Then to expand the set , costs considerable money. Track is often overlooked but that's pretty pricey . Then a larger Railroad tender engine to run on it , what £60. The cost just keeps on mounting. And I think to a certain extent the hobby has been hijacked by those wanting increasing fidelity and accuracy at any price e.g. lights in coaches , DCC In coaches . It really just drives costs up. Ok for the top end of market , but not for starters . I think there are a lot of people at exhibitions, generally interested, enthusiastic about building a model railway, whose hearts sink when they realise the prices. They then go onto do something else instead.

 

And I'm sorry I don't think this Hornby Junior set is going to bring a renaissance to Trainsets. How do you expand it? It's a train going round in a circle with a battery and switch on it.

A few points:

 

1) if a child/teen is on their Playstation/iPhone etc believe me it is just as expensive as model railways as they spendreal money on virtual must have in game features for FIFA. As a parent it is infuriating since this money is not a tangible object that can be retained or passed on (like my model trains from when I was a kid) but a virtual nothing that will disappear when next year's FIFA comes out. Trains sets are probably a lot cheaper than x hundred pounds on a phone and contract (an iPhone contract is going to cost £500-800) and numerous app and online purchases.

 

2) Its already been mentioned that kids are turning away from virtual to real as they are bored with screens, and giving the increasing complexity and general crapness of modern IT in not actually working (see Rails website thread for example) many of us want to avoid the IT rubbish that we have to fight with every day at work and have a nice analogue hobby that doesn't involve screens or settings etc. If cost is an issue why are people doing DCC in droves (apart from the presumably sadistic pleasure to turning a perfectly good analogue mechanical object into a piece of IT!). DCC Sound doubles the cost of locos etc, yet specialist DCC businesses appear to be doing very nicely thank you.

 

3) Have you watched the video for the new set? It is not only at a great price point, but includes a tunnel, station, trees, signals and OHL line equipment. The train is also compatible with OO track. Plenty to play with exactly as per Brio etc. It is a great product with huge potential and I believe is being sold through major high street retailers to ensure it reaches the full audience.

 

Which links to the wider point about the alleged demise of the hobby and Hornby. Hornby is investing and turning out products that are selling. Attendance at key shows and at preseved railways and for things like the Flying Scotsman runs shows there remains a huge interest in railways in general, but the industry has not been as good as it could at harnessing this. When the Scotsman was doing its recent runs where was Hornby or indeed any of the model railway sector to leverage this awareness and interest?

 

If the hobby is declining it makes no sense to see Rapido, DJM, Hattons and many others bringing new models to market, DCC companies expanding rapidly and bringing innovation (none of which is cheap either!), bespoke baseboard/layout suppliers popping up etc. It is going through change and not all is positive (losing small shops) but declining? No, it is vibrant and alive.

 

Personally I think Hornby should be opening flagship stores like Lego and Disney in major shopping centres to promote and sell all their brands, especially as such centres lack decent places for males to hang out during shopping trips! This wouldn't conflict with model shops as they are not in the Westfields etc.

[Clearwater]

No.  A 60 year old at £200 a year (me) will be dead in about 20 years, 20x200=£4k.  A 10 year old spending £50 a year will be spending £200 a year at a very conservative estimate by the time he is 20, and continue until he dies at 80, 60x200=£12,000

 

Unless of course he discovers girls in his teens, then he's f**d for the next 40 years at least. Literally.

Johnster.

 

I'm afraid that you are not right.  As I alluded to in post 3051, you have to consider the time value of money.  Applying a 15% discount rate means that in 10 years, the point at which our fictional 10 year old who has stayed a railway modeller and is now spending the same as the now 70 year old, the value of the spend in year 10 is only about 25% of the value of the money in year 0.  By year 20, when the 60 year old has stopped spending and hence the 10 year old can start catching up with the spend, that discount factor (1/(1+discount rate)^20) is only c.5%  That discount continues to decline making it harder for the spend of the young modeller to catch up with the high spending pensioner.Therefore, the younger modeller has, in real terms, to be spending about 12x as much as the 60 year old had been spending.

 

Now think of it from a corporate perspective, are you going to a) target those people who are spending now and make money whilst you can or b) target a more competitive youth market with the hope a few stay and then outspend the previous generation?  It's a no brainer.  Discount rate has to be c6% on these assumptions for the young modeller to be more attractive financially.  That is an absurdly low rate for a company with Hornby's risk profile.

 

See attached outputs

 

Now you can manipulate the figures to change the answer but what's clear is that a higher spending customer today is almost certainly worth more to the company than a future prospective customer who *may* spend more than those existing customers in the longer term.  If anything, judging by most RTR threads, I'd say there's a fair number of 60 year olds spending considerably more than £200/year with Hornby... That would skew the analysis even further in the direction I've indicated.

 

David

[RAF96]

I like the idea of a Hornby Hobbies shop in every Mall, on the lines of Apple, etc, where you have access to everything they market, order on line if you wish and pick it up at your local Hornby shop or just browse a shop with everything in the catalogue on the shelf, and off course a layout to try it on and staff who know what they are talking about rather than the Saturday morning numpty help you get in most shops.

Rob

[Legend]

Ok on 1, the latest FIFA game is £49.95. The cost of an iPhone or iPad is indeed horrendous or a contract to run them on .Of course they are primarily communications devices, surf the internet etc so you are likely to have one anyway, rather than going out to buy it specifically for your hobby. So this cost is not really a relevant one.

 

On 2. I don't see any evidence kids turning away from screens. There is lots of evidence however that they have already turned away from Trainsets. If not, then why don't we see them in Smyths or Toys "r" Us . DCC is fine for enthusiasts as they can add functionality , but it is very costly in comparison to analogue . You said it "specialist DCC businesses" are doing ok but probably servicing the top end of the market.

 

On 3.Yes I've seen the video and yes good price point. What happens if you want another engine...............there isn't one . so unlike Brio no room for expansion

[Clearwater]

On expansion, if it is oo/ho compatible, then marklin stock should work. Also, let's give them a chance to develop the range before pointing out at deficiencies. I'm sure that this see this as a range to add to once they see how the set sells

[ruggedpeak]

Now you can manipulate the figures to change the answer but what's clear is that a higher spending customer today is almost certainly worth more to the company than a future prospective customer who *may* spend more than those existing customers in the longer term.  If anything, judging by most RTR threads, I'd say there's a fair number of 60 year olds spending considerably more than £200/year with Hornby... That would skew the analysis even further in the direction I've indicated.

 

David

Except every business and brand has to attract the next generation of customers. Those 60 year olds they target now probably people who grew up with a trainset and/or trainspotting. Who came back to modelling having experienced it as a child or teen. Kids today are not necessarily getting that exposure so that when they are 60 they won't look back and think of their chidlhood fun playing trains, it will be something else. You have to invest in future customers as well as today's, or you will have no future. That is the problem the industry faces, 40 years time what proportion of the middle aged+ people will have any reminisences of playing trains as compared to today? This new set does something to address that and hopefully be profitable as well. Even Ferrari has to think about future customers:

 

http://store.ferrari.com/au_en/kids-1/accessories/toys.html

 

I definitely agree with earlier comments about families at shows etc not really having the opportunity to buy relevant (to them) products to make that entry into the hobby. The traditional trainset may be past its sell by date. Stands at shows probably don't stock something suitable for a smallish family purchase as it is probably not in trader's best interests, but museums etc ensure they have a range of things suitable to flog as you leave the venue.

 

And this is where I also think a Hornby store with its full range of brands along the lines of a Games Workshop with demo's etc is needed to get more people into modelling of any sort - I did trains, model planes and tanks as a teenager, although now I only do trains but use the same skills. A store can have a Thomas layout and a all signing all dancing DCC sound layout and all sorts of stuff.

 

Ok on 1, the latest FIFA game is £49.95. The cost of an iPhone or iPad is indeed horrendous or a contract to run them on .Of course they are primarily communications devices, surf the internet etc so you are likely to have one anyway, rather than going out to buy it specifically for your hobby. So this cost is not really a relevant one.

 

On 2. I don't see any evidence kids turning away from screens. There is lots of evidence however that they have already turned away from Trainsets. If not, then why don't we see them in Smyths or Toys "r" Us . DCC is fine for enthusiasts as they can add functionality , but it is very costly in comparison to analogue . You said it "specialist DCC businesses" are doing ok but probably servicing the top end of the market.

 

On 3.Yes I've seen the video and yes good price point. What happens if you want another engine...............there isn't one . so unlike Brio no room for expansion

I'll bite against the negativity. Anyone with reasonable spending power and teen or pre-teen kids will probably have the current Xbox and Playstation and many games at £49.95. Even ignoring the phone contract the annual spend on games, addons, accessories (extra controllers and headsets etc)  and gaming devices is significant. And with each iteration the systems are only partly backward compatible, so more games have to bought.

 

Traditional trainsets are not compatible with the way kids today tend to play. They play with something for a while then get bored and play with something else. A traditional Hornby set that has to sit on a 6x4 board simply doesn't fit that behaviour. This new set that is easy and flexible to put up, then pack away again when they go off trains for a while before coming back to it, is ideal. As is the accessories. Kids today are not like us adults who build a collection over a long period, they want lots of varied experiences of different things. Yet Hornby have made it compatible with 'proper' sets in case they do. My kids had a Tomy Thomas set with no extra bits yet played with for hours. Young kids don't need a whole catalogue of accessories, that's an adult thing. They want something that is fun for a reasonably long time until they get bored and then [their parent's] can pack it away and move onto the next thing. Whilst Brio had a range it was not necessary to get play value to buy lots of stuff.

 

And finally - perhaps a new RMWeb challenge is who can building the best layout based upon the new Junior set, using all the bits in the box?

[adb968008]

Personally I think Hornby should be opening flagship stores like Lego and Disney in major shopping centres to promote and sell all their brands, especially as such centres lack decent places for males to hang out during shopping trips! This wouldn't conflict with model shops as they are not in the Westfields etc.

They've already been there and done that. They have been closing their outlets at places like Swindon. If they can't make it work at the Swindon Works outlet there's not much chance anywhere else.

Concessions aren't working either, I was recently at Hamleys in London, really nice display of Hornby stuff, but no one looking at it. Hamleys isn't a cheap shop either, so it's not as if railways were over priced in that particular environment. Scalectrix had some interest there though.

 

I think the reason it doesn't work for kids, is it doesn't reflect reality and it doesn't reflect excitement. Racing trains isn't as exciting as racing cars. But even to 4 year old modelling mail trains isn't relative.. mail hasn't gone by rail for years.

I'd figure tube trains with working doors, coal trains with loading hoppers (remember that triang one), container train loading, maybe even tieing up with other stuff appealing to kids... a Cadbury chocolate train might be a win win, if you can remove the parcels van roof and extract a dairy milk..they'll definitely play with that !

 

DCC and sound is lost on kids, but station sounds is something they can both relate to and maybe interact with too.. if a train stopping at a station triggered recordings (that maybe able to have the kids record sounds themselves) might appeal.. door sirens, approaching train sounds, horn, announcer "mind the gap" etc. Much cheaper and more relational than DCC sound.

Edited September 15, 2017 by adb968008

[The Johnster]

Johnster.

 

I'm afraid that you are not right.  As I alluded to in post 3051, you have to consider the time value of money.  Applying a 15% discount rate means that in 10 years, the point at which our fictional 10 year old who has stayed a railway modeller and is now spending the same as the now 70 year old, the value of the spend in year 10 is only about 25% of the value of the money in year 0.  By year 20, when the 60 year old has stopped spending and hence the 10 year old can start catching up with the spend, that discount factor (1/(1+discount rate)^20) is only c.5%  That discount continues to decline making it harder for the spend of the young modeller to catch up with the high spending pensioner.Therefore, the younger modeller has, in real terms, to be spending about 12x as much as the 60 year old had been spending.

 

Now think of it from a corporate perspective, are you going to a) target those people who are spending now and make money whilst you can or b) target a more competitive youth market with the hope a few stay and then outspend the previous generation?  It's a no brainer.  Discount rate has to be c6% on these assumptions for the young modeller to be more attractive financially.  That is an absurdly low rate for a company with Hornby's risk profile.

 

See attached outputs

Graph.JPGCapture 2.JPG

 

Now you can manipulate the figures to change the answer but what's clear is that a higher spending customer today is almost certainly worth more to the company than a future prospective customer who *may* spend more than those existing customers in the longer term.  If anything, judging by most RTR threads, I'd say there's a fair number of 60 year olds spending considerably more than £200/year with Hornby... That would skew the analysis even further in the direction I've indicated.

 

David

 

 

If nothing else, you've just explained why I didn't have a career in corporate finance, but, explained that way, what you say makes complete sense.  It depends on a lot of assumptions though; I am 65, a recent re-starter in the hobby who had to spend more on replacing locos than I'd planned, plus a bit of new stock.  I've spent £150 or thereabouts with H over the last year since I restarted, a discounted 42xx, a new toad, a 21T hopper, and a Southern BY.  There are also s/h 2721, and Hawksworth and BR mk1 BGs, but H do not get any benefit from those purchases other than that it had already got from their original purchasers.  The bad news for H is that I have more or less finished the big restart spending spree and they are unlikely to get much more out of me for a bit, though another couple of toads are on the shopping list as is a Railroad 14xx when they hit the shops because I won't be able to leave it on the shelf at that price (well done H).  

 

The further bad news for H is that I've spent an amount of money that terrifies me, a poor pensioner, on locos and stock with Bachmann.  To be fair to H, I do not consider B to be superior or preferable as such, as any modern offering from H is of an equally high and excellent standard in terms of detail and running, it is just that B makes more stuff that I happen to want and makes 16ton minerals of the correct wheelbase.  A quick count makes the spend with B not far off £500.  The bad news for B is that my spending on their stuff will slow down as well as I've bought most of what I want now; a 94xx if they ever turn up and some more minerals are on the shopping list under the 'B' column.  Again, s/h locos, a 4575 and chassis for a 56xx, mean I haven't bought those new and B have been denied any benefit from them except what they had from the original purchasers.  I wonder how much the s/h market skews things.

 

There are also a few Oxford minerals, but Ox does not really make a big impact on my overall spend.  My wishlist items are unlikely to ever be made unless Dapol downsize their auto trailer to 4mm; that and a matchboarded A7, and a Collett 31xx large prairie with no.4 boiler and smaller driving wheels; even I would say these are a bit niche...  GW non-gangwayed compartment stock as well, but the different lengths mean we'll never get anything but B sets unlike those lucky Southern, LMS, or LNER modellers; not gonna happen!

 

I think, though cannot quantify this in detail, that I've spent about £1100 on model railways in the last year, way more than I'd allowed for.  This is for model railway specific items, and does not count stuff like baseboards and wiring (actually, baseboards were skipraids anyway) or tools, glue, paint etc.  That is the bulk of my spending for ever; I doubt if my entire outlay over the next  20 years will equal it as I move from layout building and stocking to detailing and a more kit and scratch orientated modelling approach.  If I am a typical pensioner railway modeller, and typical railway modellers are pensioners, it does not bode well for the trade.  Big layouts that need large studs of DCC motive power, 60 wagon or 12 coach trains, and lots of expensive everything, are the preserve of those earning and with increasing disposable income.  Even such pensioners as have provided well for their retirements have to keep a close eye on the spending!

 

My take on the young end of the market is that the new Hornby battery set is a good move.  00/H0 compatible, push along on the carpet when the battery is dead or needs charging, easy to join track, simple couplings, no break offable details, wagon and coach roofs that hinge open so you can put dinosaurs, Lego men, My Little Pony, Woody, Buzz, and Peppa Pig inside, and a rechargeable power source on board the locomotive controlled by NFC are the way to go, I'd say.  The challenge of a railway which is realistic enough to satisfy an older child and small enough to fit in a modern home, which was the original intention of 00/H0 in the years between the wars when middle class housing started to get smaller and the generation of TT and then N, has now progressed to Z and T, but the sub N gauges are too small for children and even N is not really suitable for under 12s who cannot put the trains on the track.  The battle has been lost, lost in the 60s when houses became even smaller and many people throughout the developed world had recourse to even smaller apartments and flats.  

 

Same applies to Scalextric and similar; if it's got be put together and taken back apart every time and the alternative is a board which is awkward and heavy to move around, forget it, it's not gonna fly these days.  Bits'll break, connections lost, power adaptors pinched for something else.  Scalextric may revive when the slot concept is abandoned and cars are powered on board and NFC controlled; you could have a track if you want or just race them round the furniture at a moment's notice.

 

There may be a market for garden railways, more amenable to on board propulsion and Peppa Pig's commute, but LGB have priced themselves out of it a bit.  What is needed is instant lay plastic track; Triang Big Big was on the money years ago!  But modern gardens are makeover/add value to the house/conspicuous consumption territory these days, and not the play areas they used to be in my youth with the gardening bit relegated to the edge borders.  

 

There will be a market for model railways as long as there are real railways that fascinate people.  I remember predictions of it all dying off at the end of steam; well, that didn't happen and the modern scene is more colourful then BR ever was.  New recruits to the hobby are likely to come from people who are real railway enthusiasts, plus a few who will take on the challenge of building scratch out of an engineering or architectural interest.  Many real railway employees are modellers, a friend who drives for Arriva Wales is thinking about it and he has never been interested before even as a child.

 

That turned into a bit of a ramble, as things do at my age (!), but is I think relevant to how H should be assessing the market.  I don't really know how typical I am as a modeller, but I am smack in the middle of the age range and probably of the spending ability; if I was Hornby, or Bachmann, or Oxford for that matter, I'd worry about that!

Edited September 15, 2017 by The Johnster

[Clearwater]

@ruggedpeak

 

I didn't intend to give the impression that Hornby should have no strategy with regard to attracting new customers at the younger end of the spectrum, my point was more that the baby boom years still have a lot of spend to give and that from a value perspective, that's where they should target. (Indeed Hornby junior's advertising in eg BRM is targeting the existing modeller market to buy it as a gift...). I agree with the suggestion Hornby should get this product into museums and heritage rail - that's where pester power peaks. Every preserved Railway I go to has loads of enthusiastic sub 7 year olds who are as captivated by steam as every generation before.

 

However, a high street presence strategy is doomed to fail. The costs are prohonitive to opening branded shops. Rely instead on traditional rep sales to multiples. Probably the supermarkets. Risk for Hornby is a production one - overproduce and have to write off or underproduce and leave retailers short of supply?? Hard one to call.

 

However, there is no iron rule that companies should always altruistically look to future markets. History is littered with names that no longer exist for products that are no longer relevant. Blockbuster video; Radio Rentals, BHS, Woolworths, Andreas, Sinclair Spectrum, Freeserve etc etc. It's a perfectly viable strategy to say "this is our market, when it goes, we go". Clearly I think that it would be a shame for Hornby to go but if I'm in a tiny minority in the global population, that's what will ultimately happen.

 

Personally, I don't think the "grey pound" issue is a Hornby one alone. Those of you who are retired on final salary pensions are incredibly lucky. I know not all pensioners have such generous arrangements but my point is to contrast to their younger equivalents. Most people, sub 45, do not have such final salary pensions. Whilst some spend their pension on trains, others spend on holidays, homes, theatre etc etc. as this spend reduces, the economy will inevitably change.

[The Stationmaster]

Johnster.

 

I'm afraid that you are not right.  As I alluded to in post 3051, you have to consider the time value of money.  Applying a 15% discount rate means that in 10 years, the point at which our fictional 10 year old who has stayed a railway modeller and is now spending the same as the now 70 year old, the value of the spend in year 10 is only about 25% of the value of the money in year 0.  By year 20, when the 60 year old has stopped spending and hence the 10 year old can start catching up with the spend, that discount factor (1/(1+discount rate)^20) is only c.5%  That discount continues to decline making it harder for the spend of the young modeller to catch up with the high spending pensioner.Therefore, the younger modeller has, in real terms, to be spending about 12x as much as the 60 year old had been spending.

 

Now think of it from a corporate perspective, are you going to a) target those people who are spending now and make money whilst you can or b) target a more competitive youth market with the hope a few stay and then outspend the previous generation?  It's a no brainer.  Discount rate has to be c6% on these assumptions for the young modeller to be more attractive financially.  That is an absurdly low rate for a company with Hornby's risk profile.

 

See attached outputs

Graph.JPGCapture 2.JPG

 

Now you can manipulate the figures to change the answer but what's clear is that a higher spending customer today is almost certainly worth more to the company than a future prospective customer who *may* spend more than those existing customers in the longer term.  If anything, judging by most RTR threads, I'd say there's a fair number of 60 year olds spending considerably more than £200/year with Hornby... That would skew the analysis even further in the direction I've indicated.

 

David

 

I thought I'd got away from discounted cash flows etc when I got away from involvement in proposing and developing schemes       (Mind you the nice thing about some of my schemes is that I can go out and watch trains running on them if I'm so inclined and oddly (very oddly in one particular case) most of them have survived current resignalling schemes,  and an electrification scheme, completely unscathed - but that's the wrong scale for here of course.)

[Gerald Henriksen]

I think a number of those previous factors will have changed now too though. With the rise in house prices will people in their 40s still have their house paid off? Increasing wage multipliers in mortgages will shift that time when the house is paid off to be later in life if at all. There may not come a bumper sales period as purchasers get older now.

 

I do fear for the hobby as I'm not sure where I can see new entrants coming from - if kids aren't interested these days will they suddenly take an interest later in life? also I dont find the prototypes as interesting on the modern railway, I miss the loco hauled era and units get more difficult and expensive to model with the rainbow of liveries

 

A fictional person writing in to a magazine 30 or so years ago:

 

"I don't the the prototypes as interesting on the modern railway, I miss the steam hauled era with all its moving parts and smoke out the top"

 

I'm not intending to pick on you, but rather just point out that each generation has had its issues with change.

 

Kids today are not given the freedom to roam outside the house like most of us were as kids(*), so saying they aren't interested in the prototype is difficult to measure given that most no longer have the opportunity.

 

But, assuming most of us are willing to admit, we change as we get older.  Electronic games lose their attraction(**) for a variety of reasons, including the fact that our reflexes slow down and the idea of constantly having to interact loses it appeal.  This is where hobbies like trains come in, because you can if you want simply sit down and watch your trains move around, or even with a shunting layout things are slower and you don't need to be constantly doing something.

 

I do agree that the changing nature of house ownership will be a challenge in the future, but trying to predict what will happen in the next 10, 20, or more years is an impossible task as things will happen that we won't even consider that will influence how things work out.

 

* these days and adult seeing a kid out alone is just as likely to report the kid (and by extension the parents) to the police or other authorities.  Example, the dad in Vancouver who was told by the government that it was not acceptable for his kids to ride a public bus to school on their own

http://www.ctvnews.ca/canada/single-dad-barred-from-sending-kids-to-school-on-city-bus-1.3577295

 

** ironically enough the video gamers have been predicting the end of the industry and doom and gloom as those cheap(ish), non-time-demanding phone games become more popular for the last 5 years or so.  So it's not unique to model trains enthusiasts.

[Gerald Henriksen]

I like the idea of a Hornby Hobbies shop in every Mall, on the lines of Apple, etc, where you have access to everything they market, order on line if you wish and pick it up at your local Hornby shop or just browse a shop with everything in the catalogue on the shelf, and off course a layout to try it on and staff who know what they are talking about rather than the Saturday morning numpty help you get in most shops.

Rob

 

Hornby Revenue - £47.4 million

 

Lego Revenue - £4.4 billion

 

Apple Revenue - $215.6 billion

 

Thus Apple and Lego can afford stores in high rent malls.

 

People keep forgetting model trains is a small business compared to most, with the limitations that go with it.

[Chris M]

I hope the new train set sells well. My grandson will get one for Christmas even though Hornby says 4 and over but he won't quite be 2. He loves my N gauge and especially likes to hold my models.

[ruggedpeak]

Hornby Revenue - £47.4 million

 

Lego Revenue - £4.4 billion

 

Apple Revenue - $215.6 billion

 

Thus Apple and Lego can afford stores in high rent malls.

 

People keep forgetting model trains is a small business compared to most, with the limitations that go with it.

I don't disagree, but not getting in front of the wider public is IMHO holding back all Hornby's brands. And it only has to be in a handful of the most relevant malls across the UK. This is not just about trains, but Corgi, Airfix, Scalextrix, Pocher etc. The business case would have to stack up. Throw in the overseas rail brands and you have the potential to make an interesting store. I'm not a retail expert but even as a temporary pop up type store it could be trialled. Some malls do this.

 

And with everything from the latest detailed Colas 60 to the Junior set, Airfix Quickbuild and starter kits, there is something for everyone to think about buying. And who wouldn't drool over a finished 1:24 Typhoon model if it were on display?

[adb968008]

I don't disagree, but not getting in front of the wider public is IMHO holding back all Hornby's brands. And it only has to be in a handful of the most relevant malls across the UK. This is not just about trains, but Corgi, Airfix, Scalextrix, Pocher etc. The business case would have to stack up. Throw in the overseas rail brands and you have the potential to make an interesting store. I'm not a retail expert but even as a temporary pop up type store it could be trialled. Some malls do this.

 

look what happened to Model Zone, Beatties... Edited September 15, 2017 by adb968008

[Fenman]

... If I am a typical pensioner railway modeller ...

Depends what you mean by typical - and it anyway may not matter. British Airways doesn't much care about you if you take one economy class flight a year. Yet that person is "typical". British Airways cares a lot more about you if you take a dozen business class flights a year. You make the company a lot more money - a lot - but you are not actually "typical". However, there are enough of you to make more of a difference.

 

Hornby is very interested in those RMWebbers who buy shiny new toys because they have a cuteness factor or whatever (have a look at the posts on the Hattons industrial thread where people are "struggling" to order fewer than six locos). Do you really think you are either more typical than them, or as economically significant?

 

Extrapolating from personal experience is often dangerous.

 

Paul

[The Johnster]

I think I was pointing out that I am not particularly significant to an RTR manufacturer in any economic or marketing sense, and did not claim to actually be typical, whatever that means.  I don't buy much, have already bought most of what I'm going to buy, and am going to die sooner than the average bear, Boo Boo.  My spending power has just been proved to be more than that of a 10 year old, but I actually am not going to be spending a lot more; my advice to any RTR manufacturer is to ignore me and the likes of me rather than pandering to my every whim, advice they seem to already be taking without my having provided it!

 

But there is also little point from the trade's angle in concentrating on 10 year olds, who aren't going to spend much either and are about to discover girls in the next few years, which is when it really hits the fan.  So who do the trade concentrate on, who are the people who are going to be buying lots of model railway stuff at decent markups in 10, or 20, or 30 years time.  I don't know.  The next generation of me, probably.  Back to square 1.  Not my problem, I'll be brown bread, remember!

[manna]

Hornby Revenue - £47.4 million

 

Lego Revenue - £4.4 billion

 

Apple Revenue - $215.6 billion

 

Thus Apple and Lego can afford stores in high rent malls.

 

People keep forgetting model trains is a small business compared to most, with the limitations that go with it.

G'day Gents

 

About time that Hornby got into the 'Phone' business, there phones could 'Chuff' instead of ring.

 

manna.

Edited September 15, 2017 by manna

[blueeighties]

Really? Hornby seem to me to have four premium models of the blueness in the form of classes 08, 31, 43, 50. I'd make that 3rd place after Bachmann / Heljan; Dapol have 2 or rather 1.5 (since the class 22  barely made it into blue) and there were no 'other players' for some years following the Hobbyco/Vitrain (also 2) evaporation from the UK market?

 

 

Then again, Bachmann and Heljan were 'in possession' of the 37 and 47 respectively, it took Bachmann some time to get their 47 out: and the Hobbyco/Vitrain  competitive entries collapsed swiftly, so perhaps Hornby were smarter in picking up some 'post blue' like the 60 and 67?

 

 

Not 'many' but 2. And that really worked out - not. What are you trying to argue here?

And not forgetting the 56.

[Dunsignalling]

No.  A 60 year old at £200 a year (me) will be dead in about 20 years, 20x200=£4k.  A 10 year old spending £50 a year will be spending £200 a year at a very conservative estimate by the time he is 20, and continue until he dies at 80, 60x200=£12,000

 

Unless of course he discovers girls in his teens, then he's f**d for the next 40 years at least. Literally.

Exactly. I don't know how typical I am, but this is my experience:

 

I've been spending quite freely on whatever wonderful new stuff covers my interests since Hornby came up with their Rebuilt Merchant Navy, c.2000. 

 

I'd been dabbling with kits and some Airfix/Mainline/Bachmann stuff for a while before that but, from about 1968 to 1993, I didn't contribute more than pennies to the turnover of any model railway business. 

 

I'm 65 now and expecting my spending on locos and stock to tail off a bit, if only because so much more of my personal wish-list than I ever dreamed possible has been fulfilled. 

 

IMHO, what the commercial health/survival of the model railway trade 20 or 30 hence really depends on is getting kids interested in the real thing before girls/careers/mortgages kick in.

 

Decent numbers doing that is what will ensure a steady flow of 40- and 50-something beginners/returnees down the line - the point at which serious money starts to get spent.

 

John

Edited September 16, 2017 by Dunsignalling

[Caledonian]

I am guessing the UK is the same, but the stats for the hobby in the US (I believe from the NMRA) is that it has always been a hobby for the 40+ demographic.

 

Yes, there are always some in the various age groups, but for the majority the hobby gets entered once the big costs (in money and time) are done with - children gone, house paid for, higher wages.

 

The biggest thing is that the hobby, over the decades, has continued to evolve and change with the times, and this has also consistently resulted in complaining - in the past in magazines, now online - that the hobby is dying simply because the previous generation don't like the changes.

 

While it may be hard for some to accept the idea of people entering the hobby as a kid via a trainset is dead - kids today simply have far too many other options for their time than previous generations.  Yes, there will still be some, but for most it won't happen.

 

The flip side though is that things like the Internet offer many new ways of discovering and getting into the hobby, thus offsetting the loss of the trainset at Christmas.

 

 

 

A fictional person writing in to a magazine 30 or so years ago:

 

"I don't the the prototypes as interesting on the modern railway, I miss the steam hauled era with all its moving parts and smoke out the top"

 

I'm not intending to pick on you, but rather just point out that each generation has had its issues with change.

 

Kids today are not given the freedom to roam outside the house like most of us were as kids(*), so saying they aren't interested in the prototype is difficult to measure given that most no longer have the opportunity.

 

But, assuming most of us are willing to admit, we change as we get older.  Electronic games lose their attraction(**) for a variety of reasons, including the fact that our reflexes slow down and the idea of constantly having to interact loses it appeal.  This is where hobbies like trains come in, because you can if you want simply sit down and watch your trains move around, or even with a shunting layout things are slower and you don't need to be constantly doing something.

 

I do agree that the changing nature of house ownership will be a challenge in the future, but trying to predict what will happen in the next 10, 20, or more years is an impossible task as things will happen that we won't even consider that will influence how things work out.

 

* these days and adult seeing a kid out alone is just as likely to report the kid (and by extension the parents) to the police or other authorities.  Example, the dad in Vancouver who was told by the government that it was not acceptable for his kids to ride a public bus to school on their own

http://www.ctvnews.ca/canada/single-dad-barred-from-sending-kids-to-school-on-city-bus-1.3577295

 

** ironically enough the video gamers have been predicting the end of the industry and doom and gloom as those cheap(ish), non-time-demanding phone games become more popular for the last 5 years or so.  So it's not unique to model trains enthusiasts.

 

I think that both post encapsulate the problem very well. 

 

There is always going to be a bit of a chicken and egg question in that do people become modellers because they are interested in trains, or do they become interested in trains because they are modellers?

 

There seem to be a large number of older modellers for whom trainspotting and model trains went hand in hand, and its a bit oif a cliche that modeller X is trying to recreate the station and trains he remembers as a kid. I'm not knocking this, but rather pointing out that for many and perhaps most of us this raileway modelling business comes as part of a package. As a kid there was a tinplate Hornby set and later my Dad dabbled with some Hornby Dublo stuff; but it was just another toy and didn't set me on the road to perdition. A combination of being a railwayman for most of my working life and a fascination with the intricacies of proper models did that.

 

In short times have moved on enormously. A battery operated kids trainset is no longer the sure and certain path to a modeller 30 years or more hence - especially as the world will continue to change

[ruggedpeak]

its a bit oif a cliche that modeller X is trying to recreate the station and trains he remembers as a kid. I'm not knocking this, but rather pointing out that for many and perhaps most of us this raileway modelling business comes as part of a package. As a kid there was a tinplate Hornby set and later my Dad dabbled with some Hornby Dublo stuff; but it was just another toy and didn't set me on the road to perdition. A combination of being a railwayman for most of my working life and a fascination with the intricacies of proper models did that.

 

In short times have moved on enormously. A battery operated kids trainset is no longer the sure and certain path to a modeller 30 years or more hence - especially as the world will continue to change

I have to disagree about the cliche bit, based my anecdotal evidence from reading magazines and overhearing conversations at shows - many layout articles I read in the likes of BRM refer to the layout builder making a connection to their childhood in choice or type of layout.

 

This is a recurring theme, and whilst one swallow doesn't make a summer, a good example is Heaton Lodge Junction (http://www.rmweb.co.uk/community/index.php?/topic/110677-heaton-lodge-junction/ ). A recent article about it in BRM (? haven't time to look it up at present) even had a photo of the layout builder and his 2 brothers as young lads clinging onto a gate watching trains at the location he now models decades later. Loitering around layouts at shows it amazes me how many people discuss their connection with those layouts based upon real locations.

 

I had no family or professional connection with trains (other than commuting via EMU's everyday :yawn: ) other than Thomas stories and then a Hornby HST set, plus early teens gricing, before a lull of 25 years and now I am spending [too much] on models again in early middle age. I think a battery train set is something that can potentially lead to an interest in railways even in this day and age.

[jjb1970]

I think the test will come in a few years. I'm 46 (going on 47) and am probably one of the last age groups that remembers when a train set was high on the list of most boys Christmas wish lists at some point in their lives, can remember when almost all boys had at least some exposure to hobbies like plastic kits and toy soldiers and when most towns of any size had a decent model shop and many department stores had decent model departments. I grew up in Carlisle, I can remember G&M Models (the business that became C&M after a change of ownership and is still going strong), Classic Models (not into trains but superb for kits and RC), O'Loughlins (excellent for kits, trains, soldiers etc), Clydesdale toys which had a great train section and Easton toys on Lowther Street which had an excellent model section. And some of the department stores had decent selections of models (mainly kits admittedly). And Carlisle wasn't especially untypical. So I'm from a generation in their 40's that remembers modelling from their youth. Whether the 20 and 30 somethings will and have the same urge to return to modelling in older age will be interesting.

[ruggedpeak]

look what happened to Model Zone, Beatties...

Model Zone failed because they expanded too much, were carrying too many expensive retail properties and debt i.e. poor business model and business decisions:

 

"A spokesperson for Modelzone admitted it was struggling in its most recent accounts filed with Companies House: "Trading performance for the year was disappointing ... Following a review of the business, it became clear that the business infrastructure and management capability was insufficient, not only to take the business forward and grow further, but also to deliver sustainable profitability."

 

https://www.theguardian.com/business/2013/aug/28/modelzone-collapses-deloitte-fails-buyer

 

That does not mean a well planned, carefully executed and limited risk trial of retail premises based upon the entire Hornby plc range will suffer the same fate. Model Zone and Beatties were both pure retail plays that struggled to adapt to the 21st century and growth of the internet, as did many other retailers in other sectors who went bust, yet their sectors remain perfectly healthy. Jessops is a good example, although they have scraped through.

 

Hornby and my suggestion are a totally different proposition, and I would suggest more akin to a Lego/Games Workshop hybrid. Model Zone failed yet Hattons, Rails and others are going great guns. And as I've pointed out before, the model market is following exactly the same path as the indie computer games sector did about 20 years ago, which sadly involved a lot of indies closing However the opportunities are there.

[jjb1970]

In terms of decline, I think it depends whether you're talking about the size of the hobby or the vibrancy of the rump hobby. In terms of the rump hobby I think most agree we're living in great times with all sorts of suppliers providing wonderful products (including Hornby, in all the praise heaped on some of the newer vendors it is easy to forget just how good the current Hornby product is), I also think it undeniable that the hobby is much smaller. I think the current apparent health of that is a strange, counter-intuitive confirmation of that. We are now seeing RTR models that would have been considered niche for kit producers not that long ago, manufactured to remarkable levels of detail and finish. However, they're being produced in small numbers and clearly looking to fully amortise development costs over the initial runs, as opposed to older times when tooling would be re-used year on year and "limited editions" were made in numbers that'd over saturate todays market.

That in a sense is positive as it indicates that model trains are no different from other hobbies in finding a niche and adjusting its supply chain to fit that niche. However it does have implications for business models and carries a price premium.