Hornby's financial updates to the Stock Market

[RJS1977]

I think that you have highlighted a very valid point here and goes to show how Hornby have lost it's core value towards a specialist market place. 

 

Indeed - I've just been on the Hornby website to see what's currently in the Railroad range.

 

Very little is the short answer, and actually in stock, even less.

 

Apart from the 'Blue Rapier' (Javelin) - there is nothing in the range which is currently in front-line service on the national network. Even most of the tender locos in the range are now 'out of ticket'. So not much that's of interest to young modellers wanting to model what they can see today.

 

And (apart from Smokey Joe and the 101) only one small tank engine - the Jinty. And some of the prices are still on the high side (£160 for a King class!).

 

I'm afraid the Railroad range is little more than lip-service. 

[JSpencer]

 

I don't think I'd want to be a mainline model railway provider. Things still look pretty good for the commissioning segment - but we have so much backlog even there it will take a while for things to normalize.

 

 

I feel that there being a constant back log for the past few years, has now become the norm.

[Hroth]

Hmm. Not discounted on the web site when I looked.

 

It seems very odd to me that they would be happy to hang onto Christmas sets for a whole year but want to get rid of things like Mk 1 coaches that I would imagine would be a steady seller.

The "old" 3rd radius oval track set (R1179) had been at the £60 level in at least two of the model shops I've visited during the latter part of last year and was discounted to £50 at Argos just before Christmas (I know, I got one...).  The new 1st radius circle track set (R1185) is on pre-order for £50, which could be seen as a similar price level to the still available R1179 as it has a cheaper track selection and no trackmat.

 

You pays your money and you takes your choice, I suppose.

 

Its always possible that by Christmas 2016 Hornby will have run out of stocks of R1179 and retailers that have held onto stocks will be able to promote the set as a superior product at a "premium" price due to the expansion potential of 3rd radius track compared to 1st radius track!

[Oakydoke]

Indeed - I've just been on the Hornby website to see what's currently in the Railroad range.

 

Very little is the short answer, and actually in stock, even less.

 

Apart from the 'Blue Rapier' (Javelin) - there is nothing in the range which is currently in front-line service on the national network. Even most of the tender locos in the range are now 'out of ticket'. So not much that's of interest to young modellers wanting to model what they can see today.

 

And (apart from Smokey Joe and the 101) only one small tank engine - the Jinty. And some of the prices are still on the high side (£160 for a King class!).

 

I'm afraid the Railroad range is little more than lip-service.

 

If it's aimed at being a toy for children, only a small range is require.

A vague blob offered in a small variety of train operator liveries and a vague blob with a chimney to represent a steam loco.

A few hours entertainment over several months and in the dustbin or on eBay when discarded and ignored.

I think there's a few options already out there in one or two of the larger toy stores.

[Andy Y]

Indeed - I've just been on the Hornby website to see what's currently in the Railroad range.

 

Very little is the short answer, and actually in stock, even less.

 

 

This, and the posts it relates to, is a very valid and important point. Retailers like to carry stock so they can 'upsell' to customers maximise revenue and satisfy a customer; Hornby don't seem to like to sit on stock, if it's on a warehouse rack it is costing money and is likely to moved on in some form. The retailers are Hornby's longer-term storage, all well and good and commercially understandable but they shouldn't expect to be a viable direct seller if they don't have a range of products.

[Clearwater]

I thought there was an interesting, and pointed, line in Bachmann's statement yesterday" "..... and release to our extensive dealer network"

 

David

[locoholic]

I think that it is very challenging to be a model railway manufacturer.

 

Once upon a time there were two purchasing behaviors:

• Stock sat on shelves until people saved up their money and went to the shops, or grandad/uncle/etc purchased a gift for little Johnny's birthday/Christmas etc. 
• Keen enthusiasts eagerly awaited a new release and purchased it when it became available.

Once upon a time new releases were infrequent and there were relatively few 'new' items in a catalogue each year.   It seems to me that a huge part of the business has migrated to the latter of the two behaviours above.  This has a huge impact. Today new items are hungrily snapped up, but second runs of those items (coaches excepted) have much less interest for today's punters.

 

Surely the massive price increases that we've seen over the last few years are partly due to the manufacturers trying to recoup a much higher percentage of their outlay on tooling from the initial production run, rather than relying on sales in subsequent years? The manufacturers will have been well aware of changing purchasing behaviour, and have adjusted their pricing to ensure that they still make a profit.

 

The problem comes when they make stuff that people don't want to buy, like for the London Olympics, or spend a fortune on an IT system and senior executives and then have to sell stock off cheap just to maintain cashflow.

 

Anyway, Hornby have just had £180 off me for some Collett coaches. Hopefully Barclays can see that items like that bring the money in. Maybe they'll persuade Hornby that if they made the maroon versions as well, they'd get even more money off me.

[Dunsignalling]

Indeed - I've just been on the Hornby website to see what's currently in the Railroad range.

 

Very little is the short answer, and actually in stock, even less.

 

Apart from the 'Blue Rapier' (Javelin) - there is nothing in the range which is currently in front-line service on the national network. Even most of the tender locos in the range are now 'out of ticket'. So not much that's of interest to young modellers wanting to model what they can see today.

 

And (apart from Smokey Joe and the 101) only one small tank engine - the Jinty. And some of the prices are still on the high side (£160 for a King class!).

 

I'm afraid the Railroad range is little more than lip-service. 

The only items I'm interested in are those I'm interested in and I haven't a clue what motivates young purchasers (if they still exist).

 

However, I don't imagine for one moment that anybody interested in the current prototype scene who purchases a Javelin is also in the market for a "Smokey Joe".

 

Not sure why you cite the King as it is clearly not a Railroad product.

 

Hornby must make their own decisions on the importance or otherwise of their "kiddie" range and this is an area where feedback from the retail trade/previous sales levels is really all they have to go on. Just as with all their products, there is a finite number of anything that will sell through in a reasonable period. If Railroad items aren't being re-stocked, it implies that they no longer generate sales and/or margins sufficient to secure production slots in preference to other models.  

 

John

Edited March 2, 2016 by Dunsignalling

[Phil Parker]

I saw a statistic the other day that 47% of children have never been on any form of public transport. I imagine of those that have, the majority will have been on a bus. Of those that haven't, they probably come from families with spare cash that could theoretically buy model railways if they wished. Or perhaps some come from areas where public transport simply doesn't exist any more.

 

 

I'd disagree about the bus. Lots of people will travel on a train who wouldn't contemplate getting on a bus. Around here, trains to Birmingham are busy, even off peak. Busses, less so.

 

Around the country, it seems people will use tram systems who won't use a bus on the same route. Busses have a real image problem - our local ones have leather seats and USB charging points but you don't see the middle classes aboard often.

[Andy Y]

Oi! I went on a BorisBus (for the first time) yesterday. True, the only other passenger in the morning was a mad lady who got off at the LSE. It was a lot more comfortable than the tube.

 

Ding, ding.

[micklner]

I thought there was an interesting, and pointed, line in Bachmann's statement yesterday" "..... and release to our extensive dealer network"

 

David

 

      So they may say , sadly what extensive dealer network exists if that means shops then they simply don't exist anymore and dying by the day. If its the internet then they have realised that sadly that  is the future of retailing and by not at the same time hacking off dealers off by antics such as Hornby recent attempts to maximise profit for themselves.

     Hornby have been very shortsighted in not realising that shops can and now have to sell via internet as well to survive, Hornby appears that they thought they could get everybody to pay full r.t.r prices and take maximum profit by ignoring the middle men and they have been badly proved wrong, people simply waited until the inevitable price cuts and then bought if they could even then they could  afford to buy or want the actual item for sale.

      The big problem they and Bachmann have is getting anything made in reasonable time scales, until that is sorted they are both in trouble.

[Dunsignalling]

I'd disagree about the bus. Lots of people will travel on a train who wouldn't contemplate getting on a bus. Around here, trains to Birmingham are busy, even off peak. Busses, less so.

 

Around the country, it seems people will use tram systems who won't use a bus on the same route. Busses have a real image problem - our local ones have leather seats and USB charging points but you don't see the middle classes aboard often.

Image aside, in areas like this, buses "go the pretty way" to serve various villages and smaller towns en route between the larger centres.

 

That creates a big time penalty over the train for end-to-end travellers who have a choice. Bus use is, therefore, generally limited to journeys to/from intermediate destinations unless the opportunity to use a free bus pass outweighs the disadvantage.

 

My own example, Honiton-Exeter Central: Train 21 to 28 min. Bus (Service 4) 67 min. Bus (Service 52B) 87 min.

 

The main shopping area is also closer to Exeter Central than the Bus Station. 

 

John

[JSpencer]

Hornby are one of the few manufacturers trying to tackle the problem "how do you bring new blood to the market"?

 

The question is important for the hobby and in the long run, for Hornby themselves. The problem is, they have a huge immediate problem which means resources looking long into the future are secondary to the immediate one.

 

To bring Children into trains, the marketing dept needs to ask them and their train set less parents what would it take to do so.

 

Battery powered vague looking models seems to be an idea "lets try this and see what happens" with a high risk of failure. A baby might see any toys as plastic blobs, but a child - whilst not as discerning as an adult modeler - is still discerning non the less. That blob must have some resemblance to a real thing somewhere. I have no clue how the child goes from wooden trains to plastic battery ones to finally a 00 gauge model....

 

My son was interested in a Nintendo DS from 3 years old, could work it, a DVD player, the telly and even a tablet. Toy cars never interested him because basically there is not much to learn from them. You push it and that is it.

To bring kids in, you need to Hornby need to have kids giving feedback directly. You will be surprised and the number of innovative ideas they will provide. However right now this is not Hornby's priority.

 

This month we should have seen those Radials in the shop. What do have? 1000 limited edition metalised Thomas's. I am not confident they will sell...

[jonny777]

Image aside, in areas like this, buses "go the pretty way" to serve various villages and smaller towns en route between the larger centres.

 

That creates a big time penalty over the train for end-to-end travellers who have a choice. Bus use is, therefore, generally limited to journeys to/from intermediate destinations unless the opportunity to use a free bus pass outweighs the disadvantage.

 

My own example, Honiton-Exeter Central: Train 21 to 28 min. Bus (Service 4) 67 min. Bus (Service 52B) 87 min.

 

The main shopping area is also closer to Exeter Central than the Bus Station. 

 

John

 

 

I'm not sure what the disadvantages are of using a free bus pass over paying for an alternative form of transport.

 

I have a free bus pass and I will use it for trips of up to a couple of hours in length because it costs me nothing directly.

 

The buses in this area are mainly full of pensioners and students, who probably have passes as well; with a few young mothers and small children. There are virtually no representatives of the 25 to 55 age group on buses that I have travelled on recently.

[Clearwater]

There was a study done long ago that showed children a cartoon style spitfire and a more accurate one. Apparently most children went for the accurate one. My four year old knows how to work most of our electronic gadgets. On a tablet, he can find I player and then CBeebies without assistance. He can't yet type and search but I doubt that's not far off. He can play "angry birds" and other simple games. He's getting quite good on a shunting puzzle called TrackZ.

 

He has an extensive wooden railway, various of the Thomas take and play range but given half a chance he will use any oo loco I'm prepared to lend him (usually something life expired). When we set up our oo sidings to "do the shunting game in real life" he was fascinated. Goes without saying, he can pick locos to control off the list on the dcc controller and knows how to make them stop, start etc. Whilst he will play rail

Related video games, I think there is something about the physicality of a model that's appealing to him.

 

Now obviously I'm interested in trains and him showing interest resurrected my desire to build a railway, but if I wasn't how would he get interested?

 

Personally, I think the battery powered stuff is a good stepping stone. It doesn't require an adult to build, wiring, soldering etc and is hence accessible. The smart systems areHO gauge allowing some interoperability, eg Thomas take and play track is gauged for oo wagons which has got to be a good thing. Friends who I've taken to shows have been impressed by what can be done but it requires someone with knowledge to introduce them.

 

On the 1000 limited edition Thomas, we saw them at Warley. Child didn't like as they were the wrong colour... Generally, I've not brought him much oo Thomas stuff as a) it's expensive for what it is b) it's not dcc c) he'll grow out of it and generally prefers real to pretend engines. I was told this am "spencer is just a pretend mallard."

 

On dcc, given what can be done electronically at minimal cost in other children's toys, I think Hornby have missed a massive opportunity to make their range more accessible. Doesn't necessarily need to be dcc but needs to compete against other toys that are out there

David

[Bernard Lamb]

This, and the posts it relates to, is a very valid and important point. Retailers like to carry stock so they can 'upsell' to customers maximise revenue and satisfy a customer; Hornby don't seem to like to sit on stock, if it's on a warehouse rack it is costing money and is likely to moved on in some form. The retailers are Hornby's longer-term storage, all well and good and commercially understandable but they shouldn't expect to be a viable direct seller if they don't have a range of products.

Now that is where their marketing policy seems to fall down.

The procedures do not seem to have any sound policy regarding stock turnover.

An efficient business would have items that must be kept in stock at all times, items that must shift within a fixed period and items that are bought in for immediate sale.

A mixture will ensure a steady income without the need for regular fire sales.

I remember dealing with a major DIY outfit.

The rack must never be full. Customer will perceive that goods are not selling and will wait for reductions.

The rack must never be almost empty. Customer will perceive that stock is almost sold out and will not buy in case they are unable to get spares in future.

The rack must be between 1/3 and 2/3 full. Customer will perceive that the store is efficiently managed and will buy the product. 

I know Hornby do not have that direct sort of competition but the principle  behind it is the same.

Bude for example was a long time coming and was then sold at large discounts from the off.

Bernard

[Dunsignalling]

I'm not sure what the disadvantages are of using a free bus pass over paying for an alternative form of transport.

 

I have a free bus pass and I will use it for trips of up to a couple of hours in length because it costs me nothing directly.

 

The buses in this area are mainly full of pensioners and students, who probably have passes as well; with a few young mothers and small children. There are virtually no representatives of the 25 to 55 age group on buses that I have travelled on recently.

I meant the wasted time. Also on country bus routes, you do get bumped around rather more than on a train.

 

I'm lucky as I also get Priv. rate on the train. Having tried all the options, I only use the bus (and my pass) for the whole trip if the train service is disrupted.

 

Very useful for shorter trips though, especially to the coast in summer when parking gets difficult/expensive. 

 

John

[jonny777]

Whether the time spent sitting on a bus and ambling through a few villages off the main routes is wasted, is purely a subjective assessment.

 

I rarely have to be anywhere in a hurry, and so watching the countryside/built-up areas go by is fine by me. I could see it all passing by more quickly by rail at a price, but I would probably spend more time waiting on the platform for a train because they are less frequent than the bus and so I will arrive a little earlier so as not to miss them.

 

I do know that more people feel travel sickness on buses than trains; but thankfully I have never suffered from that ailment on either. So the frequent stops and bumpings around are not a problem.

 

The one thing that puts me off long distance cross country rail travel these days, is the shortness of the trains and the higher ticket prices for those not bought in advance. I do not want to be tied down to buying all my travel tickets weeks ahead, because if it is a nice day outside I just want to be able to go somewhere that takes my fancy without being penalised financially for not fitting in with what the rail company wants me to do.

 

For me that is nowhere near a public service, almost the opposite in fact. I end up being crammed into a train where just about every seat has a reserved ticket on it, and pay twice the price for the 'privilege'.

[Classsix T]

So Hornby shouldn't run a bus company....?

 

 

...but a promo bus might be just the job!

"'Old on lads...I've got fabulous idea..!"

 

(whilst it's @rse is hanging over the precipice of financial uncertainty, natch.)

 

C6T.

[Classsix T]

 

 

Heh, C6T.

[RJS1977]

The only items I'm interested in are those I'm interested in and I haven't a clue what motivates young purchasers (if they still exist).

 

However, I don't imagine for one moment that anybody interested in the current prototype scene who purchases a Javelin is also in the market for a "Smokey Joe".

 

Not sure why you cite the King as it is clearly not a Railroad product.

 

Hornby must make their own decisions on the importance or otherwise of their "kiddie" range and this is an area where feedback from the retail trade/previous sales levels is really all they have to go on. Just as with all their products, there is a finite number of anything that will sell through in a reasonable period. If Railroad items aren't being re-stocked, it implies that they no longer generate sales and/or margins sufficient to secure production slots in preference to other models.  

 

John

 

1) "However, I don't imagine for one moment that anybody interested in the current prototype scene who purchases a Javelin is also in the market for a "Smokey Joe"."

 

Absolutely - that's my point. There isn't enough in the range for a discerning junior (or cash-starved adult) modeller to make  a decent collection of any era/region.

 

2) "Not sure why you cite the King as it is clearly not a Railroad product."

 

It came up when I did a search on the Hornby website for Railroad. However even ignoring the King - the Crosti 9F is £130 and many of the tender locos and even some of the diesels aren't far off three figures.

[RJS1977]

If it's aimed at being a toy for children, only a small range is require.

A vague blob offered in a small variety of train operator liveries and a vague blob with a chimney to represent a steam loco.

A few hours entertainment over several months and in the dustbin or on eBay when discarded and ignored.

I think there's a few options already out there in one or two of the larger toy stores.

 

But what's needed is enough to enable children to progress from the toy which provides a few hours entertainment over several months, to the hobby of a lifetime. So yes, the vague blob mentioned is a starting point - but if Hornby want sales they have to have more which children/parents (and hard-up adult modellers) can buy after the initial set.

 

In my case, my first train was a 101 tank, three 4-wheel coaches and a few wagons. Then after that I was looking out for other GWR locos and rolling stock to go with them. 

[PCW]

This, and the posts it relates to, is a very valid and important point. Retailers like to carry stock so they can 'upsell' to customers maximise revenue and satisfy a customer; Hornby don't seem to like to sit on stock, if it's on a warehouse rack it is costing money and is likely to moved on in some form. The retailers are Hornby's longer-term storage, all well and good and commercially understandable but they shouldn't expect to be a viable direct seller if they don't have a range of products.

And that sir is where there is a major problem in the relationship between Hornby and the independent retailers. On the one hand you have retailers wanting to 'invest' in a good range of stock to put on their shelves, and on the other hand you have Hornby wanting the whole lot shifted PDQ. This results in the current broken/untenable relationship between Hornby and the independent retailers. Think of all the retailers who pay Hornby the 'proper' trade price for stock only to see Hornby 'gazumping' them by flogging it direct to the public for less than trade a few days later.

 

The only sane way forward is for an independent retailer to  purchase an absolute minimum quantity of stock in the hope of shifting it before Hornby undercut them on price. Obviously Hornby would prefer ALL the stock to go out immediately to dealers on 30 days credit, that way as far as they are concerned it is all sold and will be paid for in a reasonable timescale. It is VERY ironic that it is the actions of Hornby slashing prices selling direct that stops shops ordering, and thus the stock is sitting in the Hornby warehouse while they moan about disappointing sales.

 

Of course I do understand the need for Hornby to make cash ASAP, but the current situation is very destructive indeed. I'm sure the relationship between Hornby selling in direct competition to the retailers it used to supply (who are turning their backs in droves) will go down in retailing history as a lesson for future generations to take note of.

 

Don't get me wrong, I'm not against a manufacturer selling direct to the public to obtain a wider market penetration with their product, but the only sane way to do this is not to kill the shops who used to like the concept of ordering stock. Hornby must either respect the hard earned cash shops hand over for stock, or else take up position on horseback along the A1 with a mask over their face as an alternative way of raising funds.

Edited March 2, 2016 by PCW

[Caledonian]

I am on the whole a little suspicious of wish lists and big locomotives and wonder whether an obsession with enlarged digital photos is necessarily a good thing.

 

Large tender locomotives are attractive to the collector who can cheerfully spend twice my weekly grocery shop on one, but for most people and more importantly younger people, are they really what they want?

 

I have a shelf layout running the length of one wall. I have a few tender engines which get a run out from time to time, shuffling up and down as I once saw Tornado do at Locomotion, but really it works best with four and six coupled locos and usually tank engines at that. I'd quite like more variety, but big expensive tender locos are what tend to be produced and there the age factor kicks in.

 

I'm 62 but my only real memory of original steam is a Peckett shuffling about the yard in the Culter Paper Mill near Aberdeen. Steam to me is history not nostalgia and the same goes for the younger generations Hornby and the other manufacturers should be reaching out to. Diesel and electric locomotives speak for themselves, but if those younger generations don't remember British Railways what's to entice them into steam? Yes there will always be some attracted to grimy big black locomotives even if they never saw them in the wild, but surely they are more likely to be attracted to private liveries [just as they buy all those PO wagons] and to managably sized six coupled locos and shunters - with the added bonus that inside cylinders mean that there's no need for expensive valve gear.

 

Once upon a time I was assured that in considering adding a particular locomotive to their range one of the things the manufacturers wanted was something which was long-lived, ranged widely and wore multiple liveries, thus appealing to the broadest possible range of customers. Instead, although Bachmann are rather less guilty, the wish lists submitted by those who already have lots of locos seem to be obsessed with filling the last gaps in Standard locos and other post-war types. 

 

So far as Hornby are concerned the Sentinel [diesel] J50 and the forthcoming Peckett are a step in the right direction, but they really need a few more steps and perhaps a few more decent bodies mounted on their Railroad 0-6-0 chassis

[Pacific231G]

If it's aimed at being a toy for children, only a small range is require.

A vague blob offered in a small variety of train operator liveries and a vague blob with a chimney to represent a steam loco.

A few hours entertainment over several months and in the dustbin or on eBay when discarded and ignored.

I think there's a few options already out there in one or two of the larger toy stores.

Don't underestimate children.

When I was four I was given a Hornby Dublo layout for Christmas (It was a complete layout on a 5x3 baseboard bought secondhand). The locomotive was the Dutchess of Atholl and I knew exactly what it was. Though it obviously wouldn't pass muster as a fine scale model today it certainly wasn't a blob. A bit later we acquired a pannier tank. It had a die cast body and probably wasn't very detailed but it was certainly a model of real panniers I'd seen rather than just a crude toy. My friend up the road had Hornby 0 gauge clockwork and, though fun to play with, I knew it wasn't even remotely realistic. 

Edited March 3, 2016 by Pacific231G