Hornby's financial updates to the Stock Market

[RJS1977]

For me, it depends how much I want it.

 

If it's something I do want, I'll pay the asking price to make sure I get one.

 

If it's something I'm not so bothered about, I'll wait and if the price comes down I'll probably pick it up.

 

I like to think that this is a sustainable approach - as has been pointed out many times before the manufacturer can get their costs back + a reasonable profit so long as enough units sell at a high enough price. If a lower price is necessary to shift the rest then they've still won out, so long as this doesn't deter too many people from paying full price next time.

 

Of course if everybody sits tight and waits for the price to come down then the manufacturers (and ultimately the buyers) have a problem.

 

Personally I wouldn't normally go out and buy a loco as soon as it hits the shelves anyway (unless it's a re-release or re-livery of an existing model). I'd rather wait until other people have bought one and reviewed it, so that I know whether there are any major issues with them before I go out and buy one for myself. I didn't buy the Bachmann City of Truro when it first came out, for that reason. Likewise I don't pre-order.

 

So in that regard it's slightly unfortunate from my point of view that the H&P livery (which is of local interest to me) is being applied to the first batch of Pecketts!

 

And yes, the possibility of the models being available at a discount in a few months is also an incentive to wait, although it doesn't always work out!

[The Stationmaster]

They limit discounts to 15% at the start don't they, rather than full RRP as Hornby seems to want.

 

They do but it all depends where the RRP is pitched as well (and the level of trade discount the retailer receives of course).  But has the lack of a discount offer actually ever stopped anyone placing a pre-order?  

 

Far more importantly in all of this is where Hornby's direct sales will stand and the fact that hopefully they will cease under-selling.

 

Incidentally as far as major 'fire sales' are concerned I doubt they will stop - if a 'manufacturer' has not managed to clear their stock then they will no doubt make an effort every now & then to clear the slow-moving stuff from their warehouse although i think this year's Hornby effort was very much driven by a cash flow situation and the very poor trade sales performance in January (which in reality was of their own making of course).  Once (if) they get back to a proper relationship with the retail trade then the need for that sort of sale should disappear and it will have been a pretty useless strategic move on their part if it doesn't.  So then they'll probably be in much the same situation as Bachmann and just have occasional/annual clearouts of the slow moving items.  For those folk looking for bargains all they have to do is work out which things won't fly off the shelves and cross their fingers & hope,

[Coryton]

They do but it all depends where the RRP is pitched as well (and the level of trade discount the retailer receives of course).  But has the lack of a discount offer actually ever stopped anyone placing a pre-order?  

 

Far more importantly in all of this is where Hornby's direct sales will stand and the fact that hopefully they will cease under-selling.

 

Incidentally as far as major 'fire sales' are concerned I doubt they will stop - if a 'manufacturer' has not managed to clear their stock then they will no doubt make an effort every now & then to clear the slow-moving stuff from their warehouse although i think this year's Hornby effort was very much driven by a cash flow situation and the very poor trade sales performance in January (which in reality was of their own making of course).  Once (if) they get back to a proper relationship with the retail trade then the need for that sort of sale should disappear and it will have been a pretty useless strategic move on their part if it doesn't.  So then they'll probably be in much the same situation as Bachmann and just have occasional/annual clearouts of the slow moving items.  For those folk looking for bargains all they have to do is work out which things won't fly off the shelves and cross their fingers & hope,

 

I think there is a big difference between selling discounted stock directly on the web (as Hornby did recently), and making it available to suppliers at a very low price (standard Bachmann approach, also Hornby more recently?).

 

A bit hard to work out what will stay on the shelves unless you know how many they've made...

[jjb1970]

I think we should allow the new Hornby team to implement their new approach and judge it according to what they deliver rather than speculating on "what's" and "mights". The indications are that they're doing a reset of their sales approach and relationship with model shops. Apparently part of that approach is to move away from discounting. Beyond that I think we need to let them figure out what they will do then judge on results.

[JSpencer]

I dunno why it has to be so complicated.

 

 

Its fairly easy to see what models will fly off the shelves, and which ones might stay around a while.

Any new release, in a desirable livery or number is likely to sell, any old release in an undesirable livery is less likely to sell... in between theirs a median.

It could be measured in Pleasurable (Value), Desirable (Want) & Financial (price).

 

Desirability is in the eye of the beholder but easily viewed in  the pages of this forum, others, shops, model shows etc etc...

 

In thist ?

Eh no, not quite. When I worked for the signal box and each year had to fill in our orders to Hornby et al, it was quite a hard task going through the entire range figuring out what numbers of each item to order.

 

Now, for certain, there were items that you know will sell well. How well? Take the new H class. It is certain that the Bluebell in SECR livery will out sell the other 3 by some margin. Now it's possible my shop (located in the south east as it was) could sell certainly sell 200, maybe 300 and even as high 500.. But I need to fix a figure now.

You then have items that won,t sell so I get maybe 5 or less and then you have a hole range items falling in between and anywhere in between.

 

No it is not easy to guess and to be honest it will best for the retailer to have a good period of time to build up pre orders before fixing their stock with Hornby and al.

The problem fall retail price etc for the first weeks means that a lot of people will not place pre orders right away.

 

I will certainly 3 of the 4 projected H class, however if this is Hornby's new game, only the bluebell member will be actually pre ordered. The other pair, I will for prices to drop, and if the run is too small for them to be found after 4 weeks, I won,t be bothered about. Hornby and their retailers have lost potential sales to this idea of full price for a few weeks.

[Coryton]

I think we should allow the new Hornby team to implement their new approach and judge it according to what they deliver rather than speculating on "what's" and "mights". The indications are that they're doing a reset of their sales approach and relationship with model shops. Apparently part of that approach is to move away from discounting. Beyond that I think we need to let them figure out what they will do then judge on results.

 

Where's the "agree in principle we should wait and see, but where's the fun in that?" button?

[jjb1970]

Eh no, not quite. When I worked for the signal box and each year had to fill in our orders to Hornby et al, it was quite a hard task going through the entire range figuring out what numbers of each item to order.

 

Now, for certain, there were items that you know will sell well. How well? Take the new H class. It is certain that the Bluebell in SECR livery will out sell the other 3 by some margin. Now it's possible my shop (located in the south east as it was) could sell certainly sell 200, maybe 300 and even as high 500.. But I need to fix a figure now.

You then have items that won,t sell so I get maybe 5 or less and then you have a hole range items falling in between and anywhere in between.

 

No it is not easy to guess and to be honest it will best for the retailer to have a good period of time to build up pre orders before fixing their stock with Hornby and al.

The problem fall retail price etc for the first weeks means that a lot of people will not place pre orders right away.

 

I will certainly 3 of the 4 projected H class, however if this is Hornby's new game, only the bluebell member will be actually pre ordered. The other pair, I will for prices to drop, and if the run is too small for them to be found after 4 weeks, I won,t be bothered about. Hornby and their retailers have lost potential sales to this idea of full price for a few weeks.

Whilst I appreciate that it is not as simple as some imagine, reducing the habit of pre-ordering effectively normalises model retailing with most other retail sectors where one of the key requirements for success is to understand customers and judge what to stock and sell. Whilst I appreciate playing with how shops can discount new releases may affect the now widely adopted culture of pre-ordering may have risks for Hornby and their retailers, I also see no reason why retailers have to rely on pre-orders to determine what to order. Before pre-ordering retailers used interaction with customers and their own judgement to determine stock levels and for the most part did a reasonable job. I think the fundamental problem (not just for Hornby) is the assumption that the SRP is merely an abstraction and that there will be a discount. That is an assumption created by the box shifters but the culture of model buyers seems to be that they're being ripped off if they don't get a discount rather than to appreciate a discount as a bonus.

[Legend]

To support your local model shop?

 

So you don't have to be in for a delivery that you have no idea when will come?

 

So that if it doesn't work, someone will deal with it without the hassle of packing it up and posting it (and possibly paying postage).?

Assumes there is a local modelshop. In Glasgow we really don't have one anymore. The excellent Pastimes is great for second hand , but I don't recall him being the first to receive new models from Hornby. Waddles models doesn't seem to have an account with Bachmann or Hornby. So I would be placing an order with Hattons, Hereford or maybe give C&M a try, but what's the difference compared to ordering from Hornby direct , which last time was very efficient?

 

Playing a bit of devils advocate here, clearly you want to support model shops wherever you can, but just demonstrating a flaw in these possible new terms.

[JSpencer]

Whilst I appreciate that it is not as simple as some imagine, reducing the habit of pre-ordering effectively normalises model retailing with most other retail sectors where one of the key requirements for success is to understand customers and judge what to stock and sell. Whilst I appreciate playing with how shops can discount new releases may affect the now widely adopted culture of pre-ordering may have risks for Hornby and their retailers, I also see no reason why retailers have to rely on pre-orders to determine what to order. Before pre-ordering retailers used interaction with customers and their own judgement to determine stock levels and for the most part did a reasonable job. I think the fundamental problem (not just for Hornby) is the assumption that the SRP is merely an abstraction and that there will be a discount. That is an assumption created by the box shifters but the culture of model buyers seems to be that they're being ripped off if they don't get a discount rather than to appreciate a discount as a bonus.

 

Unfortunately that would be serious mis-judgement of the model railway market as it really is not a normal retail sector because:

1/ it is actually quite small (product runs are in 100s, occasionally a few thousand)

2/ it is very localized (very few people outside the UK will ever have heard of Tornado, and even fewer will want a model of one)

3/ the product diversity is huge

 

If we were back in the 1970s, when the range was small and the market was quite large (though largely toy like than models) and globalization had  not taken grip yet, your arguments for "normalized" retailing can apply.

So with a smaller range (and fewer manufacturers), before retailers could use their judgment. Today, a small shop ordering 1 of everything from the huge range = rapid sales on 5% of the items and the rest sitting on shelves collecting dust.

Unfortunately, Hornby don't hold stocks anymore (wise for high ticket items but stupid for sundry things like track etc), so the retailer wishing to replace the 5% sold, cannot --- and again they loose sales.

 

So today pre-orders really help retailers and Hornby set up the amount to be ordered and the production plan. As the figures are generally too small, re-runs are not viable (except Railroad Flying Scotsman perhaps). Therefore yo put something that makes us all think "######, I'll wait 4 weeks for the prices to come down," means that they are starved of this info with the end result that the entire range will be under or over produced and rarely the right amounts.

 

The end result is that this situation will not benefit small independents at all and will benefit a big box shifter with resources who will stock up, wait for 4 weeks to pass, as they know customers will come to them because - basically - they are the only people with the item. Small retailers will just order the few items from the range they think will sell and ignore the rest unless they have an actual pre-order as they simply cannot afford to have money sitting on shelves.

 

As a customer, if I get told too many times "sorry ain't got one in stock", you eventually go first to the places who "yep, got one". The Signalbox owner in the 90s knew this, kept sufficient stock and we were not the cheapest and that is how they became big.

 

Pre-order help to ensure the livelihoods of small independents, and runs on 0 discount for 4 weeks won't help them, indeed the guessing game on what will sell after 4 weeks will lead to costly mistakes and fewer model shops.

Edited October 12, 2016 by JSpencer

[Coryton]

Whilst I appreciate that it is not as simple as some imagine, reducing the habit of pre-ordering effectively normalises model retailing with most other retail sectors where one of the key requirements for success is to understand customers and judge what to stock and sell. Whilst I appreciate playing with how shops can 

 

True, but most retailers aren't coping with batch manufacturing.

 

It is easier for a supermarket to forecast sales of tins of beans when they have the historic data for cans sold per month for the last n years. 

 

And with new products (let's say a new flavour of beans) you can trial it in a few stores, see how they sell, then decide whether to roll out or not and if so how many to order.

 

Now I'm not saying that running a supermarket is easy because I'm sure it isn't; they will have a different set of problems. But they don't need pre-ordering as a tool in the way a model shop might.

 

It would be interesting to look at other areas where batch production is the norm and see if pre-ordering is prevalent or not. 

[Coryton]

Assumes there is a local modelshop. In Glasgow we really don't have one anymore. The excellent Pastimes is great for second hand , but I don't recall him being the first to receive new models from Hornby. Waddles models doesn't seem to have an account with Bachmann or Hornby. So I would be placing an order with Hattons, Hereford or maybe give C&M a try, but what's the difference compared to ordering from Hornby direct , which last time was very efficient?

 

Playing a bit of devils advocate here, clearly you want to support model shops wherever you can, but just demonstrating a flaw in these possible new terms.

 

Fair points. You might feel, though, that you would get better customer service with a mail order shop if things went wrong then via Hornby's outsourced logistics firm.

[railsquid]

The model train market that is often forgotten about is Japan, that is a huge market but is in effect a closed shop. There is some limited interest in North American models, with even more limited interest in European models but in manufacturer terms Japanese manufacturers (who work to exceptional standards of quality) are utterly dominant.

 

Lima did actually make a bid to enter the market in the late 1970s with a few Japanese models in HO and N, as well as their usual fake liveries applied to locos from other countries which vaguely resemble the protoype they're marketed as. Predictably that foray didn't last long given the competition, though there's a surprising amount of 2nd hand N gauge British outline stock still floating about the second hand shops and auction stores. There's also a small Hornby dealer in Tokyo, but interest in British models is very much a niche.

[jjb1970]

I think retailing is like any other industry in that they share something in common with parents attitude to babies, they’re all special and unique. At a certain level that is clearly true, every business is unique, it is also true that fundamentally the basic processes to manage a business and operate one are common. I’ve worked in the maritime industry, electricity generation and offshore oil/gas and each one has considered itself to be special and unique (you can’t compare what we do with…..etc etc) when actually most of what they do not only can be compared with other sectors, in most cases it is basically the same. Model shops are specialist retailers, there are all sorts of specialist retailers. Some of the ones I frequent include camera shops, hi-fi shops, cycling shops, ice skating shops, plastic kit shops and book shops. Each of those shops has to manage a diverse range of products and make decisions over what to hold in stock and what to offer as a customer order on request. And some of them are dealing with items with four and five figure price tags. Clearly no book shop will hold every book published, no camera shop will stock every item offered by every manufacturer whose products they sell and no cycling shop will keep every frame size for every model made by every manufacturer in stock. If anything those sectors are dealing with a much more diverse range of products than are model railway shops. Shops make a judgement of what items need to be kept in stock to meet the demands of their customers, just as customers accept that it is unlikely (but nice) that the shop will have certain esoteric items in stock or have sufficient quantities of certain items to service multiple sales without having to re-order and that they can either ask the shop to order it or shop on-line. And most of those other sectors do not operate a pre-order system to anything like the degree that is normal in the model train sector, nor are discounts for new items as common. And lest it be said that model train shops have to compete against box shifters, all specialist retail sectors have the equivalent of box shifters, who generally do well for the same reason model train box shifters do – they offer a great range of products, low prices and good service. Book shops have to compete with Amazon which is a far more dangerous competitor than Hattons in terms of the range of goods offered, prices, delivery, ease of ordering etc yet bookshops do still survive (albeit there has been a real cull) and for the most part they do not discount (even if many have remaindered sections and bargain clear out shelves) or rely on pre-ordering. I think one of the problems in model railways is that people accept certain things they wouldn’t accept in other areas because there is a culture that model railways are unique when in fact the basic processes are no different to other specialist sectors. Hornby is a classic example, I am making some assumptions here but my feeling is that their financial problems are nothing to do with unique challenges of making models and everything to do with supply chain management, botched introduction of an ERP and other basic business failings.

[jjb1970]

Lima did actually make a bid to enter the market in the late 1970s with a few Japanese models in HO and N, as well as their usual fake liveries applied to locos from other countries which vaguely resemble the protoype they're marketed as. Predictably that foray didn't last long given the competition, though there's a surprising amount of 2nd hand N gauge British outline stock still floating about the second hand shops and auction stores. There's also a small Hornby dealer in Tokyo, but interest in British models is very much a niche.

I miss the Tenshodo evergreen floor in their Ginza shop, best model shop I ever frequented by a country mile.

[Coryton]

I think retailing is like any other industry in that they share something in common with parents attitude to babies, they’re all special and unique. At a certain level that is clearly true, every business is unique, it is also true that fundamentally the basic processes to manage a business and operate one are common. I’ve worked in the maritime industry, electricity generation and offshore oil/gas and each one has considered itself to be special and unique (you can’t compare what we do with…..etc etc) when actually most of what they do not only can be compared with other sectors, in most cases it is basically the same. Model shops are specialist retailers, there are all sorts of specialist retailers. Some of the ones I frequent include camera shops, hi-fi shops, cycling shops, ice skating shops, plastic kit shops and book shops. Each of those shops has to manage a diverse range of products and make decisions over what to hold in stock and what to offer as a customer order on request. 

 

In your list above I would imagine plastic kits most closely mirror model railways - is pre-ordering common/the norm?

 

Aside from that, I would have thought book shop would actually be the closest analogy.

 

For the others, new products will presumably largely be incremental improvement over existing ones, so there is already a good basis for judging demand (and while someone might have a preferred colour, if all the black cameras are sold they'd probably take a red one whereas people are a bit more sensitive to liveries of models).

 

But judging the demand for a new book is probably even worse than for a new model release; it's not as if you can look up wishlists of plots people wanted to see written up, and while for both models and books there will no doubt be sensitivity to reviews, reviewing books is much more subjective than models.

 

I have a feeling bookshops generally take books sale-or-return, though...

[adb968008]

I miss the Tenshodo evergreen floor in their Ginza shop, best model shop I ever frequented by a country mile.

 

If it's the one I remember (Just off of the main street of Ginza, in an upstairs location ) it was more of a studio of white walls and brightly lit glass cases full of models.

 

At the other end of the scale is Lee Kwon in the northern part of Kowloon, Hong Kong :-), was good for 00 gauge releases (either new or not yet released, but it still seems to have them. or left over after everywhere else had sold out), but was a little on the "dark" side.

 

 

On the subject of pre-orders.., 

 

I see people are anecdotally holding off buying new Hornby in expectation of a Black Thursday / January / Easter / Big sell off sale at some point down the road. If they are doing that with discounted pre-orders... then why wouldnt they do it with delayed to discounted RRPs ?

 

I'm actually heading away from pre-orders, this year, with exception of the APT-E , each one has been on sale on ebay cheaper than buying from a big-box shifter, or ended up cheaper with a box shifter and that includes the new USA tank and DJ J94s !  My biggest waste of money this year was 61310.. the collectors B1 from Hornby, which is nearly 50% less at Hattons, less than 6 months after buying it, and allegedly having to be a member of the club to buy it.

 

My approach to pre-orders will change to "order now, cancel later"... if I order it, but don't see it as a "sell out" then I can safely cancel and wait for a discounted one to follow a few weeks later.

Edited October 12, 2016 by adb968008

[Ozexpatriate]

I'm actually heading away from pre-orders, this year, with exception of the APT-E , ....

 

My approach to pre-orders will change to "order now, cancel later"... if I order it, but don't see it as a "sell out" then I can safely cancel and wait for a discounted one to follow a few weeks later.

With some exceptions I note from your earlier post.

Last week I pre-order the Hornby Grange and 4P as I had a pleasurable interest in them, but not at a financial price increase or desirable (I have 2 but not with the tender)... this week I see the price hasn't increased.. so I may actually just cancel it and wait and see... but the Pecketts.. (I have high financial, desirable and pleasurable benefit) so not a chance I will cancel, its inevitable more numbers / liveries will follow.. but the 2nd round will be higher priced than the 1st.

[Classsix T]

(cruel snip)

I think one of the problems in model railways is that people accept certain things they wouldn’t accept in other areas because there is a culture that model railways are unique when in fact the basic processes are no different to other specialist sectors. Hornby is a classic example, I am making some assumptions here but my feeling is that their financial problems are nothing to do with unique challenges of making models and everything to do with supply chain management, botched introduction of an ERP and other basic business failings.

As someone who enjoys your missives (you're on the C6T must have a pint with list!), can I just say the latter part of the above makes sense, if I read it correctly that Hornby's woes are much of their own making.

However, comparing cycling and photography vendors with model railway retailers is stretching things a bit far isn't it?!

 

If you're inclined to purchase a bike or camera/lens/tripod you're going to read the reviews in your trusted mag of choice then pop down to the shop. All of the products allege to do the same but it then is entirely up to the purchaser to balance cost and performance.

I couldn't say that for models. If I want a straight out the box runnable J15 options are very much limited.

 

C6T.

[jjb1970]

However, comparing cycling and photography vendors with model railway retailers is stretching things a bit far isn't it?!

 

If you're inclined to purchase a bike or camera/lens/tripod you're going to read the reviews in your trusted mag of choice then pop down to the shop. All of the products allege to do the same but it then is entirely up to the purchaser to balance cost and performance.

I couldn't say that for models. If I want a straight out the box runnable J15 options are very much limited.

 

C6T.

 

Yes, and no. Any generalisation has to be taken with a pinch of salt and clearly there are differences but fundamentally they're all specialised, quite technical products where at an elemental level you can either shop from box shifters where you really need to have a good idea what you want or find a good shop where you can be supported by knowledgeable staff (noting that sometimes on-line shops are very helpful via telephone and e-mail and can provide a lot of remote help and advice). The same problems of very diverse product lines and a mix of big ticket items which get most attention (eg, locomotives or a bicycle or a camera body or lens) alongside cheaper, more prosaic items which are essential to that activity (for models it is things like adhesives, solder, paints, scenic materials etc, the cycling equivalents are things like lubricants, tyres, tubes, tape, cables, cleats etc). In each field it is not uncommon for people to buy the big ticket stuff on-line to take advantage of lower prices but then expect local shops to be there to make it more convenient to buy the more mundane stuff. Many cycling items are extremely subjective, especially the contact points. If you look at saddles there are quite a number of saddle suppliers, each of which offers a wide range of shapes, each of which is offered in a range of colours and in some cases different rail and shell materials to save weight. A shop has no idea what saddle a customer wants and for items like that reviews are meaningless. One of my own favourite is the Fizik Aliante, that is a popular saddle so I'd expect a decent bike shop to hold it in stock, but do they go for the steel, or light alloy or carbon rail models, and what colours of each? If I have decided I'd quite like a lightweight version in red but the shop only has the steel rail version in black or white then I'm walking out empty handed. So the shop has to make a judgement of what to order, what stock to hold, how much of each item etc. And they do this without the benefit of pre-orders. So yes, clearly there are a lot of differences but fundamentally the challenges of managing stock are very similar. One big difference is that many cycling shops avoid discounting new items, however on the other hand their end of season discounts can be very large (half price is not unusual on many items).

[Mike at C&M]

No retailer in their right mind is going to buy a large number of Hornby (or any other) item to sit on the shelf for several weeks, just so he might get some sales at a price which then reduces his margin to a minimal amount.

   I have made it known to Hornby that I feel the non-discounting of new releases will work against us, and I am not prepared to accept this part of the new terms. I have not had a reply to this point from them.

 

   Indeed, such is the content of the new terms and price lists that I reckon to do the same amount of business with Hornby over the next year will actually cost me around £3,000. The changes in margins that have been put in place are not all positive to retailers, many parts of the range have had their margin severely reduced, and make stocking everything uneconomical. There are other caveats which require clarification from Hornby before the full picture is known.

  In many cases, there are alternatives available, and we are actively persuing some of these.

[JSpencer]

I think retailing is like any other industry in that they share something in common with parents attitude to babies, they’re all special and unique. At a certain level that is clearly true, every business is unique, it is also true that fundamentally the basic processes to manage a business and operate one are common. I’ve worked in the maritime industry, electricity generation and offshore oil/gas and each one has considered itself to be special and unique (you can’t compare what we do with…..etc etc) when actually most of what they do not only can be compared with other sectors, in most cases it is basically the same. Model shops are specialist retailers, there are all sorts of specialist retailers. Some of the ones I frequent include camera shops, hi-fi shops, cycling shops, ice skating shops, plastic kit shops and book shops. Each of those shops has to manage a diverse range of products and make decisions over what to hold in stock and what to offer as a customer order on request. And some of them are dealing with items with four and five figure price tags. Clearly no book shop will hold every book published, no camera shop will stock every item offered by every manufacturer whose products they sell and no cycling shop will keep every frame size for every model made by every manufacturer in stock. If anything those sectors are dealing with a much more diverse range of products than are model railway shops. Shops make a judgement of what items need to be kept in stock to meet the demands of their customers, just as customers accept that it is unlikely (but nice) that the shop will have certain esoteric items in stock or have sufficient quantities of certain items to service multiple sales without having to re-order and that they can either ask the shop to order it or shop on-line. And most of those other sectors do not operate a pre-order system to anything like the degree that is normal in the model train sector, nor are discounts for new items as common. And lest it be said that model train shops have to compete against box shifters, all specialist retail sectors have the equivalent of box shifters, who generally do well for the same reason model train box shifters do – they offer a great range of products, low prices and good service. Book shops have to compete with Amazon which is a far more dangerous competitor than Hattons in terms of the range of goods offered, prices, delivery, ease of ordering etc yet bookshops do still survive (albeit there has been a real cull) and for the most part they do not discount (even if many have remaindered sections and bargain clear out shelves) or rely on pre-ordering. I think one of the problems in model railways is that people accept certain things they wouldn’t accept in other areas because there is a culture that model railways are unique when in fact the basic processes are no different to other specialist sectors. Hornby is a classic example, I am making some assumptions here but my feeling is that their financial problems are nothing to do with unique challenges of making models and everything to do with supply chain management, botched introduction of an ERP and other basic business failings.

With the possible exception of model kits, all the hobby retail sectors you quote are nothing like the model railway market. Certainly all businesses share a far number of common features, they all finance and a bank manger for a start, and they all share similar things to manage. They will need electricity, water, a toilet, some means for lunch too... But what is always different is the market and the actual market place they deal in.

Granted a book shop will not stock every book, but I can go into a book store and practically order any book I wish that is currently in print or stock at the publishers. Books seem to stay available in the market for a few years and there are an awful lot of publications to choose from. If they don,t sell, they get flogged off per paper weight and recycled. If they sell too quickly a second print run is dead easy and can be run from any printing company they care to choose.

Model railways on the other hand use dedicated tooling, switching supplier is nightmare.

If I walk into a model wanting to buy a model released 6 months ago, the chances are they will not have in stock and cannot get it anymore.

The people who buy models have very different wants. I might decide to buy several members of one class (example 4 E4s) going across all periods or none at all (zero Webb tanks).

 

Granted some people in the market will only buy something once they see it. But basically most will be sold blindly on pre orders because it will be a model of loco etc that fills a gap which has not been before. The crowd sourcing trend is an ultimate preordering expression which I doubt exists for books.

 

Without preordering, a lot of models would never have come into existence (or new developments would have been slower). Kernow's projects would have been dead in the water, no Rapido APT-E, no USA tank and a whole host of exclusives.

Strangely these exclusives are doubtless the best sellers too (much to the small independents disadvantage).

 

If I compare with photography, unless I started with Nikon and wish to reuse my lenses on a new device, I am not going to be that bothered which make I buy as long as it meets my purposes and price range. Nikon, canon etc, don,t need to produce local market specific items, they can sell these things world wide. Bikes are in a similar situation. There are awful lot more people buying phones, cameras and bikes than model trains, and people buying these are insisting they match SECR colours from 1910. Granted they will probably only buy and use one at a time.

However if I want an H class, it will be just Hornby. I can only buy that in the UK, and I,d better be quick upon release because they will sell out rapidly.

 

Hornby's failings are trying to make their processes fit like how we sell any other object such as books, cameras and bikes. It simply does not fit this market.

To ensure the production sells, you need a healthy preorder book, this is completed if people have confidence in your product, that will based people's perception of your previous product quality etc etc.

 

I have seen what happens if you stock based on educated guess work. People come in, look at the model, say lovely, it's nice, but I don,t want one. Pre orders really do show what proportions you can sell stock in.

[micklner]

According to a post on Facebook, Hornby are hiking prices 15% on Monday . If that is true, do they seriously think this will not be a huge negative reaction on their future sales ??

 

No logic, they are desperate for capital and shoot their selves in the foot yet again with stupid business decisions and naivety in the extreme, if its true.

Edited October 12, 2016 by micklner

[asmay2002]

According to a post on Facebook, Hornby are hiking prices 15% on Monday . If that is true, do they seriously think this will not be a huge negative reaction on their future sales ??

As other people have said many times before WHAT MATTERS IS PROFIT NOT SALES VOLUME.

Edited October 12, 2016 by asmay2002

[micklner]

As other people have said many times before WHAT MATTERS IS PROFIT NOT SALES VOLUME.

 

Indeed ,but that only applies ONLY  if you get someone to buy anything !!

[Ozexpatriate]

According to a post on Facebook, Hornby are hiking prices 15% on Monday .

Does this come as a surprise? Edited October 12, 2016 by Ozexpatriate