An idea for future to help Hornby

[rue_d_etropal]

I know man here would be worried if Hornby were to stop trading, but the development costs of so many super detailed models does not help then financially.

One idea I have is that Hornby should drop parts of their range, and concentrate on the core quality models (with possibly a low cost variation as well).

As I consider, as do many others that Peco track is best OO/HO track range, how about Hornby discontinuing producing track and having Peco supply it for them. I think Bachmann could also do this this their ex Roco(Hornby designed) OO track. Not only would this reduce what Hornby have to produce, store and deliver but might introduce many to a better quality track system. It would not be first time Peco had supplied track to other companies either as the original Mainline track looked like Peco.

Another idea might be to drop their own electrical and control systems. Peco could supply some parts, but Gaugemaster would be my preference for controllers. Possibly even DCC .I think the Gaugemaster one is actually from another supplier. 

Hornby need to stop thinking they can supply everything a modeller needs to build a layout, and concentrate on good quality models which are probably what attract more attention. Then we can start to get to grips with common standards(couplings, and better back to backs), knowing they will work well on most customers layouts.

 

[Jenny Emily]

On the other hand, it may be that setrack in the Hornby range is actually quite profitable for them. Certainly in the toy end of the market, they are probably shifting plenty of this stuff. Why drop a profitable line in their range?

[Andy Y]

Giving up high volume and high margin products won't help them at all. They should know better than anyone which are their low volume and/or low margin items.

[34theletterbetweenB&D]

Those are decisions which can only be made with full knowledge of the profit yield from the elements of the range.

 

It is no secret that set track has been a reliable high yield cash cow long term. Think about it. No design input to speak of for decades, very simple tooling, cheap materials and largely automated assembly, the pieces sell at pocket money prices which generally don't require a purchasing decision leading to steady and pretty predicatable sales. This is a product formula that any business really wants in its portfolio.

[rue_d_etropal]

Having run a shop, I saw some of the poor quality items, Hornby forced on shops. This is as much for the good of the hobby as for Hornby themselves. Man know the name Hornby, but when you show them another product , costing about the same but much better then they often choose the better product. Peco track with Hornby packaging?. Having a British made product as part of your range actually opens doors in some markets, in particular the USA. I have heard that in other businesses(I remember a TV program a couple of years ago and this was a big deciding factor for bringing production back to Britain).

Thing is, Hornby thought the knew what they were doing by switching to online , but have had to backtrack. There is also something else, a question I have raised elsewhere and that is MKD plastic building kits, now under Hornby, but if you look carefully some still include Wills OO parts. Still not sure how this is been done, but it is an interesting, possibly only hiistoric connection between Wills(now under Peco) and Hornby. Peco have produced track for Bachmann I think(GF sets?), and Minitrains narrow gauge. I am sure there are loads of similar deals done between companies(certainly common in financial sector between banks and insurance companies), but being open about it just might also help, instead of everyone trying to push for top spot.

[Ragtag]

Aside from the valid points raised above, I don't see how buying in Peco track and Gaugemaster controllers could do anything other than bump up the price of the train sets. Doesn't exactly seem conducive to making more sales, especially given the target market of the sets.

[JohnR]

What they need to do is:

 

Produce Stuff that people want

 

At a price people want to pay

 

At a quality people will accept

 

They get it right a lot of the time - but there have been some terrible decisions which dont tick any of these boxes. 

[Legend]

I think they make a lot of money from track. Just look at the price of some of the items. I'd imagine they are not very labour intensive. Outsourcing track would not b a good idea. I suspect it's the same with controllers. Having incurred the development costs of their current range HM2000 and the various trainset ones, just milk it for all it's worth. Outsourcing wouldn't save money here.

[Dunsignalling]

What they need to do is:

 

Produce Stuff that people want

 

At a price people want to pay

 

At a quality people will accept

 

They get it right a lot of the time - but there have been some terrible decisions which dont tick any of these boxes. 

The first one is easy but whether they manage to hit both of the others with any given product is open to endless debate.

 

Either the quality is good but the price is too high or the quality has suffered to keep the price down and nobody really agrees where the dividing line between the two should be.

 

My own thought is that some of us are always on the lookout for a reason/excuse not to buy.

 

The only real certainty is that super-detail combining with super-cheap was a short-term fluke that only happened for a few years in the early 2000s and I am so glad I was around to take advantage of it. 

 

John

[Brit70053]

I recall reading posts by 87029 of this parish describing the difficulties retailers can face trying to persuade potential customers that compatible set track pieces produced by anyone other than Hornby are acceptable substitutes for that brand range.

Many of us on here do prefer alternatives produced by the likes of Peco and Bachmann, but I don't think we necessarily represent the typical buying public so far as track is concerned.

 

Regards,

 

             John

[plarailfan]

I wondered, for some time, if outsourcing would be appropriate in helping Hornby's problems. I was thinking maybe they could sort out a deal with mattel to supply some Matchbox and Hot Wheels models under the "Corgi" brand (using the range of cars that are familiar to UK & continental collectors eyes)  A few years ago I worked for a sign manufacturing company and I was amazed at the amount of outsourcing that went on between sign suppliers and firms.

This business model seemed to work very well most of the time and I understand door / window and conservatory firms sometimes rely on outsourcing for some of their requirements.

I really need a decent Euromillions win to be able to explore various options and get a grip on Hornby's woes, lol         

[rue_d_etropal]

Hornby have I think used Oxford Diecast for some vehicles, a range that directly competes and is slowly killing their own ex Corgi range.

One reason I suggested a Hornby branded packaged version of Peco track was to get over the commonly help opinion amongst customers that Hornby must be best because they have not heard of Peco. Man have not heard of Bachmann either. Hornby are depending on this lack of knowledge, but as model railays become less popular and more the hobby for enthusiasts, it is more important to produce what the want. They are in effect doing this with super detailed models, possibly being too keen, and this costs a lot of money in development, so older models are continued to subsidise the more expensive newer models. They can only go so far with this plan, probably why prices are now spiralling.

What does amaze me, in some ways is that Hornby have not tried to introduce their own track system which is not compatible with other makes. Sounds strange, but that is what they did with Scalectrix when SCX got taken over , in effect by Bachmann, and used pretext that the new road track would be better for the future. Slot car racing has a far smaller market, except in the 'toy' market, as most hobby enthusiasts build much of their own stuff including the road track, so it was a lot easier for Hornby. Tr that trick with model railways and I think it might backfire on them.

Interestingly in Japan the two main model N gauge railway manufacturers have track systems which do not connect together. The most obvious difference is that rail joiners are on opposite rails, but an competent modeller can get round that. Also the rail profiles of the n gauge track is different to standard code 80 rail elsewhere. I have not checked the HO track system Kato produce though, but that is probably compatible .

[andyman7]

Back in the 80s Hornby track was inferior to Peco but once the points were redesigned and they moved to Nickel Silver rail quite frankly there was and is no real difference in quality - and indeed as has been noted Bachmann track is made from the previous set of Hornby tools. It's just a commodity! Certainly over the years I've acquired a fair stockpile of set track and the nickel silver code 100 stuff gets used as required regardless of maker.

[traction]

When speaking to a rep a few years ago, its the train set market that makes them money.

What I would do is drop back to putting 2nd radius curves in the train sets instead of the 3rd radius.

 

They seem to forget that most people just don't have the room for a nice big OO train set that can be left "set up"

On Christmas day or even a birthday, the box gets opened set up on a carpet, maybe a tiled/wood floor if lucky played with for a few days, then it gets in the way and is taken down, put in the box and mostly never seen again until a few years later it pops up on Ebay for silly money and classed as "rare"

 

Having a smaller layout means it's easier to store and hopefully can stay "set up"

As it's still set up things can be constantly bought for it, be it scenic items or rolling stock, as when Birthdays or Christmas comes around it's an easy present to buy.

 

Just a thought.

 

Cheers

 

Ian

[Ozexpatriate]

I know man here would be worried if Hornby were to stop trading, but the development costs of so many super detailed models does not help then financially.

One idea I have is that Hornby should drop parts of their range, and concentrate on the core quality models (with possibly a low cost variation as well).

...

Hornby need to stop thinking they can supply everything a modeller needs to build a layout, and concentrate on good quality models which are probably what attract more attention. Then we can start to get to grips with common standards(couplings, and better back to backs), knowing they will work well on most customers layouts.

Giving up high volume and high margin products won't help them at all. They should know better than anyone which are their low volume and/or low margin items.

Indeed so.

 

I don't think selling the 'complete system' is where Hornby got into financial trouble. (Actually I don't even think their troubles are necessarily related to railway models at all, though of course I don't know.)

 

Most new releases from the main range do seem to sell strongly.  I think there is a bigger issue with subsequent releases and this may be particularly true with the RailRoad range. Without any data whatsoever, my instinct is that it might be standalone items from the RailRoad range (not trainsets) that might be the slower items to move. On the flip side of that of course is that it is items from the RailRoad range that you are most likely to find outside the railway-focused hobby shop, and aggregating all those toy shops who knows what the volume looks like.

 

I wonder if some of the shop owners here could share rough, relative percentage sales (guesses are fine) or a sense of what moves reliably for the following:

Hornby main range rolling stock

Hornby RailRoad range rolling stock

Hornby trainsets

Hornby other (track, controllers, SkaleDale*, scenery, etc)

 

* I note that Hornby has deprecated the use of the SkaleDale branding on their website.

[alfsboy]

Few have ever made any money out of enthusiasts.Its kept alive by the great unwashed who buy Hornby in bulk not a rivet sniffer who would buy one in flash but for the fact sit three months out of his time period.People might be a lot happier if they accepted its a toy company .

[Stevelewis]

I know man here would be worried if Hornby were to stop trading, but the development costs of so many super detailed models does not help then financially.

One idea I have is that Hornby should drop parts of their range, and concentrate on the core quality models (with possibly a low cost variation as well).

As I consider, as do many others that Peco track is best OO/HO track range, how about Hornby discontinuing producing track and having Peco supply it for them. I think Bachmann could also do this this their ex Roco(Hornby designed) OO track. Not only would this reduce what Hornby have to produce, store and deliver but might introduce many to a better quality track system. It would not be first time Peco had supplied track to other companies either as the original Mainline track looked like Peco.

Another idea might be to drop their own electrical and control systems. Peco could supply some parts, but Gaugemaster would be my preference for controllers. Possibly even DCC .I think the Gaugemaster one is actually from another supplier. 

Hornby need to stop thinking they can supply everything a modeller needs to build a layout, and concentrate on good quality models which are probably what attract more attention. Then we can start to get to grips with common standards(couplings, and better back to backs), knowing they will work well on most customers layouts.

All very  nice  in  a  perfect  world,  but  unfortunately  its  not a perfect  world, ,  dropping  key  profitable  sectors  from  their  range  would be  commercial  suicide  for  Hornby

[The Stationmaster]

Indeed so.

 

I don't think selling the 'complete system' is where Hornby got into financial trouble. (Actually I don't even think their troubles are necessarily related to railway models at all, though of course I don't know.)

 

Most new releases from the main range do seem to sell strongly.  I think there is a bigger issue with subsequent releases and this may be particularly true with the RailRoad range. Without any data whatsoever, my instinct is that it might be standalone items from the RailRoad range (not trainsets) that might be the slower items to move. On the flip side of that of course is that it is items from the RailRoad range that you are most likely to find outside the railway-focused hobby shop, and aggregating all those toy shops who knows what the volume looks like.

 

 

 

And that of course is - again - exactly the point, we don't know what or where Hornby makes its greatest profits or greatest losses.  A survey of model shop sales would no doubt give some indication of the popularity (or otherwise) of the various parts of their railway range but would be incomplete without figures for their sales through other outlets such as chain stores, mail order companies and retailers who only stock Railroad items.

 

I suspect that in terms of gross profit the model railway part of their business is probably profitable but that is really no more than a guess although I suspect they wouldn't keep on putting items into the marketplace if they're not making money by doing so.

[Clearwater]

Whilst i agree with the comments stating that we simply don't know the profitability of specific lines with the 00 range or the different brands (as an aside in hawkins bazaar I was shocked to see scaletrix sets of gbp349 reduced from gbp500!), I do think there is some merit in the OP's idea if not the lines suggested. I strongly suspect some of those lines suggested are profitable given they have been staples of the range for years and brand loyalty will drive some sales, eg the add on packs to the basic oval and track mat are sensible ideas. If you look how tesco markets it's range of wooden railways, they say "compatible with other wooden railways" if not directly Thomas or brio wooden sets. Same argument applies here I think to how some customers will only buy Hornby track for Hornby sets. Also look at the other Thomas play sets. The "take and play" range has it's own unique track. To expand you have to pay gbp16 + for a few extra pieces. I'd wager that makes a pretty healthy margin... Ditto Hornby's clip together plastic platforms.

 

Where I think the idea has merit is in sharing risk and development costs where appropriate. I suspect where they have lost money over the years is where they've taken either development or commercial risks they weren't capable of managing. Bringing in partners on either profi table lines or ones where no development is needed doesn't make sense, but spreading other risks may be sensible.

 

David

[rue_d_etropal]

Just one fact . Before Hornby moved production of track to China, it was sub-contracted to Roco to produce, so idea is not new to Hornby. Roco designed a new version, but then Hornby moved production to China, and Bachmann took over the Roco stuff.

Biggest problem for the hobby at the moment is number of real shops going down. I understand reasons for this, but online trading is not the complete answer. I know there are problems with some companies not be prepared to supply retail businesses which don't have a proper shop, yet may be trading at exhibitions. In fact exhibitions are becoming main way to see products in reality, but it is still not a cheap way to trade. To get started in retail, you have to invest a lot of money in stock. Discounting cuts into profits so makes this more difficult. I have mentioned it elsewhere, but the problems with supply of super detailed models from Hornby(and other makes) has actually made them more desirable when they do eventually arrive, so sell a lot faster.  It is a simple business idea based on supply and demand, although in this case suspect it happened by chance.

[Forester]

Giving up high volume and high margin products won't help them at all. They should know better than anyone which are their low volume and/or low margin items.

 

I think most of us know which are their low volume and/or low margin items.

 

 

....those are the items we RMwebbers mostly buy, wish for, and hope they will continue to produce, are they not?

[jjb1970]

Something to keep in mind with the current mess is that it appears to be more related to poor management and a botched ERP roll out rather than product issues. I'll admit I'm speculating and making assumptions there, but on the whole the quality of Hornby models recovered a while ago and their new tooling is as good as anything else being brought to market and they're doing an awful lot better than their principal competitor in getting models from announcement to shop shelves (or internet sales....). Most people seem pretty positive about the subjects they're choosing, OK modern image enthusiasts are disappointed about the steam bias but their steam era program has been very well received. Which makes me feel that fundamentally they should leave their product alone and get a grip on their ERP and how they manage their business.

[KalKat]

Well, Barclays seem to be helping Hornby out  - at the moment

 

http://www.telegraph.co.uk/business/2016/03/30/Hornby-thrown-a-lifeline-as-it-averts-debt-covenant-breach/

 

 

Emma

[Ravenser]

Well, Barclays seem to be helping Hornby out  - at the moment

 

http://www.telegraph.co.uk/business/2016/03/30/Hornby-thrown-a-lifeline-as-it-averts-debt-covenant-breach/

 

 

Emma

 

 

Interesting. The fact that they've simply agreed not to do the calculation suggests that there may be a degree of seasonality involved, and that both Hornby and the bank may be assuming that the numbers would  improve naturally later in the year

[Brit70053]

Perhaps someone who knows how to attach a link to a post could repeat this welcome information under the Hornby 'issues a profit warning' thread where it might attract more attention and provide some limited assurance to those who have been sweating on the outcome of Hornby's discussions with the bank.

           Together with the posting of the job prospectus for a merchandising manager, currently subject of some light hearted derision under another topic -Armchair critics Opportunity' IIRC, this seems to be rather more positive news coming from Hornby. I sincerely hope so.

 

Regards,

 

              John

 

Edit to correct job and thread titles