Hornby Discount Limits

[adb968008]

Indeed I find, the longer I look at a model, the more likely I am to buy.

 

Maybe a few shops could adopt the Bachmann (or Rails) showroom effect...

 

put sofas, teas/coffees in front of a cabinet full of trains.. do that and you could leave the credit card machine next to me ;-)

[Widnes Model Centre]

Having read and re-read the letter from Hornby. I believe that this came into effect from Friday 14th September 2018, in effect for any new items not yet released. Any other retailers that can clarify/agree/disagree?

[Andy Hayter]

Sadly the USP for some shops seems to be that they are the only one within x miles radius - where x is a large number.  I fear if owners rely on this alone, it will not end well.

[sawyermodels]

Having read and re-read the letter from Hornby. I believe that this came into effect from Friday 14th September 2018, in effect for any new items not yet released. Any other retailers that can clarify/agree/disagree?

That's what I understand from the letter. Any new items arriving from September 14th onwards are subject to the 10% discount for 6 weeks.

[The Stationmaster]

Having read and re-read the letter from Hornby. I believe that this came into effect from Friday 14th September 2018, in effect for any new items not yet released. Any other retailers that can clarify/agree/disagree?

 

Won't make any difference to me but thanks for the info.  Only question in my mind is which of my two 'local' shops will get my business for various rabbits that might well appear from Hornby's hat next year

[Willie Whizz]

Lots actually. I deplore this disease where price is the yardstick by which everything is judged. Be it broadband, energy, insurance, food if we junked the gimmicks / discounts / hype and actually paid a realistic price (and shareholders wern't so greedy) then society as a whole would be a lot better off.

 

A small point, but bear in mind that when a business does go bust, the shareholders are the very last to get paid-out from the sale of any remaining assets the business has left after satisfying creditors with preferential claims.  Which almost invariably means that in any liquidation they get, in a phrase recently used in another context, 'about one third of diddly-squat'.  Been there, got the T-shirt.

 

Shareholders are not necessarily therefore being "greedy"; they may simply be seeking a fair reward for the additional risk they are taking by putting their savings (or, e.g. with pension funds etc., their members' savings) into a business, rather than into a bank or building society backed by a Government guarantee (i.e. that will be paid for with your taxes).

Edited September 23, 2018 by Willie Whizz

[phil-b259]

A small point, but bear in mind that when a business does go bust, the shareholders are the very last to get paid-out from the sale of any remaining assets the business has left after satisfying creditors with preferential claims.  Which almost invariably means that in any liquidation they get, in a phrase recently used in another context, 'about one third of diddly-squat'.  Been there, got the T-shirt.

 

Shareholders are not necessarily therefore being "greedy"; they may simply be seeking a fair reward for the additional risk they are taking by putting their savings (or, e.g. with pension funds etc., their members' savings) into a business, rather than into a bank or building society backed by a Government guarantee (i.e. that will be paid for with your taxes).

 

There are shareholders and there are shareholders.....

 

In one corner we have small investors or pension schemes who are seeking a nice long term return on their investment.

 

In the other corner we have the Venture capitalists, hedge funds and assorted city traders whose goal is simply to make the maximum amount of money possible in the shortest amount of time.

 

One big factor in quite a few retailer collapses is where the company gets bought out by such 'get rich quick' merchants. The the new owners do a sale and lease back deal for the retail premises, then sell the company on while tieing it into expensive property leases.... Then there is the tactic of manipulating pension liabilities etc - I believe that Sir Philip Green still made a large wedge of cash from the sale of BHS even after he was forced to pay out compensation for leaving the pension scheme in tatters.

[adb968008]

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Edited November 6, 2018 by adb968008

[Legend]

That's what I understand from the letter. Any new items arriving from September 14th onwards are subject to the 10% discount for 6 weeks.

So what happens to items we have already ordered from retailers at a higher discount rate? Price honoured or not?

[bigherb]

So what happens to items we have already ordered from retailers at a higher discount rate? Price honoured or not?

Good question.

[Andy Hayter]

So what happens to items we have already ordered from retailers at a higher discount rate? Price honoured or not?

 

2 options:

 

1 price not honoured

2 Price honoured and you receive delivery 6 weeks after everyone else.

[rembrow]

So what happens to items we have already ordered from retailers at a higher discount rate? Price honoured or not?

 

I think that's in the lap of the gods. It will depend on the retailer and whether the Hornby Police will identify pre order non compliance. I recall when Dapol introduced a similar measure, a retailer advised me he had received a call from Dapol as he was advertising on his website at 20% below rrp when their level was 15%, however existing customers got their original pre order price. It's likely that Hornby sales will check internet sites for pricing and reps will be asked to check shop stock pricing, but I can't see they have any authority to check pricing on existing orders.

 

As a guide, I checked my outstanding Hornby orders, potentially now affected due to Hornby's production delays, which see existing tooling products being delayed as well as new tooled, e.g. Gresley suburbans now showing as December. The effect of Hornby's mid year price increase plus the effect of the recent minimum price is, for me:

 

Gresley BR second R4250B    was  £38.50        now £45.00

Peckett Willians etc R3640      was £79.50         now £90.00

Wainwright H BR     R3631      was £99.50         now £117.00

Lord Nelson BR tts  R3603tts   was £149.50       now £175.50

Lord Nelson BR early R 3635   was £129.50       now£153.00

 

If these new prices go through on my sample, I will cancel the Lord Nelson tts as I was only going to de-chip it and it's the most likely candidate to still be around after a few months.

[Legend]

2 options:

 

1 price not honoured

2 Price honoured and you receive delivery 6 weeks after everyone else.

Well that’s pretty poor . I would have thought sensible option was to exclude existing orders. Difficult to police, but then the whole policy is . They could say starting from the 2019 Range, then you could police it as it’s obviously a new model or derivative . But to impose it on an existing range has not been fully thought out. Do they even mention what to do about existing orders in their letter? I’ll bet not

[adb968008]

.

Edited November 6, 2018 by adb968008

[jjb1970]

A carrot approach we might see is more retailers offering loyalty programs with incentives, cash back offers, priority ordering on special items etc for regular customers instead of discounts. In some ways that could create an ideal situation for retailers as it could end up tying customers to them in a more effective way than discounting.

[robmcg]

I honestly cannot fathom the subtleties of discounting and whatever Hornby's creditors may require, nor how well sales will go in the next few months.

 

Although R3555 Duchess 46256 'Sir William Stanier F R S' is expected in its second production run this October, having sold out its first run fairly quickly last year, I just bought a discounted version from the 1st run at UKP175, because it is'

a/ a fine model, up there with Hornby's best,

b/ I have no confidence in it being available in October,

 

which is all rather off-thread, except inasmuch I hope Hornby can get back to profitability. 

[The Stationmaster]

Having read the various companies filings, my interpretation of its current state is...

 

Hornby's grass roots shareholders won’t get squat in a failure.

 

But at the higher level, the brand names, stocks and assets are set against loan guarantees by Phoenix and PNC.

If Hornby folds, the largest shareholder, with the inside insight to the company is the one that can make that crucial decision, can take the sweepstakes first and leave the remaining debt ridden, cash poor, asset less company’s remains to fold...

 

Sure Phoenix stands to lose its share values, but it gets pretty much everything in the company of value before they chose to fold it.

 

Sadly I cannot see any provision for its staff, pensions as well as the minority shareholders either should they choose that event to occur.

 

 

Here’s another instance of PNC securing itself in advance of a failure..

They came in took possession of K’nex, sold it for $21mn to the highest bidder...

https://www.bizjournals.com/bizjournals/news/2018/02/14/knex-maker-of-lincoln-logs-and-tinkertoys-sold-by.html

 

The only problem for Phoenix is that it is the junior debt holder on the new arrangement so it might not necessarily do all that well although it does have the advantage of controlling the company.  It is therefore in a position to manage the assets against impending debt repayment should it need to.  

 

But as I see it the only way in which that gets us back to the discussion of discounting is that should it have to the group could sell off surplus stock at best realisable price which would inevitably be greatly discounted. However the important 'but' at the moment is that such a potential outcome is several years away and that in the meanwhile we can assume that LCD will continue his very sensible policy of not selling the brand(s) cheap by fire sales (and now, in effect, by endeavouring to restrict initial deeper discounting - which takes us back to where this thread started).

[Derails Models]

So what happens to items we have already ordered from retailers at a higher discount rate? Price honoured or not?

 

We're going to honour prices, as that's how I read the letter. So if you've ordered with us before we put the prices up, don't worry, it'll be the lower price.

Edited September 24, 2018 by Derails Models

[Widnes Model Centre]

We're going to honour prices, as that's how I read the letter. So if you've ordered with us before we put the prices up, don't worry, it'll be the lower price.

 

I agree with De-Rails, the wording as such is that if you pre-order after the cut-off date of 16th September we are expected to stick to 10%. Any pre-orders before that date can be honoured. Or at least that is what I understand

[sawyermodels]

So what happens to items we have already ordered from retailers at a higher discount rate? Price honoured or not?

What would make this easier would be it applies from January 1st 2019 rather than from three quarters of the way through the year. We will be honouring all our pre order prices with those who have pre ordered with us. Im hoping we'll get a lot more clarity on this 10% soon as for now it's quite confusing.

[rue_d_etropal]

Shopping has changed a lot over past 20 years. The shopping mall won't be around for much longer. Many in the USA have closed, and many in the UK are struggling. They cost a lot to run, and even in a small one lie we have here the ret for any unit is way beyond what any small business can afford.  The company whiich built many of these shopping malls sold most of them off a few years ago. They knew what was happening and got out when they could.

The shift towards online shopping is just another step in the way shops are evolving, and it is the bigger chains of shops that are getting hit more. It is 10 years since Woolworths closed, and they had already moved away from big stores, but that was not enough. Many wel known stores have closed over past couple of years.

The internet mght appear to be doing harm, bu it is boosting small retail businesses, who can operate at lower costs, someties from home. No harm there. It is just the way it is going. It wasn't the internet that has emptied out High streets of small local shops but the big stores, and it is them who are now suffering. Small local busnesses can now come back, assuming rents etc are not too high.

Talk of getting tax people to penalise businineses that purely operate online is rediculous. They pay their tax, but are just lucky enough to have lower operating costs. Don't give the tax authorities the idea, because it could spoil it for everyone. Most tax officials know that for the effort it is better to chase after the big earners.

Having run(or more likely attempted to run) a small local model railway shop, I know just how much money is ted up in it, and therefore why no-one can usually afford to buy one to keep them going. It is scary.

With respect to discounts on new stock. I don't think that actually helps or hinders a small business. The main money earner for any small shop is the small bits and pieces. A good selection of track, modelling materials, kits and that will make more money, and you don't tend to need to discount it either. The new locos cost a shop a lot of money(think £100 for a loco with recommended price of £150). Their main benefit is attracting customers into the shop, and even if someone is coming into to look, a knowledgeable, well mannered shop keeper should be able to sell them something, and  they will still want to come back again. Selling locos is not the bread and butter for most small shops, just the icing that gets the attention.

 

Another way to handle the discount issue, is to keep back all the new stock, and only display the slightly older stock which everyone else discounted las year, and has now sold out of it. You don't then need to discount it at all. I know of someone who did this, but not sure if they still are.

 

Finally anyone who thinks selling online is easy, just think of how much time it takes to package up those goods and then post them, and then have to deal with any problems.

[Deltic]

That's what I understand from the letter. Any new items arriving from September 14th onwards are subject to the 10% discount for 6 weeks.

The Ts and Cs replaced anything previously in operation, so from the stated date.

 

Discount hold-backs are not new, so we now have broadly similarterms from Bachmann, Dapol, Heljan & Hornby.   As stated earlier whilst no one can price fix under British Law, there is nothing to stop a producer holding back products from those whom they may feel are causing them concern with their pricing of new product (deep discounting).

 

Some may not like the attitude, but do these same individuals expect a discount when they undertake their weekly shopping at their local supermarket.  Yes, they can make use of the discount stores ALDI for example, but I cannot see how they would get away with virtually demanding a discount at the till of their local TESCO or Co-Op.

Edited September 24, 2018 by Deltic

[JSpencer]

So what happens to items we have already ordered from retailers at a higher discount rate? Price honoured or not?

It would be the quickest way for Hornby to alienate end customers if they insisted retailers cancelled all pre orders at the previous price!

[adb968008]

It would be the quickest way for Hornby to alienate end customers if they insisted retailers cancelled all pre orders at the previous price!

It would be devasting for the finances.

As is I suspect it’s pain delayed.

 

We all know 6 weeks from release the discounts begin and could well be more aggressive amongst those dealers with cash flow issues stemming from 30 days credit requiring the invoice to be paid, before the 6 week discount kicks in on those who rely on selling stock to make that invoice payment.

 

I missed ordering Peckett 560, so my 6 week count down timer just began... 6 weeks is a long time in model railways and I may well be sidetracked into something else by then and no longer want it, I have 4 already and in 6 weeks it won’t be an impulse buy any longer.

 

It will be interesting to see how Pre-orders are affected upon the next tranche of new announcements.

Edited September 24, 2018 by adb968008

[Legend]

We're going to honour prices, as that's how I read the letter. So if you've ordered with us before we put the prices up, don't worry, it'll be the lower price.

Regretably it’s not with you, but thanks for clarification. A very pragmatic view. Noted for future orders.