ModelZone seeking Administration

[The Stationmaster]

We're all commenting on the model railway side of the business, but ModelZone sells much more than that. We are speculating on perceived difficulties with sales of model railway items, but I wonder if the underlying problems are elsewhere?

I think - judging by the Reading branch - that their problems are quite a bundle.  Firstly the model railway business is probably variable depending on level of local interest & presence of clubs (so Reading should be quite good for them in that respect).  But their discounting is very evident on other lines as well as Hornby's 'knock out to clear the shleves' trainsets so it suggest that overall it might just be a lack of consumer interest in 'practical hobbies' - and that might not be down entirely to computer games before we start blaming them as a lot of disposable income money nowadays goes on keeping up with the iphone generation or on fancy plimsolls trainers and all the other paraphenalia that goes into street cred or whatever it's called this week.

['CHARD]

Won't be sorry to see them dis-appear , they do not help the traditional model shops whom are usually staffed by people who can give you answers to questions and help , whereas I found model zone useless on that front . 

 

I'd be interested to know how many average families would know where to start interesting their sons and daughters in model railways, were it not for the likes of MZ?

 

Useless for you perhaps, but their role is perhaps more significant than supporting more experienced modellers (or as RM used to describe us, 'The Average Modeller').

[G-BOAF]

Where does this leave Signal Box? Got several pre-orders with them...

[Edge]

We're all commenting on the model railway side of the business, but ModelZone sells much more than that. We are speculating on perceived difficulties with sales of model railway items, but I wonder if the underlying problems are elsewhere?

 

I also look at their airfix, Scalextric and diecast racing models. Much the same situation exists with them as does with the model railway items: its a wonderful place to go and see them, but you buy from somewhere else. Got a Michael Schumacher 2010 Mercedes for £30 cheaper than the modelzone price online.  

[Stevelewis]

Sad  to  hear  this,  but  it  seems  to  be  a  sign  of  the  times, unfortunately  many busunesses are feeling  the  pinch,  increasing  rates & rentals  are not  helping  either,

 

I must admit   that i did not  visit my  local branch in Chester all that  often ( locals  will remember the store  as previously  being  the  Arts& Craft Studio), by the  time Fual costs  and  parking  are considered it is  less expensive  to  mail order!

 

The  last  time  I did  visit  the  shop  it  was  actually  closed during openeing  hours,  with a notice  stating  closed  due to power  failure, although  the  lights were  all on  within  the  store!  It was interesting to note  also  that  there  were several recently closed  down stores in the location of the Chester MZ  another  sign of  the  times.

[Peter Bedding]

I bought a ModelZone special edition Bachmann N-Class mogul (32-150V), DCC-ready in Southern black Number 1860. It ran sweetly straight out of the box, and fitting the decoder was straightforward as well. Hornby, sadly, are missing this market, so I bought a second 32-150V from EmZee. (Actually The Signal Box at Rochester.) I found the whole experience enjoyable; the chap on the phone knew his goods, and was happy to oblige, and I have two affordable locos that are completely reliable, haul as much as I can hook onto the rear, and look exactly right.

 

So that makes me a satisfied customer, and I continue to look at their adverts for a repeat opportunity.

 

Our High Streets will continue to evolve, but it is Government taxation policies that will bring on the demise of the fixed retail shop. Sooner rather than later, I like to think that some enterprising souls will find ways to circumvent this.

 

PB

[Stevelewis]

It will be  sad  if  the  SIGNAL BOX  in Rochester  go  although as MZ own  them  I cant  see a way out  unless  someone has  the capital  to purchase it, which I suppose is unlikely.

 

I have  dealt  with  the  Signal Box  for  many  years   long  before MZ bought  them  and  have  always found  the  buying  experience to be  first  class ( and it still is!!)

[Barry Ten]

I hope the Cardiff branch stays. While we're OK for model shops, every one helps and I've always found the staff courteous and helpful. I've not bought any locos from them but certainly quite an amount of rolling stock and scenic materials, not to mention model aircraft kits...

[billbedford]

Before people started pontificating about the state of the model trade and MZ's part in it, they should have checked out the status of MZ's parent company, Amerang.

[Legend]

Sorry to hear difficulties. I love wondering round MZ in Glasgow. Its not just railways, but about the only place you can see good variety of kits , RC items and Model buses.  Hopefully it will survive. But then when I thought about it, you know I cant remember the last time I actually bought anything- which is probably the issue. Just too expensive.Their Model Railway prices are full RRP. Sorry just wont pay it. If you still want a 2 Bil or a 42XX take a look at Glasgow MZ, they are still there at full price, which for 42xx is £119

 

I'm convinced that model railways and models can survive in shops in towns , but its more in the single proprietor , low overhead category, perhaps just out of town where the rates are lower. I can't see that big flashy "model"shops can be sustained in shopping centres because of huge rates. In Glasgow we lost Beatties, before that it was Argyle Models that had expanded from an Aladdins Cave small shop (a great place to potter around)to a big glitzy affair that clearly wasnt sustainable. I think it lasted 3 years

[petethemole]

Southampton's branch is reachable in a lunch break so I visit weekly to check for possible bargains, but also ocasionally buy wagons and other bits at RRP; with no postage, the cost of a single wagon  or Oxford vehicle is no worse than some box-shifters. Paint (revell) I get cheaper nearby at Rock Bottom Toys. I regularly see people in there who are obviously buying stuff for their kids (not just trains) so if they fold there'll be nowhere in town to buy most plastic kits, slot cars and diecasts.

Pete

[Jol Wilkinson]

Model Zone charge high prices for trains, on line retailers offer discounts.

Pubs charge high prices for beer, supermarkets offer discounts.

Model Zone in trouble, on line retailers thriving.

Pubs in trouble, supermarkets thriving.

 

The common factor is obvious - RRP v discounts.

 

Which sums it up very well. The model railway community votes with its wallet and get the "supply chain" that it wants/deserves.

 

As a model maker, rather than a modeller/collector, I have little choice but to buy through mail order or at the "specialist" shows. Discount doesn't come into it, but the demise of the "traditional"  model shop means that I can't readily get the basics such as paint, plasticard, glue, etc. locally. And that's with a local shop that does probably meet the needs of most modellers, i.e. whose models arrive ready made in a red or blue box.

 

If MZ (and others like them) go to the wall, then the opportunity for the beginners to most aspects of modelling will be very poor. With model railways, other than seeing a Thomas set in the Argos catalogue, they won't have any idea of what is out there.

[Jamiel]

I wonder if we'd had RMweb when a chain like ModelZone opened, if there would have been a thread about big chains squeezing out the little local shops?

I take the point that you need a car to shop at those backstreet and out of town units, but would point out that if you have a car, then shopping in the city centre is pretty much as difficult as out town for those who don't (cost of parking particularly).

 

Mostly I shop from the independents, but can see model railways going the way of other markets that are starting to be dominated by web distribution.

 

It would be sad to lose places that expose new people, and especially children to the hobby, but perhaps it might encourage more people to railway exhibitions.

Perhaps those exhibitions could broaden and have retailers to have stands with Airfix and ScaleElectric etc. On-line retailers could try and encourage people to such exhibitions by including leaflets, or emails (spam I know) with their orders to support the hobby as a whole.

Jamie

[Mike Bellamy]

We're all commenting on the model railway side of the business, but ModelZone sells much more than that. We are speculating on perceived difficulties with sales of model railway items, but I wonder if the underlying problems are elsewhere?

 I can't speak for the other stores, but at Derby the model railway side is less than a quarter of the content of the shop - the rest being mostly plastic kits, diecast, lego and radio control - they seem to have rather a lot of helicopters!

 

Mike

[54Strat]

As 'Chard said, MZ does a great service in making modelling more accessible to potential modellers, young and old. I know the prices are high, but to focus on that alone is quite short sighted. They do a lot more than just charge the RRP. They cast a net out in a very public place, and I think that's a good thing.

 

Everytime I pass one I walk in as there's always something to get, (one tinlet of paint mostly, though some big purchases for nephews and other non-railway realted stuff too). The conversations I've overheard have often involved brand new modellers, or buyers for, all wanting advice, and to be honest in the Chester franchise it's been quite good in this respect.

 

If MZ goes, where will the brand new 'walk in' potential modellers get inspired? We have Model Shops, Exhibitions, Magazines and Books, Clubs, Internet, Friends and Family all contributing to preserve and inspire the hobby, to lose Model Zone would be a great shame.

 

As a footnote, I'm all for saving money, and as most of you do I too look for discounts. However, I'm sometimes accutely aware that a great deal for me may leave the dealer with less profit. I would be more inclined to pay more if I knew that dealer was actively promoting the hobby to new modellers, a kind of investment in the future of the hobby if you like. Getting a great deal for me does little for that side of my thinking. Model Zone do this by their location, and I guess their prices reflect that.

[MikeParkin65]

I wouldn't be surprised if Hornby put a bid in for at least some of the shops if they get the opportunity. It would give them the greater control over supply that they seem to be seeking.

[justin1985]

Is it not quite common in these situations, especially for specialists like HMV and Jessops, for a management buyout or restructuring company to buy out the brand and the choice pickings of the stores?

 

I get the impression that for many chains the problem has been having been tied in to long tenancies in expensive malls, which might cost more to break than to continue, unsustainably, paying.  This makes it very difficult to organically contract, and leaves administration as the only way out of said contracts. Once that process takes place, the bones can be picked to reopen the best stores.

 

For MZ to have reopened the New Oxford Street store in London so soon after the Holborn one closed must have been a vote of confidence in trade in that area. However I can see the branches in suburban malls, like my local Croydon, are probably a money pit when you look at the differential between square footage and footfall! 

 

Justin

[Barry Ten]

Before people started pontificating about the state of the model trade and MZ's part in it, they should have checked out the status of MZ's parent company, Amerang.

 

Your posts often strike me as terse to the point of rudeness. Glad to see the tradition continuing.

[billbedford]

Your posts often strike me as terse to the point of rudeness. Glad to see the tradition continuing.

?

[Stevelewis]

I wouldn't be surprised if Hornby put a bid in for at least some of the shops if they get the opportunity. It would give them the greater control over supply that they seem to be seeking.

I dont  think  Hornby  would be looking  to  acquire  any 'assets' at  the  moment!

[The Stationmaster]

Before people started pontificating about the state of the model trade and MZ's part in it, they should have checked out the status of MZ's parent company, Amerang.

Modelzone's parent company is actually Modelzone Holdings which was the subject of a £5.6 million management buyout in 2009 supported by Lloyds Development Capital (a division of Lloyds Bank).  Modelzone Holdings has subsidiaries Modelzone,  The Amerang Group Ltd, and Solarbo.

 

Modelzone Ltd had one year liabilities of c.£8million about a year ago, Amerang Group had one year liabilities of c.£4 million in June last year while neither was in a good cash position although Modelzone was probably the worst of the two.  As Amerang is presumably a supplier to Modelzone there is a potential that some of Modelzone's liabilities could be money owed to Amerang but that sort of information is not in the public arena as far as I can trace.  I presume - and it is only a presumption - the Modelzone Holdings might still have a capital financing debt to Lloyds Development Capital as that concern still lists Modelzone Holdings among its companies.

[Mike Bellamy]

Before people started pontificating about the state of the model trade and MZ's part in it, they should have checked out the status of MZ's parent company, Amerang.

 

A quote from the Telegraph article in the very first post

 

"ModelZone has 47 stores according to its latest accounts and is majority owned by the private equity arm of Lloyds Banking Group, Lloyds Development Capital."

 

Looking at Amerang's web site there's no mention of MZ - it doesn't even say that MZ is a stockist of their products

 

 

 

Edit - Stationmaster beat me to it - with a lot more information !!

[The Stationmaster]

I wouldn't be surprised if Hornby put a bid in for at least some of the shops if they get the opportunity. It would give them the greater control over supply that they seem to be seeking.

I'd be surprised if they did - especially in present circumstances as they would simply be adding overhead to an existing outlet which they already seem to have a fair degree of control over and for which - if trade rumours are correct - they already select the stock and level of it as well as the retail pricing.

[trisonic]

So, it appears they have already had a "management buyout", Mike? Not something many people would look at with interest i.e. the potential for a return on investment in minimal.

 

I wonder how much money they owe Hornby and Bachmann? That alone could bring down one of them...

 

Best, Pete.

[Legend]

I dont  think  Hornby  would be looking  to  acquire  any 'assets' at  the  moment!

More likely they will be looking at other outlets to stock their goods. Have you noticed that they are now in WH Smith, mainly Railroad items, but it would certainly be a way of maintaining a presence on high street.

 

Re resolving Supply Chain issues. Acquiring Model Zone is going in the wrong direction Vertical Integration wise, they'd be better off acquiring a manufacturer to make their models, not a chain of shops to sell them. Looks like increasingly Hornby are looking at direct selling opportunities (they keep all the money that way)