Hornby 2014 - A fatal sting for retailers?

[Dunsignalling]

It may be one interpretation, but it's a stretch to say Hornby undersupplied retailers by choice, and another to say that under-supply over the last two years has alone caused bankruptcy for some small retailers, where trading in general has become harder in the face of web sales mostly, and shop costs and customer volumes have been bad for nearly all retailers.

 

So I disagree with the thinking suggested by your post, as if Hornby has purposely brought about the demise of small retailers. It is actually rather offensive to suggest that their use of concessions is intended to kill off retailers. So far as I can see the concessions are not undercutting retailers.

 

Hornby just wants to make models and toys which sell.

 

Maybe I got your meaning wrong. If so I apologise.

 

Rob

I certainly don't think that Hornby have deliberately set out to damage retailers in the past but short supply (especially to those particularly specialising in Hornby sales) has had a serious effect on turnover and will have been a significant factor in some closures.

 

What Hornby are evidently attempting is to divert margin from the retail network into their own coffers. They won't need to kill off retailers, many will conclude that the level of income they can generate on selling Hornby is insufficient to cover the costs of stocking it.

 

Those that make that judgment, may change their business model to exclude Hornby (i.e. concentrate on selling the products of Hornby's competitors) or get out of the model trade altogether and retire or find something more remunerative to do. 

 

Hornby clearly want to have a high level of control over (for which read, the ability to increase) prices and having fewer (and less independently-minded) outlets for their products will make that easier. 

 

John

[micklner]

New tooling P2 roughly £100 (with some moulded handrails)   Old tooling Superdetail A3 Book Law with a renumbering £150  =  bonkers = who is going to buy them ?

 

 

The A3 has a type of tender (new type non corridor) never before in LNER livery. It will be interesting to see if its the old "better" version or as the P2 (same type of tender) with moulded handrails?. If it's the P2 version the price differential is even more scary !!

 

If Hornby think we "the buyers" are that stupid they maybe in for a big shock.

 

It has been mentioned on the LNER Forum , no idea if true that a bodyshell cost 30 pence to make?

[Western Dave]

i thought labour costs in the UK had remained static (in fact, falling in real terms) for the last 4 years so I think the statement that labour costs all over and in china and back in the UK are rising is not quite correct.

 

anyway how else do we expect all those new middle classes in china to pay for our land rovers, freelanders, jags and range rovers 

In real terms they have fallen behind in the UK taking into accoutn inflation but with year on year increase in the minimum wage, NI increases and now enforced pension contributions they are up year on year.

[brushman47544]

Wow, just seen a copy of a wholesalers prices for 2014. Can't see many new models getting shifted next year. I can see a booming second hand market ahead!

 

But you can't have a booming second hand market unless the models get sold new first. Fewer new models being sold (by whatever route) may be something Hornby has had to factor in to its prices in addition to Chinese manufacturing cost increases because they now have less production capacity available overall so production runs will all be shorter.

 

New tooling P2 roughly £100 (with some moulded handrails)   Old tooling Superdetail A3 Book Law with a renumbering £150  =  bonkers = who is going to buy them ?

 

[snip]

 

It has been mentioned on the LNER Forum , no idea if true that a bodyshell cost 30 pence to make?

 

So perhaps we will see Hornby putting a greater emphasis on Railroad standard models. As has been mentioned consistently in various threads, the largest elements of the production cost of a model is fitting all the extra details (separate handrails etc.) and the complexity of the paint process. It is hardly surprising therefore that the higher fidelity models are starting to cost so much more than the more basic Railroad ones. It is encouraging to me that Hornby has decided to fit a separate smokebox dart to the 42xx etc. tanks because it could signal a clearer distinction between the two brands rather than the hit and miss detailing we have seen with those tanks and the GWR Star.

[Western Dave]

I seem to have touched a nerve here. Perhaps daylight robbery & rip off Britain are a bit too strong terms to use, but certainly, prices rising overnight at such a huge rate, (including old re released models) seems a bit too much to me. I don't know the % mark up Hornby apply, I suppose its confidential company info, but just to say "Their (continental) models are expensive, so ours must be too" is just not on.

 

I want Hornby to thrive, and like most others here welcome the new model announcements, but this thread has clearly shown all is not quite what it seems in our hobby, or indeed at Hornby. Yes, I expect (but do not welcome) price rises - but in line with inflation, bit like pay rises (!!!).

 

I agree with most posters on this thread, especially the model shop owners. May I wish the best of luck to them all, big and small, and yes, I use both. The die has been cast, and time will tell.

 

Just a question. If labour / materials / transport etc  etc of Chinese made model railway goods has gone up 20%+, how come most other Chinese made goods is still vastly discounted - electrical goods etc.? Surely they are subject to the same manufacturing / transport / market forces ? Or am I overlooking something ?.

 

Brit15

Simply supply and demand plays a major part here.

Firstly not many factroies in China make model railway items as opposed to general electrical goods and secondly it's easy to fill a 40 foot container with basic white 2 slot toasters all branded with XYZ superstore on it and drive a low price because you knwo you will sell them.,

Can you imagine anyone ordering a 40 foot container of one single livered model? be it a loco, carriage or wagon? if you did then you would get a great price becase the economics of scale apply.

[Fenman]

If Hornby think we "the buyers" are that stupid they maybe in for a big shock.

 

It has been mentioned on the LNER Forum , no idea if true that a bodyshell cost 30 pence to make?

 

You remind me of one of my elderly aunts, who takes great delight in adding up the cost of the individual ingredients in a restaurant meal compared with the menu price, thus "proving" that the restaurant is ripping her off. 

 

Maybe the price differential between the P2 and the A3 is a result of the maligned "design clever" policy - which, from the beginning, Hornby has said is an attempt to include the levels of detail we want but in a way that is more cost-effective to manufacture. The A3 was designed when labour was cheap, which is no longer the case, and maybe it therefore costs a lot more to produce. The P2 "benefits" from "design clever" and costs 30% less than the A3. Maybe, in fact, that's evidence that "design clever" is working...?

 

Please note: I want the highest level of detail possible, and I accept I'll have to pay an appropriate price for that.

 

Paul

[Guest 2750]

It's interesting how many of the voices that stated they wasn't happy with moulded handrails etc are now complaining about the price rises. I'm afraid you can't have your cake and eat it too gents.

 

We have been spoilt over the last ten years. I for one think the price of an A3, the paint and detail etc is still at a good price when you compare how much a commission of an A3 would cost...£700-£800.

 

China has been cheap for too long and we have done nicely out of it, isn't it only fair their pay and standard of living improved too.

[Ian Hargrave]

One thing is certain from scanning all of the above.The world has changed and we need to adapt to the changes because there is little......save refusing to purchase......that we can do about it.Time will tell how this situation plays out,meanwhile like wolves,we howl at the moon.

[edcayton]

Someone talked about greed earlier in this thread. Who is being greedy-us for wanting perfect models for peanuts, Hornby and their shareholders for wanting maximum profits or the Chinese workers for wanting a reasonable wage?

It's complicated but nobody needs toy trains!

 

Ed

[Dunsignalling]

New tooling P2 roughly £100 (with some moulded handrails)   Old tooling Superdetail A3 Book Law with a renumbering £150  =  bonkers = who is going to buy them ?

 

 

The A3 has a type of tender (new type non corridor) never before in LNER livery. It will be interesting to see if its the old "better" version or as the P2 (same type of tender) with moulded handrails?. If it's the P2 version the price differential is even more scary !!

 

If Hornby think we "the buyers" are that stupid they maybe in for a big shock.

 

It has been mentioned on the LNER Forum , no idea if true that a bodyshell cost 30 pence to make?

Presumably people who want an A3 rather than a P2.

 

The P2 is being built to a simplified specification precisely to bring its price below those of more complex existing models. Hornby already offer a simpler version of the A3 in the Railroad range which would provide a fairer comparision.

 

Reminds me of a conversation I had a few years back. Someone was unfavourably comparing the price of a Hornby Duchess with that of a Lima Class 50.

 

"So, you'll be buying a Fifty, then?", I suggested. "I don't want a Fifty, I want a Duchess." came the reply...............

 

Bodyshell mouldings only cost 30p if you are making several thousand at the same time; making and fitting the other parts to complete the body is the major cost. Producing just one basic moulding would cost almost the same as a full batch, the only saving being in the amount of plastic used.

 

John 

[40F]

If we all stop and think about it Hornby want to protect the brand name. Over the years discounters/boxshifters have virtually given away new releases at cost or near to cost . This gives the impression that Hornby is a cheap brand and therefore "rubbish" and eventually the stigma sticks. Hornby are not rubbish and rightly so are protecting their name as a manufacturer of quality goods. Also if  the company comes to rely on one or two large retailers taking say 40% of the total sales. If one goes under the ripples would felt for ages afterwards and Hornby may not recover. So yes it is painful BUT everybody should come out with a level playing field and Hornby would survive. Also remember Hornby have shareholders to please. 

[The Stationmaster]

Hmm, I think we're starting to run off piste again when what this is really about is the impact on retailers because Hornby are reducing the margin they offer them.  It's not about price (RRP) although it might be about the price some (many) actually pay because they currently buy from the steep discounters (I don't) and in consequence it's not about the perceived and actual increase in the price we will pay because of a concurrent increase in RRP and what looks like a (long overdue) end to deep discounting.  Those things will happen, they are in many respects inevitable as others have said and we have to get used to the ideal - if we want detail and numerous different models will will have to pay for it.

 

But to get back to the essential point in order to 'pay for it' we first need somewhere to buy it and if I can buy a loco, some paint, possibly some numberplates, the latest copy of a mag, maybe a book and some rail or whatever from one shop that saves me time and probably money.  If I buy it from a knowledgeable retailer I might also get advice, or quality conversation or a cuppa - none of that comes by post from a deep discounter or in a box from Margate.  Many modellers and model railway buyers have already lost that facility - some of us are lucky and we should support the retailers who are still with us; I try to.  And I think in order to catch the broadest market those retailers need to sell Hornby - they don't have much choice to be honest.

 

Now another side of the coin and, as others have said, Hornby need to make the best possible return in order to survive and prosper so taking a slightly different line I wonder if they can foresee savings in simplifying their distribution network?  And don't forget they are in any event already reorganising - is this a consequence of that?

 

So what next?  Well in the midst of all that happens at present Hornby have a wholeseller and unlike Hornby themselves they will supply anyone who pays and their prices can't be too bad as those who buy from them - admittedly without retail premises overheads in many cases - offer some very low prices.  Are Hornby looking to 'drive' smaller retailers towards the wholesale route instead of buying direct from them?

 

Again it would help enormously if Hornby actually told their retailers why they are taking the course they appear to have chosen.

[Mike Bellamy]

Just a thought that perhaps some of our traders may be able to answer . . . . .

 

Hornby is much more than just a model railway company - so how do these price changes compare to the RRP / wholesale / discount prices for things like Scalextix, Airfix, Corgi and Humbrol ??

[DaveF]

For those who think Hornby models are becoming too expensive I suggest you have a look at the Fleischmann ranges in HO and N.  You could substitute other manufacturers names, including that well known Japanese firm Kato (who also manufacture for Hobbytrain amongst others).

 

I also know how long it takes me to build a loco (or rolling stock) from a kit, and the standard I can achieve which is well below Hornby's.  If I paid a model maker the rate I used to be paid when I was working  my kit built locos would cost a lot more than £700 each.

 

I now live on a pension of around one third of what I used  to earn, I still buy model railways, but generally restrict my purchases to what has actually run on the lines I choose to model and looking at the standard of new models I think they are not that expensive..

 

David

[53A Models]

I don't make a habit of commenting on here, but this topic is highly important for the future of the local model shop and I feel sufficiently incensed by Hornby's new pricing policy that I really am unable to resist.

 

Firstly this 50% reduction in the standard uplift from Trade to Recommended Retail Price has been imposed without any discussion or negotiation.  I suspect Hornby would also be angered if their suppliers made similar and immediate decisions without any form of negotiation.  It's also interesting to recall that neither Beatties nor Modelzone were able to make a success of model retailing even with the previous potential of a 50% mark-up - PLUS, as a Hornby Concession, Modelzone had the added advantage that they didn't have to pay for their stock until it had been sold.

 

Secondly I concede that few retailers charge RRP on many Hornby (or other suppliers') products, and this new regime will have little impact on those specific items - usually locomotives and rolling stock.  In the past, however, retailers have been able to make up for those discounts and make some profit by not discounting track and other accessories; but now even that opportunity has been removed.

 

There's also another major disincentive for retailers to invest heavily in Hornby items, and that is the propensity for the company to heavily promote slow selling items, often disposing of them at lower than trade price via their own website or so-called Concessions, and on occasions within just a few weeks of new models being released.  This practice immediately devalues the stock which normal retailers have already ordered and often already paid for.

 

It doesn't take a genius to realise that when it comes to deciding whether to invest in Hornby or other suppliers' products, the potential for being able to make a profit will be at the forefront of a retailer's mind.  I'm afraid Hornby are making the decision to carry deep stocks of their products much more difficult.  I can virtually guarantee that in future we will (for instance) be unwilling to stock Hornby track (also carrying the new discounting regime) and will stock our shelves exclusively with BRITISH MADE PECO track, a far superior product, and one on which we will be able to make a better margin.

 

So why have Hornby reached this ludicrous decision?  There are any number of reasons which come to mind but which I don't feel able to explain here, but of one thing I'm totally convinced, and that is they want a bigger chunk of the profit generated by the mail-order / on-line retail market, and the only way they can achieve that is by reducing the potential price differential between their own web sales and those of the long-established & successful mail-order businesses.  I can't believe that the likes of Hatton's or Rails are anything but angered by this - unless of course they are getting some sweeteners to help them.

 

What Hornby have achieved (and I'll finish after this comment) is that no-one planning on entering the retail model market would do so with these margins levels.  Certainly if we were not close to retirement then serious consideration would have to be made whether to completely change direction and pull-out of model retailing.  It will do nothing for the future of the independent local model shop, and their decline will only continue.

 

 

[micklner]

With my comparison between the P2 and A3 was the P2 is total new tooling therefore expensive . It has the same level of painting and lining as the A3.

 

The A3 is about ten years old and other than assembly/making it is paid for as is the A4.

 

 

I too love detail but if Hornby can justify £50 for adding four small handrails to the Loco (the only moulded ones on the P2) and another four to the tender (if not moulded on the tender again as the P2  when it arrives) then something is not right with their pricing.

 

To me Hornby are chancing their arm with the customers to see what they can get away within their pricing structure. This in relation to the thread means the Model shops suffer ,as how many people are willing to pay that price as said on many many times. As said again, how comes thousand if not millions of items from China are not getting such extreme price increases.

 

I was talking to a non modelling friend yesterday who without prompting said £150 for a model train no chance. Sadly that is probably how many prospective modellers may also feel in the future.

[Fenman]

With my comparison between the P2 and A3 was the P2 is total new tooling therefore expensive . It has the same level of painting and lining as the A3.

 

The A3 is about ten years old and other than assembly/making it is paid for as is the A4.

 

 

I too love detail but if Hornby can justify £50 for adding four small handrails to the Loco (the only moulded ones on the P2) and another four to the tender (if not moulded on the tender again as the P2  when it arrives) then something is not right with their pricing. ...

 

You are assuming, I guess, that the old tooling, made for Sander Kan, will work in a completely different factory without requiring any investment?

 

And models are not just one or two basic items plus hand-rails: as you'll certainly know, some models are easy to disassemble, others are fiddly and require lots of shunting of bits (excuse my technical language). "Design clever" is about all of the bits, seen and unseen, and simplifying both manufacture and assembly.

 

Without knowledge of the actual costs, we have no idea whether or not the P2 and the A3 have the same or wildly different profit margins. You can't just count the number of separate hand-rails before deciding whether to call "foul".

 

Paul

[Pandora]

Hornby are not out to make model railway locos.

 

They are out to make money

[gordon s]

Of course they are out to make money.  It just happens their business is manufacturing model railways.  If they don't make profit, their share price will fall and investors will take their cash elsewhere.  Please don't think they are performing a charitable service for railway modellers.  There is no point in making items that don't make a profit.  If you do, you will have to reduce your costs and staff may lose their jobs.  Running a business is a fine balancing act.  Get one part wrong and you will have to adjust another to restore that balance.

 

As far as I'm aware none of us are Hornby Board members and as such we are second guessing what their strategy is.  It appears to me from what has been posted so far is that their biggest mistake is not communicating their plans to their sales outlets and as such it would appear that rumour and conjecture are running rife...

[Dunsignalling]

I, along with many others have enough model locomotives that, if push came to shove, I could continue to enjoy the hobby without ever buying another one. I have successfully diverted any "collectorish" inclinations in the direction of Oxford Diecast - much more economical!

 

I'm going to be smiling when I hand over £100-odd for a certain 0-6-0 Goods engine simply because it is still the cheapest way to get what I want. Kit-building one myself would set me back at least £150 and if I paid someone else to do it for me, I'd not see much change from £400.

 

John

[edcayton]

Something that occurs to me is this: For years a major factor in deciding what car to buy has been the re-sale/secondhand value in x years time. I don't think this is taken into consideration when purchasing (say) a toaster as mentioned above.

 

The question is; will we think about this when we buy trains in future?

 

Ed

[Dunsignalling]

Something that occurs to me is this: For years a major factor in deciding what car to buy has been the re-sale/secondhand value in x years time. I don't think this is taken into consideration when purchasing (say) a toaster as mentioned above.

 

The question is; will we think about this when we buy trains in future?

 

Ed

Quite a few people already do - hence the unwillingness of many to do anything to improve their models for fear of affecting their S/H value.

 

It's not an issue with toasters which tend to be kept until they stop working or look too disreputable and are then chucked out (come to think of it, that's roughly what I do with cars, too.......)

 

John

[micklner]

You are assuming, I guess, that the old tooling, made for Sander Kan, will work in a completely different factory without requiring any investment?

 

And models are not just one or two basic items plus hand-rails: as you'll certainly know, some models are easy to disassemble, others are fiddly and require lots of shunting of bits (excuse my technical language). "Design clever" is about all of the bits, seen and unseen, and simplifying both manufacture and assembly.

 

Without knowledge of the actual costs, we have no idea whether or not the P2 and the A3 have the same or wildly different profit margins. You can't just count the number of separate hand-rails before deciding whether to call "foul".

 

Paul

Easy to say but as Hornby say nothing about anything when questioned, unless it suits them it will remain a mystery.

 

When I get a P2 it will interesting to compare the amount of parts in each build at the moment I remain unconvinced. If the Book Law does use the P2 tender which from Tony Wright is a whole new moulding then that might inidicate that Hornby have been forced to retool the A3. I doubt if that is the case,  would Hornby would be releasing a retool of a old model so quickly , as well the amount of new releases for 2014.

[Dunsignalling]

Thinking about it, I wonder if Hornby are deliberately trying to get rid of the local model shops by making it financially impossible for the shops to carry them.

 

This leads to the presumably easier job for Hornby of only selling to a small number of box shifters and their full price concessions.

Not impossible, just unprofitable is my guess; and once the local model shops have walked away, the box shifters will be next.

 

I think most model shops will switch to obtaining only those Hornby models they have orders for from the wholesaler and cease to stock everything else (e.g track) which will then only be obtainable direct with the retail trade selling more Peco and Bachmann instead.

 

John

[Dunsignalling]

Easy to say but as Hornby say nothing about anything when questioned, unless it suits them it will remain a mystery.

 

When I get a P2 it will interesting to compare the amount of parts in each build at the moment I remain unconvinced. If the Book Law does use the P2 tender which from Tony Wright is a whole new moulding then that might inidicate that Hornby have been forced to retool the A3. I doubt if that is the case,  would Hornby would be releasing a retool of a old model so quickly , as well the amount of new releases for 2014.

It probably wouldn't be a retool as such, but it's quite feasible the existing tools might need quite costly modifications to allow them to be used in a different factory's machinery.