Hornby & The Retailer

[JSpencer]

I  Mind you what on earth might happen with what looks like three different concerns on the verge of announcing an Adams radial I really don't know - that is not so much a matter of over-production as duplicated production, which might work with big engines like A4s but won't work in the niche market.

 

 

I know Kernow have dropped hints of a Adams radial 4-4-0 but who are the other 2?

 

I agree duplication/triplication could well result in neither getting enough orders to move it forwards.

 

Assuming DJM is overseeing Kernow, who would be other manufacturers?

[Paul.Uni]

JSpencer see http://www.rmweb.co.uk/community/index.php?/topic/91184-oxfordrailcom-whats-all-this-about/?p=1625037

[Ozexpatriate]

But their key change is 'throwing retailers under the 'bus' - the trade discount to retailers was halved between 2013 and 2014 and I believe it had already been reduced between 2012 and 2013.  Accompanied by product price increases the effect on the consumer is of course considerable but the good thing is that it has - albeit at a price - removed the distortion created by deep discounting, which has levelled the playing field to some extent.  But it still makes selling Hornby trains a pretty unrewarding business activity which needs careful management if retailers are to stay in business and a lot of them aren't happy according to things I have heard and read.

 

... To me that is a management failure - and we are now paying for it.

I agree completely. Hornby's single supplier strategy was incautious. It paid off handsomely for a while but has bitten them in the end.

 

It is short-sighted thinking to try to recover profitability at the expense of their primary channel.

[antrobuscp]

The single supplier route may have been incautious, but is what was stated as the replacement policy any better? I think it was said in another thread that all new production would be given to one of a few manufacturers who then were to go their own way in design terms. Perhaps re-designing something already in the range for a new loco. There may be "engineering" reasons for this, of which I am unaware, but that surely replaces one monopoly with a number of individual monopolies, incurs unnecessary cost, and raises manufacturing, quality control, and parts, complexity.

 

Hornby's valuation of the retail trade was demostrated earlier this year when the changes in terms were announced. That margins were cut was bad enough, but the lack of response when questions arose about the changes to geographical selling terms defied belief. There seemed a total lack of respect for the retail trade. The issue should never have arisen as it did, but when it did, the company should have made sure that it was dealt with in short order. Hornby seem now to be getting supplies for some things into the shops. They have appeared to be a company "out of control" and I hope that will gradually change. Not carrying the retail trade with them could prove to be a fatal mistake.

 

Turning to the issue on new models and duplication, I agree that some form of clearing house providing anonymous information to interested manufacturing parties would help, but I suspect it may not be legal. A problem is the long gestation period for new models, as is the desire of manufacturers to put down markers on their chosen prototypes. I'm as keen as anyone to see new models, but there are now so many items for future production that when another is announced I almost say to myself "Oh no, not another one". The Adams Radial will be good, but not a flock, gaggle, or herd of them!!

[Dunsignalling]

 

........The Adams Radial will be good, but not a flock, gaggle, or herd of them!!

Just the three would do me fine!

 

John

[Wicor Models]

Some interesting comments on here, far too many for me to reference individually, but I would like to comment on the general theme.  As a long standing retailer of Hornby products I, like a lot of others, was a little bit concerned when I first read the new terms and conditions.  It appeared that Hornby and it's associated brands wanted to go down the direct selling route and cut out retailers rather like Matchbox did 15 or so years ago (Matchbox - who???).  I expressed my concern to Hornby that the removal of red/yellow boxes from shops could well mean that the general public would believe that Hornby had disappeared and the blue boxes were now the only model railway supplier.  I had the terms explained to me by a fairly senior manager along with the assurance that the last thing that Hornby wanted was to lose it's presence in bricks and mortar stores throughout the country, and that those retailers that chose to sign would get benefits that the non signers wouldn't get..  Furthermore I was told that production would be increased this year and without promising that everything in the 2014 catalogue would be delivered there would be a fair chunk of it coming through.  I was, to say the least, rather sceptical at this point.  However, in fairness to Hornby, they have delivered much of what they promised and while I, like most other retailers would like bigger margins, will accept what we have been given and work with it.

[The Stationmaster]

Some interesting comments on here, far too many for me to reference individually, but I would like to comment on the general theme.  As a long standing retailer of Hornby products I, like a lot of others, was a little bit concerned when I first read the new terms and conditions.  It appeared that Hornby and it's associated brands wanted to go down the direct selling route and cut out retailers rather like Matchbox did 15 or so years ago (Matchbox - who???).  I expressed my concern to Hornby that the removal of red/yellow boxes from shops could well mean that the general public would believe that Hornby had disappeared and the blue boxes were now the only model railway supplier.  I had the terms explained to me by a fairly senior manager along with the assurance that the last thing that Hornby wanted was to lose it's presence in bricks and mortar stores throughout the country, and that those retailers that chose to sign would get benefits that the non signers wouldn't get..  Furthermore I was told that production would be increased this year and without promising that everything in the 2014 catalogue would be delivered there would be a fair chunk of it coming through.  I was, to say the least, rather sceptical at this point.  However, in fairness to Hornby, they have delivered much of what they promised and while I, like most other retailers would like bigger margins, will accept what we have been given and work with it.

But are you getting any 'benefits'  (such as better access to early supply of stock etc) than the ones who didn't sign (assuming that you did sign)?

[jjb1970]

I don't know how much this practice has affected model railway over the counter retail sales, however, particularly with furniture and electrical goods, customers window shop, or even walk around the store, examine the item in detail, but then go online and search for the cheapest deal (in some cases even doing that in-store on their smartphones)

 

I think there has always been an element of this, even in pre-internet days people would look at models in a shop then go and price check the classifieds in Railway Modeller. I do think that there is much more of this now, as you say in an era where most have smart phones you can do it in real time and even order on-line whilst in somebody elses shop.

 

I also think there has been a much more fundamental shift in buying habits. I buy almost all of my books on-line, it has long past the point of even browsing in book shops unless I'm passing time waiting for the wife or something. I buy most of my electrical goods on-line, even furniture. Hobbies are no different, the Internet is not a passing fad and it has altered many things in profound ways, shopping being one of them. Yes there was always mail order, but it took effort to make phone calls, post cheques, find out half the stuff advertised was out of stock, now it is a real time experience and effortless. And unlike mail order of old you can browse a web site effectively window shopping.

 

Given al of this, the real surprise is the fight back of the small model retailer. For a variety of reasons their price disadvantage is not what it was and some of these retailers offer a really excellent service. If Hornby sell direct on-line at the nominal RRP then I do not see them as a threat to model shops as they are not under cutting and I'd see such direct sales as supplementary to more traditional shops. Where it does get more complex is when they discount and undercut retailers. If this was the norm it'd be hard to defend however if it is sales of old stock this could be seen as no different to the sort of shop clearance bargains that all shops offer, especially the box shifters. Admittedly the shops have already paid Hornby their price for stock but if retailers sell of slow moving stock cheaply (and I'm guessing have access to knock down prices from the suppliers for stock they want rid off) then Hornby are not really doing anything different and compared to the sort of huge discounts that box shifters were offering across their ranges which must have been hugely damaging to smaller retailers I think Hornby's direct sales at the moment will have a minimal impact.

 

I think the real pain is less Hornby's direct sales than the trade terms, although judging from the post above these may be being ameliorated slightly or not as bad as perhaps feared.

[antrobuscp]

I think there has always been an element of this, even in pre-internet days people would look at models in a shop then go and price check the classifieds in Railway Modeller. I do think that there is much more of this now, as you say in an era where most have smart phones you can do it in real time and even order on-line whilst in somebody elses shop.

 

I also think there has been a much more fundamental shift in buying habits. I buy almost all of my books on-line, it has long past the point of even browsing in book shops unless I'm passing time waiting for the wife or something. I buy most of my electrical goods on-line, even furniture. Hobbies are no different, the Internet is not a passing fad and it has altered many things in profound ways, shopping being one of them. Yes there was always mail order, but it took effort to make phone calls, post cheques, find out half the stuff advertised was out of stock, now it is a real time experience and effortless. And unlike mail order of old you can browse a web site effectively window shopping.

 

Given al of this, the real surprise is the fight back of the small model retailer. For a variety of reasons their price disadvantage is not what it was and some of these retailers offer a really excellent service. If Hornby sell direct on-line at the nominal RRP then I do not see them as a threat to model shops as they are not under cutting and I'd see such direct sales as supplementary to more traditional shops. Where it does get more complex is when they discount and undercut retailers. If this was the norm it'd be hard to defend however if it is sales of old stock this could be seen as no different to the sort of shop clearance bargains that all shops offer, especially the box shifters. Admittedly the shops have already paid Hornby their price for stock but if retailers sell of slow moving stock cheaply (and I'm guessing have access to knock down prices from the suppliers for stock they want rid off) then Hornby are not really doing anything different and compared to the sort of huge discounts that box shifters were offering across their ranges which must have been hugely damaging to smaller retailers I think Hornby's direct sales at the moment will have a minimal impact.

 

I think the real pain is less Hornby's direct sales than the trade terms, although judging from the post above these may be being ameliorated slightly or not as bad as perhaps feared.

I agree with most of what you say. One of my sons is a retail store manager, used to be with Woolworths, now with what you'd call a discount or value store. In the long run I think a lot of "shops" will really be displays of what you can buy on the web. Certainly, all our recent white goods purchases have arrived quicker/cheaper by web order than it would do if we went to a local Currys, etc.More and more stores are becoming web orientated and getting the offering right.  I think there will be two main classes of survivor shops, specialist ones - such as for model railways - and discount stores, so I'm glad that my son is in that area of trade, even if it is a pressure job at times. Supermarkets these days are more out of town stores than conventional shops.

 

Model stores will survive, but I think it will be in smaller numbers covering wider local areas, with a good web presence, and in relatively low cost locations to make them viable. People will travel to a specialist shop, whilst they often won't walk an extra 20 yards for run of the mill purchases. The reduced margins will hurt in the long run unless Hornby produce popular models that sell in quantity. Even if a small trader doubles, or triples their sales on a small margin it won't go far against business running costs. The box shifters will also lose sales as their lower margins might not be enough for them if large volumes of sales are lost.

 

None of us yet knows how this will all play out, but I repeat that all of the retail model trade needs all the help it can get, and it is easy to appreciate why diversification and commissioning of models by some is taking place. I just hope Hornby don't kill off the retail trade in trying to ensure their own short term survival, only to find in the future that they've committed commercial suicide.

 

Longer term, I think the market will contract further when the post WWII "baby boomers" pass on. The hobby will surely survive, but I think it will be smaller and probably more costly.

[Xerces Fobe2]

Looking at the tittle of this tread maybe it should be renamed The Shop Verses On-Line Shopping! The reason I say this is that is the problem if you conserve it as one is not limited to model railway shops.

 

A recent example for me was that Is went into one of the few remaining Peter Jones recused Jessops recenty to buy a cable for a Nikon cable a standard item. The shop did not stock many cables and they said they could order one for me my reply was well I can do that too. I did indeed do this got a good price and delivered within 2 days without leaving my home.

 

So will I bother to go to the Jessops next time no, as it would be pointless when a better option is readily availabe. To survive retailers have to add value which can be difficult if you do not have stock!

 

I do feel sorry for the shops but the world us changing. I liked traveling on slam door stock to work in the past but those days have gone too. Some of box shifters have been around prior to the Internet and just modified their over the phone ordering service so they moved with the times. Hornby like all companies exists to make money so they are adapting to survive.

[JSpencer]

On the other hand, the vast increases in postage rates may eventually play a influence.

 

Over the years, I have seen this odd perception in magazines that people will make a once a year purchase for a locomotive and them recommending to us to do the buying at a local model shop.

 

The problem these days is that the range is vast, production runs are short, so the chances of a model actually having an item when  you visit the shop is 1 in 1000.

Likewise shops need to get their orders in early, there is no point in ordering once it has been reviewed by a magazine as by then it is too late.

 

To be honest, I wonder why manufacturers even bother sending examples to be reviewed, 80% of items will have been long sold before a review even hits the streets, only rather generic locos like Tornado, Cock'o'the North are likely to remain around in large numbers for a while to merit all the publicity.

[antrobuscp]

Looking at the tittle of this tread maybe it should be renamed The Shop Verses On-Line Shopping! The reason I say this is that is the problem if you conserve it as one is not limited to model railway shops.

 

A recent example for me was that Is went into one of the few remaining Peter Jones recused Jessops recenty to buy a cable for a Nikon cable a standard item. The shop did not stock many cables and they said they could order one for me my reply was well I can do that too. I did indeed do this got a good price and delivered within 2 days without leaving my home.

 

So will I bother to go to the Jessops next time no, as it would be pointless when a better option is readily availabe. To survive retailers have to add value which can be difficult if you do not have stock!

 

I do feel sorry for the shops but the world us changing. I liked traveling on slam door stock to work in the past but those days have gone too. Some of box shifters have been around prior to the Internet and just modified their over the phone ordering service so they moved with the times. Hornby like all companies exists to make money so they are adapting to survive.

You're right about the way business and habits are changing. Hattons is my local model shop and it is noticeable how, over the many years I been a customer, they constantly react to the changing scene and their apparent success means that they are in a position to continue to react. This thread is, though, about Hornby. Whilst shop v internet is part of the equation, the discussion is also about how Hornby appear to be tackling the necessary changes and succeeding, or otherwise, in carrying the retail trade with them. It is true that efforts do now appear to be being made in communicating with their customers, both trade and retail, but  they certainly weren't doing that earlier this year. The initial scepticism expressed by Wicor Models is testiment to that. I'm sure we all hope that Hornby and the retail trade are profitable so that our hobby continues to benefit from their continued existence.

[dibber25]

On the other hand, the vast increases in postage rates may eventually play a influence.

 

Over the years, I have seen this odd perception in magazines that people will make a once a year purchase for a locomotive and them recommending to us to do the buying at a local model shop.

 

The problem these days is that the range is vast, production runs are short, so the chances of a model actually having an item when  you visit the shop is 1 in 1000.

Likewise shops need to get their orders in early, there is no point in ordering once it has been reviewed by a magazine as by then it is too late.

 

To be honest, I wonder why manufacturers even bother sending examples to be reviewed, 80% of items will have been long sold before a review even hits the streets, only rather generic locos like Tornado, Cock'o'the North are likely to remain around in large numbers for a while to merit all the publicity.

This is a massive generalisation and very wide of the mark. At Model Rail we frequently obtain new items through retailers because supply of samples from Hornby can be erratic and models are often in the shops before we receive a sample. To take a recent example, I bought the last of eight BR-liveried 2-HALs that the store had in stock and reviewed it in the magazine. Within a week I noticed that it was restocked and on display again. All the recent review items (with the possible exception of the P2 - I didn't notice that) were in stock and available.

CHRIS LEIGH

[Legend]

I think JSpencer makes a valid point, though.  In old  days (good grief I sound old), models stayed in stock  and so when you needed that Class 08   or 47   or Hall you nipped into local shop examined and bought one.  Now the way models are released in relatively low numbers with spasmodic frequency (*even assuming the manufacturer has control over his supply chain) the chances of a model shop having one at exactly the time you need it is remote! Therefore you are foreced into pre ordering an item that you might need for a future project

 

As to availability in mags , I note that Hornby mag is carrting review of full fat P2. Are there still some of these around?  This is certainly an issue with some limited editions which can be gone before review hits the press

[brushman47544]

I think JSpencer makes a valid point, though.  In old  days (good grief I sound old), models stayed in stock  and so when you needed that Class 08   or 47   or Hall you nipped into local shop examined and bought one.  Now the way models are released in relatively low numbers with spasmodic frequency (*even assuming the manufacturer has control over his supply chain) the chances of a model shop having one at exactly the time you need it is remote! Therefore you are foreced into pre ordering an item that you might need for a future project

 

Yes, but in the old days if you wanted a Hall or whatever, it was in x livery whether you liked it or not. There are advantages of the smaller batch production.

 

As regards comments about Hornby having one (SK) or more (REF etc.) suppliers, I have already started looking at the manufacturer code before deciding whether to buy without the model tested/inspected first, because some of the new factories are clearly better at putting models together reliably than others, whereas SK is/was very reliable in terms of quality control. Hopefully things will get better as the factories get more used to Hornby production, but in the meantime ensuring quality over a lot of manufacturers is more difficult than dealing with one supplier.

[Ozexpatriate]

Looking at the tittle of this tread maybe it should be renamed The Shop Verses On-Line Shopping! The reason I say this is that is the problem if you conserve it as one is not limited to model railway shops.

Not exactly. You can readily buy on-line from a hobby shop that offers mail order (which is what I prefer, since I can't visit one without purchasing a plane ticket*.)

 

* It is a six-hour drive one way - even to Vancouver, BC (and I don't know if there is a good Hornby stockist there.)

 

The question is "The Shop" versus "Cutting out The Shop". Both of these alternatives offer on-line selling.

[Ronny]

Minor point but important to me is that when I buy online I'm pretty much guaranteed a brand new, never opened, still in its manufacturers wrapping, item.

 

When I go into real stores, often times the item has been clearly opened, maybe missing parts, scuffed up, returned by a previous customer, who knows what.

 

Maybe it's different in the UK but I have a much higher rate of return of stuff bought in the store down the road than from internet suppliers thousands of miles away. And it's not because its hard to return internet stuff. Most of the retailers make it ridiculously easy to return. These days they usually ship you a replacement item before waiting for the original defective to be sent back. Amazon, for one, is great at that.

 

By the way, in the US we don't pay sales tax on internet goods. That usually more than offsets postage. You guys in the UK should try that :-)

[jjb1970]

The next level is to follow Exactrail in the US and to decide to only sell directly. Personally I do not like that as I do like to visit model shops and to rely on internet sales for stuff like paint, brushes, scenic materials etc would be a royal pain. I know in some industries this is quite common but I do not think it would be a good model for Hornby to try and follow. However, personally I have no problem with Hornby offering direct sales at the RRP and a bit of bargain stock clearance in parrallel with their products being sold via model shops.

 

On shop sales, I take the point of Ronny, the flip side is that if I buy a model in a shop I have the opportunity to inspect the actual model I am buying and if it is a locomotive see a test run before walking out of the shop. These days I find the test run to be a formality (looking at the Dapol section of this board I am either very lucky or the number of faulty models is exagerated) but it is still re-assuring to see it.

 

On Internet sales in general I have to say that the overwhelming majority of Internet shopping I do, whether it be from big corporations such as Amazon, from box shifters such as Hattons, from department stores such as John Lewis or from small independent retailers, is a painless experience. Goods are generally supplied quickly and are fully as described. So I have no issues with Internet shopping.