ruggedpeak

Not always.

Yes, as long as it follows the well proven path of many other manufacturers of products as diverse as Apple to Dartington Crystal. That is sell direct at full price, do not undercut, undermine or cannibalise your existing sales channels, and maintain your focus on marketing to drive sales and your brand across ALL channels.

Nice pic of E5001 pulling NSE liveried EMU's out of Shakespeare Cliff Tunnel in the current (795, WCRC Ban cover) issue of Rail Magazine, on page 64 in the feature on the Dover Sea Wall repairs.

Indeed, and as per the quotes above (and the odd picture ) I'm pleased Rapido use retailers and look forward to this occuring in the UK very soon. In terms of risk and commissioning they have a clear model: "With the exception of some accessory items, all Rapido Trains Inc. products are produced strictly to reservations placed before the appropriate order deadlines. Avoid missing out by reserving in advance with your dealer." Clearly de-risking the process. I assume US retailers don't have large quantities of heavily discounted Rapido stock clogging up their shelves......

Not great for retail, though, is it? Much as the Rapido business model has brought new models to market, it is undermining independent retailers by cutting them out the value chain.

For those who are looking longer term to the future of the the hobby there are several pertinent articles in the Graun on the wider and social and economic issues. It is a running features on the economic woes of the 'milennials' or Generation Y. "Middle-aged western consumers who are at the peak of their earning potential have been the central plank in the development of the world’s postwar economy. They have been key to purchasing all sorts of goods from washing machines, microwaves, cars and houses, to life insurance, as well as putting money away in savings." Or indeed buying model trains. http://www.theguardian.com/world/2016/mar/07/generation-y-pay-price-baby-boomer-pensions And the lack of wage growth for the younger generation http://www.theguardian.com/business/2016/mar/06/wage-growth-george-osborne-budget-obr-pay Why is this relevant to Hornby? Well for whatever reasons those with decent pensions will be dying off, those with decent wages will retire but with lower pensions, and the workers behind them as a mass have little or no spare cash for leisure activities and no doubt be taxed to death to pay the pensions of the every growing numbers of elderly. Model trains won't die, but running a profitable £50m t/o model company could get a bit tricky over the next 10-15 years. I suspect the more collector and wealthy customer orientated business models of the Continental and North American firms, especially getting some commitment from punters before spending on design etc is going to be the norm. This may not be good for us modellers (if you don't have the dosh you miss out) or retailers. But people will still be modelling.

Hornby's pricing activity has led to a perception of lower prices, even if that was not the intention. Brand and product value has been eroded in the eyes of customers and retailers alike. The excess stock is a direct result of various factors, a key one being the absence of a proper understanding of the market and its customers, as I have explained pursued a digital/IT and direct sales strategy that has damaged relationships with customers and retail channels, undermined the brand and failed to capitalise on the most basic marketing opportunities that generate actual sales rather than tweet or Facebook likes that generate the square root of zero cash. Shrinking the business does not ovecome a fundamental inability to make and sell stuff people want. As for semi-profitable (not a technical terms), some times a company has to run at a loss e.g. cover its variable costs of production and some of its fixed costs to stay afloat. Hornby seems to be approaching that position where it will have to (again) forget profitability and focus on cashflow to keep it afloat, pay its bills and loans and sub-contractors etc.

Personally this gets to the nub of it. I have studied Hornby and its last recovery strategy as part of an MBA I am doing. Quality data and info is hard to come by, hence more opinion than fact. More importantly the other half is a marketing consultants to global brands, doing all sorts of market and consumer intelligence as well as product innovation. Her expertise is the qualitative side, understanding what people actually want and will pay for (which is often different from what they say when asked!). She knows her stuff and I worked with her for a while so have some understanding of the processes. What is clear is that there is very little good data on the model railway market, as it is treated as a subset of toys. It is not really big enough for the analyst firms to produce reports on as there are few companies who can afford the £500+ reports cost. Hornby appear to have made an attempt, but it seems that either this was not done properly, or they ignored it. I am of the view they may be lacking a proper marketer who understands trains and modellers and people who buy toys on their staff (or at least not in a senior position). Certainly there seems to be insufficient engagement by Hornby in the marketplace visiting retailers, talking to customers, attending shows etc to build that non-data 'feel' for the market (as others have said above). That is what sits alogg side the qualitative data. I believe by employing an ex- major corporate accountant as head of sales, they have lost the non-numerical information they need to make good decisions, such as making products that people want and will buy at a reasonable price. This case study reinforces my view that Hornby has gone far too digital and got lost in a sea of IT, data and spreadsheets: http://www.matillion.com/case-studies/Hornby-aligns-strategy-to-execution-using-matillion-bi-sales-analysis/ As I keep saying, social media and spreadsheets don't sell anything - hard graft and basic sales skills do that, along with a strategy aligned to a well understood marketplace. Time for Mr S and his team to roll up their sleeves and be seen at model stores and shows across the UK rather than hiding behind screens. The major manufacturers need to get a much better understanding of the market, but with customers spread across the full spectrum from those fully digital to those reading the odd mag and popping down their local club, and parents or grandparents looking for presents, this woud require a reasonable investment, which I don't think the big players can afford right now. However proper in depth research seems to be required.

This is part of the Bachmann 2016 releases: 39-005 BR Mark 2A + Class 101 DTCL ‘Highlander Pack’ with Passenger figures Edit to bring forward the release date by 90 years!

Their website is still up. Just found this in a pile of old modelling instructions and manuals. Complete catalogue with highlighter marks of stuff I was going to or did order! Not dated but well over 20 year old.

I think we all hope not, and Hornby pricing has gone the other way with endless sales. A key issue seems to be a very large amount of stock that will not sell even when discounted. A photo from a recent show showing one of Hornby's concessions showed tables full of suprisingly large numbers of discounted Hornby items. Hornby have to make more stuff that sells promptly at a reasonable and at least semi-profitable price before it starts thinking about premium pricing.

Question is are there enough of them to sustain a business? And how best do Hornby reach them?

I wonder if there is anyone at Frizinghall from about 20-25 years ago? Pride of my fleet has always been this Hornby 37, which I think is about 25 years old. Long before it was common for locos to be commercially reliveried, as a teenager I saw this in Railway Modeller and got it for my birthday or Xmas. I remember it being delivered by the postman after days of excited anticipation. The idea of a repaint of a Hornby 37 into Highland colours was a dream come true for me at the time. It is still running, albeit not as smooth as it used to, and all I have done is paint the buffers, reglaze and add the Scottie dog transfer (liked it too much to do a full detailing upgrade). Clearly a quality job as it has had a lot of use as my "best" loco. And completely contemporary as it is back running in this livery (last time I looked!) on the NYMR

A set has just arrived here . Very pleased, lovely models. Very well packaged too. As bought a couple of these as I couldn't resist (another Harburn commission). Very nice For info the Harburn coaches are Mark 1's and are totally different livery to the Mark 2's in the Bachmann "Highlander" train set.

I'll be the grumpy one then! It is great that Nat and his son went and he has written about it. The counter is what was the Hornby marketing plan to capitalise on probably the biggest train related news day (global coverage) of the year? Especially with a warehouse full of Scotsman models.

Coaches must be a nightmare, as Hornby's recent discounted packs have shown. Take the Arriva mk3's, the 3 standard coaches are still available yet the restaurant car is not. And the DVT's are rare but the 67's not. How do you predict the right number to make? How many people like me will want to buy a full set and only a full set (and in my case only if discounted significantly) versus those who may only buy one or two, and if they what do they buy? One standard and one restaurant or two standards? Or one standard? On indie shops getting together, this has been tried in many other sectors. Unfortunately it requires time and cash to set up and operate and today's margins preclude it being viable in my view for most stores. However a decent real as against digital sales force could fulfil some of this function. On Hornby and their profits, their much vaunted ERP was supposed to help with some of this. More concerning is the marketing and sales process. To be blunt their entire process, based on what we see and hear in the public domain is not up to scratch. They have damaged existing channels and clearly achieved little as a result. I have no time for social media like Twitter and Facebook personally or commercially. They can build brand awareness but it is entirely ephemeral and is wasted money unless you do it continually. Hornby have gone up a blind alley at large cost for little visible gain IMHO. I give 2 examples. When I had a web retail and distribution business there was only one communication medium that had a dramatic and sustainable as well as highly cost effective impact on sales - TV. Forget websites, paid adverts etc, TV is it. Proper guerilla tv marketing, old school marketing like Mr Kohler writes about still works far better than this digital stuff when it comes to the bottom line of selling models. I had great TV benefits like giving product to sponsor SARDA dogs who were featured on BBC news, big lift in sales. Even better the Gadget Show called me for product to test to destruction. Our product won this against competitors on the Show and for £25 I got national TV coverage. And get this, ITV's ad revenue growth recently has been mainly web companies. Yes, the mighty web co's like Google, EBay, Amazon and Netflix are having to pay for TV ads to compete in the Internet sector. Quite telling in my view. One question, what was the Hornby presence at Kings Cross for the Scotsman run? Given they have a warehouse full of Scotsman models (including discounted Corgi models) surely they'd have a stall or stand or something to capitalise on it? If not why not? TV cameras everywhere and surely a Hornby banner could have been snuck in somewhere or attached to a line side fence at a key point? Apologies if this was done but I saw no Hornby marketing in the Scotsman coverage. I fear the marketing department thinks sitting in front of a PC screen is more effective than actually meeting punters and retailers and filling hire vans with stock and promo material and touting them around the country. As the results are showing, its doesn't seem to be working. Edited for bizarre iPad predictive text nonsense. Never had that problem with Stone Age carvings!

Hornby have the 3 standard Arriva mk3's in their Last Chance pages. The Arriva 67's and DVG can be found elsewhere, but as big Jim says the buffet is rare. But might be worth trying Chester Model Centre, they had some at the end of last year, because that's where I got mine after Hornby sold out. I have the full Arriva set Goes with my WSMR set and looking forward to Hornby's Arriva 153.

Hornby NSE 121 at less than £50, tested as usual, quick delivery. Great service.

Funnily enough I work in the public sector too............ Possibly, but I disagree. Having run my own web business that imported, retailed and distrubuted products I have some idea. As a Luddite and having run and successfully outsourced my logistics operation (from inbound to despatch), the fact that it is on 3 continents and multiple channels and several factories does not in itself require fancy IT. You only need the fancy IT when you have a business need for high levels of effective interfacing between those elements, often based on timing or complexity or risk. Well trained staff with clipboards, spreadsheets and email can fulfil the same function for next to nothing in a normal warehouse. There is nothing invalid about my analysis since nothing you have suggested provides any justification for a complex, risky and expensive IT system since Hornby do nothing in their business which is properly high risk, complex or time critical AFAIK. There core UK operations are the design, sales & marketing, plus box shifting in the warehouse. The lead times are huge and key elements of their supply chain are sufficiently fluid as to make timings very flexible. I'm more than happy to be proved wrong, that Hornby do have a degree of criticality on their business operations that justifies the risk and cost of this system (which still doesn't work), but I can't see it. Where is the added business value and ultimately extra profit it will generate? Does saving a day or two in the production to retail shelf process generate sufficiently enhanced profits to pay for such a system? Not selling model trains it doesn't. When their production processes were fully sorted, when their direct sales route was operating properly and profitably, when they actually had some idea what their stock levels were (which does not require any IT at all), then perhaps look at some system, but before that you are diverting business finance and resource away from the core activity of flogging trains, kits and paints to punters at decent margins. This is one of the fundamental problems with ERP implementation, it takes management's eyes off the ball. Hornby sells models. It's focus should entirely be on that, and as we've seen with even the basic operation of the website, they have lost focus on that. ERP will never overcome poor strategy, botched marketing or a less than ideal supply chain. Remember the bulk of Hornby's sales (70 odd %) are in the UK. That's less than 30% everywhere else. And 40% [EDIT over 70% - correct figures from earlier post "UK sales make up 79% of Hornby group revenues (2015 Annual Report)(up from 71% in 2014), and 40% of all sales is model trains, plus 23% Scalextric (2014 Report)."] of overall sales are trains, so as I've pointed out before the core business of Hornby, the driver of revenue (and presumably profit but we don't have figures) is selling model trains in the UK. Everything else is peripheral, so investing in some expensive IT system to help you sell stuff in the US or France is arguably nuts, since it is a tiny and probably not very profitable area of the business. The UK design, marketing and box shifting doesn't require it. Overseas was seen as a 'growth' area, but again my argument is you put in the fancy system when your core business is stablised and producing the cash to fund it, and/or the growth areas are actually growing sufficiently to justify the resource. Not before, and drain the business of cash and management time trying to get it to work. How many City analysts have actually run a logistics operation or a business? They know no more about Hornby's operations or how to improve them than my cat does. In fact most of them can't even run a bank (not actually difficult) or count, as we all found out in 2008. Didn't see many of the complaining about Ames' strategy a couple of years ago, yet here we are with £1m stock loss, growing financial losses etc.

Enterprise resource planning Enterprise resource planning is a business management software—usually a suite of integrated applications—that a company can use to collect, store, manage and interpret data from many business activities, including: Product planning, cost Manufacturing or service delivery Marketing and sales Inventory management Shipping and payment ERP provides an integrated view of core business processes, often in real-time, using common databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across the various departments that provide the data. ERP facilitates information flow between all business functions, and manages connections to outside stakeholders. Enterprise system software is a multi-billion dollar industry that produces components that support a variety of business functions. IT investments have become the largest category of capital expenditure in United States-based businesses over the past decade. https://en.wikipedia.org/wiki/Enterprise_resource_planning In other words a very big, complicated and expensive computer system that pretty much does everything in the business. If (big if) it works then management can all sorts of real time reports on all sorts of stuff. However the complexity and cost can crash the entire business. This is well documented. One very simple question at the outset is do we need all this stuff, and if we invest £x million in it will we get a decent return on that investment? If you are running a large car factory with Just-in-Time parts supply and every vehicle made to customer order, you definitely need a good ERP, and I've supplied components to a well known van maker who turned their parts warehouse into fully RFID and ERP controlled, with forklift drivers directed wirelessly by PDA's to specific parts at the time required by the production line, whilst simultaneously monitoring stock levels and notifying suppliers of new orders etc. Do you need it for a model train supply chain in China where it takes weeks to arrive by ship (so plenty of warning) and orders are via normal warehouse processes and not time critical as one late order does not shut down an entire factory? Personally I think not, not if it costs a lot of money you don't have. Nice to have but does it deliver additional profits ultimately from that costly functionality? IT in the wider economy is arguably holding back producitvity as so much money is being wasted on IT systems that don't work, rather than investing in training and skilling staff and getting competent management. But the current trend is staff are bad and costly, IT is good and shiny, despite volumes of evidence to the contrary.

That's what discussions and forums are for. We don't know the full facts, and as investors know, getting the full truth out of management can be very difficult, so frankly no one knows exactly what is going on, perhaps even those with sizeable shareholdings in the company. Given the surprise £1m write off, do even the management? It doesn't mean we can't comment based on available information. That is exactly potential investors and commentators have to do all the time.

not according the National Bureau of Statistics of China http://www.tradingeconomics.com/china/labour-costs

Evil doesn't pay. Every time the Empire has nearly finished the Death Star it gets blown up. Must be costing them a fortune. Bet they won't get insurance on the next one.

What, Bachmann are about to announce a Peckett too?

21st century IT? They might have got the same ROI investing in 21st century astrologers. Nothing Hornby do needs anything more than MS Office and a pad of paper and some pens. IT sales is just snake oil. There are plenty of academic studies showing how investing in the latest IT destroys value and can bankrupt companies.