Hornby Tier System- An Update.

[Drifter]

Hornby retailers have in the past fortnight received an email explaining the way Hornby are going forward to support their retailers. Been informed the different Tiers were sent different emails.

 

Having recently let most of their sales force go, presumably by way of redundancy, there is now a new system.

 

From 1st April 2022, maybe the 2nd might have been a better choice?

 

Tier 1 Retailers have a business development manager. Tier 2 can contact Hornby sales by telephone or email. Tier 3, no idea, probably send a telex or something similar. There is one for the North of the country and a job vacancy for someone to cover the South.

 

Already been made aware that Tier 2 haven't been sent a weekly 'in stock' update as they no longer have a rep.

 

Already been pointed out that a rep in the shop would always spot something a retailer had missed on their order as it was missing on the shop's shelves.

 

To end this update on a lighter note, post April 1st. Speaking to a retailer this week and he told me about a new rep they had some years ago.The shop queried the high price. Retailer was told the train came with a wagon. Shop pointed out that was the tender not a wagon.

Edited April 11, 2022 by Drifter

[spamcan61]

Bizzare, it's almost like they're trying to make life as difficult as possible for their retail network...

[Oldddudders]

10 minutes ago, spamcan61 said:

Bizzare, it's almost like they're trying to make life as difficult as possible for their retail network...

The bean-counters would love to do so. Direct sales, no middle-man, no distribution costs etc. All good for pure profit and keeping the share-price buoyant. 

[Global]

If I were a retailer I just wouldn’t stock Hornby - that may play into their hands a bit I know, with them seemingly wanting everyone to use their website - as it must surely be more hassle than it’s worth?

 

The product isn’t great, the quality control is shocking, decoration can be hit and miss, and that’s before you get into the fun and games around allocations etc.

 

Surely the stress of all that, customers returning faulty or cheaply made items and dealing with Hornby themselves must mean for a lot them they be better off telling them where to go?! 

[spamcan61]

2 minutes ago, Global said:

 

 

Surely the stress of all that, customers returning faulty or cheaply made items and dealing with Hornby themselves must mean for a lot them they be better off telling them where to go?! 

They're the one and only brand name the vast majority of the population have heard of, their product range (across all brands) is vastly bigger than anyone else in the market so I suspect that would be a cutting off nose to spite face situation for pretty much any mainstream retailer.

[spamcan61]

9 minutes ago, Oldddudders said:

The bean-counters would love to do so. Direct sales, no middle-man, no distribution costs etc. All good for pure profit and keeping the share-price buoyant. 

True, and I suspect that's the aim, but that does mean the "manufacturer" gets to do first line support, probably gets to process 50-100 times as many orders etc. So it's not quite a one way street cost wise.

[Oldddudders]

8 minutes ago, spamcan61 said:

True, and I suspect that's the aim, but that does mean the "manufacturer" gets to do first line support, probably gets to process 50-100 times as many orders etc. So it's not quite a one way street cost wise.

Outsourcing would be the preferred solution, no doubt, providing a buffer between Hornby and the dirtier tasks. 

[AY Mod]

5 minutes ago, Oldddudders said:

Outsourcing would be the preferred solution, no doubt, providing a buffer between Hornby and the dirtier tasks. 

 

In stocking and fulfillment terms they already do.

[Pandora]

It is correct that Hornby have laid off their Sales Reps by redundancy,  Reps were not allowed to disclose the information.  I think the Sales Reps finished at the end of February. Retailers now have an Account Manager.  Retailers were surprised,  did not consider Hornby  Sales Reps to be at risk, Bachmann continue to retain Sales Reps, even though Bachmann have a better IT system interfacing between Retailers and Bachmnn than  Hornby.  Retailers seem to prefer dealing with Bachmann over Hornby.

[Global]

40 minutes ago, spamcan61 said:

They're the one and only brand name the vast majority of the population have heard of, their product range (across all brands) is vastly bigger than anyone else in the market so I suspect that would be a cutting off nose to spite face situation for pretty much any mainstream retailer.

I’m not disagreeing on the fact that the brand name is well known - whether that actually translates into major sales who knows.

 

Whilst I suspect there maybe a few purchases that are completely unrelated to any form of ‘persuasion’, that these are very much in the minority! 
 

By persuasion I mean truly unbiased purchases by people with no real interest in railways or modelling beforehand where knowledge of the brand name has been the only deciding factor. 
 

For example my interest in railways and models was most likely only due to my grandad having a layout when I was growing up. He was never seriously into the real railway though, but I do remember us going to watch HSTs nearby while holidaying in Devon.

 

I then had model railways bought for me for Birthdays and Christmas, if that hadn’t been the case as much as I may now know what Hornby was I wouldn’t be out buying model railways, I was kind of steered that way by influences in my formative years. 
 

If there are families with generations of parents, grandparents with no interest in railways then the chances are neither will the children unless they pick it up elsewhere, so it won’t matter how well known we think Hornby are! 
 

I do disagree a bit on this Hornby is the most well known, people will only buy that because they haven’t heard of others. It’s 2022 - for those with an interest it really doesn’t take much time online to find out.

 

I’d lost interest until lockdown forced me to find something to do! I’d not heard of Accurascale until then - it didn’t take long to find out about them and now I pretty much won’t buy anything else! 

[Kris]

I am aware of other companies (outside of the modelling world) who have recently removed sales reps and or reduced their sales staff. These companies saw those working in sales as expensive assets, who didn't really bring in enough money to the company (when compared with other sales routes).

 

I suspect in time we may see other companies removing sales staff in the future and I do wonder if we will see the role of sales rep disappearing as other roles have been (such as firemen on the railways). 

[andyman7]

Given that the 'rep' is effectively a salesman, I can't see how this particular decision would negatively affect retailers (although happy to be put right). Tier 1 are 'showcase' retailers that are going to be expected to stock a broad range; as for Tier 2 and Tier 3, they are free to order what makes sense for them without having someone pushing them to order x, y and z. A good retailer will know their successful lines and order what they can, but the consequences of any failure to push stock sits with Hornby and not the retailer.

 

It has been said before many times, but the markets and customers that Hornby serve go well beyond anything Rapido, Accurascale, Cavalex etc offer. It is very clear that these specialist manufacturers can pick off certain areas that Hornby are unable or unwilling to serve, but that leaves a considerable marketplace that benefits from Hornby's presence when it is working well.  

[The Stationmaster]

It looks like the financial pressure is really on at Hornby with something like this where an important area of customer contact (including contact with the end retail customer) has been removed.  The end of their financial year is looming and they did not have a good first half despite a generally buoyant retail market but they have been suffering from delivery delays from China (as have others).  Their share price hit a 12 month low in trading last week at 32p although by the end of the week it had recovered to 33.5p and a fall off is usual for them at this time of year although there have been some large daily trades of their shares.

 

As far as reps are concerned let's not overlook the role the good ones have played in helping retailers sort out ording log-jams or actually providing them with things they wanted to sell when they were being told such things were out of stock.  If Hornby want to cut themselves off from satisfying their retailers and the retail market, or perhaps see it shrinking to a more limited number of retailers, that is their decision and it is clearly a good one if it saves them money.  But if it means a key component in resolving retailer problems is lost, together with a very useful point of contact with the market and retail customers would it be a false economy to remove it?   Let's face Hornby is clearly not of the best when it comes to selling its model railway product with what comes over as a continuing overselling (why else have tiers?; and even then their presence has not solved that one as retailers still find their orders rationed when they actually arrive).  On Hornby's own figures model railway direct selling is, so far, not as prominent as it is with some of their other brands and, for example, the stories around direct sale W1s suggest they (or, more accurately, their contractor) are not as good at packaging as the long established retailers using various forms of distance selling.

 

Yes the market is changing and in the higher value higher price area Hornby has largely failed to tackle that change although it is making some major efforts with its 2022 catalogue year but it even managed to get that overshadowed by its own Titfield farce.  Not exactly clever getting some interesting, worthwhile, technical advances lost behind a piece of marketing bravado that went the wrong way.  Whether or not Hornby moves more of its model railway sales to the direct sale is one thing.  But keeping, let alone increasing, its level of market share is a very different thing and the level of sales remains critical - according to Hornby - to its route to sustained and growing profitability.  And that has obviously also lately even involved flogging off (some of?) the warehouse pile of unsold stock to whoever it can get to buy it - including Tier 3 Hattons whose recent free catalogue is a tale of Hornby releases over several years past.

 

Forecasts for the annual report - supply problems from China have caused significant loss of sales revenue; (however) we have. a very full order book for the 2022 range; inventory has been reduced by positive management action which has helped sales revenue;  the cost of sales has been reduced which will contribute to improving gross margins in the coming year;  some additional redundancy costs have been incurred due to the action taken to reduce the cost of sales; the supply problems have led to disappointing final results for the year but with a very full order book and reduced cost of sales we anticipate a far more positive situation for the coming year provided the supply situation improves.

[woodenhead]

@Harlequin It feels like they've lifted the drawbridge and shut the port cullis on their retail network.

 

They can still deal with Hornby but from a distance and unless they are a Tier 1 Lord they don't get to speak directly with any of the Brand Knights.

[Harlequin]

37 minutes ago, woodenhead said:

@Harlequin It feels like they've lifted the drawbridge and shut the port cullis on their retail network.

 

They can still deal with Hornby but from a distance and unless they are a Tier 1 Lord they don't get to speak directly with any of the Brand Knights.

 

@woodenhead I deleted my post because on consideration I thought it was pointless and stating the obvious. Sorry!

 

Clearly Hornby are looking to the future and cutting costs where they can. We might yet see other manufacturers having to take similar steps in the difficult times that look to be heading our way.

 

Edited April 10, 2022 by Harlequin

[woodenhead]

Just now, Harlequin said:

 

I delete my post because on consideration I though it was pointless and stating the obvious. Sorry!

 

Clearly Hornby are looking to the future and cutting costs where they can. We might yet see other manufacturers having to take similar steps in the difficult times that look to be heading our way.

 

It may be simply cutting costs as they steam towards even more direct sales, if your main focus is outsourcing and direct sales then you don't need reps on the road, just an office with 'brand managers' who are really no more than elevated contact centre agents - it too may be outsourced to further drive down cost.  I may be in the minority, but I feel Hornby are the only model railway company where you don't feel that the people in charge actually are enthusiasts, it's a business pure and simple.  Do you remember the video one Christmas where Simon Kohler built a model railway using Hornby products, I am sure he said it was the first time he'd done it.

 

Will be interesting to see how this juxtapositions with Bachmann's attempt to reinvigorate modelling (in the wider sense) through it's MCC experiment.

[Steamport Southport]

3 hours ago, Global said:

If I were a retailer I just wouldn’t stock Hornby - that may play into their hands a bit I know, with them seemingly wanting everyone to use their website - as it must surely be more hassle than it’s worth?

 

The product isn’t great, the quality control is shocking, decoration can be hit and miss, and that’s before you get into the fun and games around allocations etc.

 

Surely the stress of all that, customers returning faulty or cheaply made items and dealing with Hornby themselves must mean for a lot them they be better off telling them where to go?! 

 

Not my experience of Hornby. Far from it.

 

Over the last year or so I've bought at least twenty Hornby locomotives* and not one of them have had a problem. I don't think I've had a problem with a Hornby model in over 45 years of buying them. Maybe I'm lucky. But I reckon I'm typical of most purchasers.

 

Is it a case of those that have a problem with a model shout loudest whilst those that don't have problems don't say anything, and if they do they are ignored as it doesn't fit in to peoples agenda?

 

And yes, some do seem to have an agenda, usually those that constantly complain they don't make "modern" trains then say they wouldn't buy them even if they did. Proof is in the now closed "Titfield" thread. Most of the people in that thread were just using it as an excuse to kick Hornby, most weren't interested in buying a Rapido one either.

 

 

*Not including a full set of Coronation Scot and about a dozen GWR Collett coaches.

 

 

 

Jason

Edited April 10, 2022 by Steamport Southport

[Global]

4 minutes ago, Steamport Southport said:

 

Not my experience of Hornby. Far from it.

 

Over the last year or so I've bought at least twenty Hornby locomotives* and not one of them have had a problem. I don't think I've had a problem with a Hornby model in over 45 years of buying them. Maybe I'm lucky. But I reckon I'm typical of most purchasers.

 

Is it a case of those that have a problem with a model shout loudest whilst those that don't have problems don't say anything, and if they do they are ignored as it doesn't fit in to peoples agenda?

 

And yes, some do seem to have an agenda, usually those that constantly complain they don't make "modern" trains then say they wouldn't buy them even if they did. Proof is in the now closed "Titfield" thread. Most of the people in that thread were just using it as an excuse to kick Hornby, most weren't interested in buying a Rapido one either.

 

 

*Not including a full set of Coronation Scot and about a dozen GWR Collett coaches.

 

 

 

Jason

Clearly you’ve been very lucky or I’ve been very unlucky then!

 

My experience of Hornby has been nothing but issues and that, together with their arrogance, particularly around but not limited to Titgate, led to my decision to not only never purchase from them again but to sell off everything of theirs that I already had.

 

Even clearing out said Hornby models hasn’t been without its problems - most of them were new, have been stored and not used, yet several haven’t worked, bits have dropped off, and one had completed disintegrated! I’ve not had the same multitude of problems with the Bachmann stuff I’ve been selling at the same time. 
 

My APT went back without even leaving the box after reading about the issues with it. A friend is on his third and still has issues, but is giving up now!

 

The red box is a sign of cheaply built, poorly finished and overpriced junk as far as I’m concerned, and then there’s the arrogance of SK when it comes to ‘their territory! Maybe it’s just me or maybe others feel the same, but that’s what the Hornby brand means to me!

[The Stationmaster]

8 minutes ago, woodenhead said:

It may be simply cutting costs as they steam towards even more direct sales, if your main focus is outsourcing and direct sales then you don't need reps on the road, just an office with 'brand managers' who are really no more than elevated contact centre agents - it too may be outsourced to further drive down cost.  I may be in the minority, but I feel Hornby are the only model railway company where you don't feel that the people in charge actually are enthusiasts, it's a business pure and simple.  Do you remember the video one Christmas where Simon Kohler built a model railway using Hornby products, I am sure he said it was the first time he'd done it.

 

Will be interesting to see how this juxtapositions with Bachmann's attempt to reinvigorate modelling (in the wider sense) through it's MCC experiment.

As much in my view as part of reducing the cost of sales as anything else and coming at a time when they need to make economies in staffing costs.  They will have to go a long way to increase their model railway direct sales.  While they undoubtedly have in mind changes in the market their direct model railway sales as a percentage of total model railway sales fell from 17% in the first half of 2020 sales year to 15% in the first half of 2021 sales year although they had only been at 12% in the first half of 2019.  

 

That compares with a small but steady annual increase in the percentage of Scalextric direct sales over the same period and a spectacular leap of Airfix direct sales from 13% in 2019 to 20% in 2020 and sustained at that level in 2021 (all are first half percentages).  Corgi followed a rather bumpier course dropping from 35% in 2019 to 29% in 2020 but back up to 35% in 2021 (again all first half figures).  Humbrol also rocketed up in 2020 leaping to 28% from a mere 8% the previous year and still holding at 16% in the 2021 first half. 

 

Thus the direct sales pattern varies considerably between ranges and the 2020 figure obviously owed a lot to Lockdown but interestingly only model railways and Humbrol showed a drop between first half 2020 and first half 2021 while the other brands either held their level of direct sales percentage or it increased.  We obviously don't know the second half figures for 2021 nor do we know any revenue or profitability splits between the brands but going on the first half of 2021 for all the UK brands, and their sales split, except for Corgi,  80% or more of sales were NOT direct sales.  Thus on those brands we can assume - possibly incorrectly - that more than three quarters of the sales income came from the retail trade in its various forms.  If Hornby intend to seriously change that relative position that is one thing but based on the numbers  (unless they have changed drastically in the second half of 2021?)  getting rid of the reps looks more like a cost cutting move rather than anything else.

[woodenhead]

@The Stationmasterthen perhaps it is purely taking the retailers for granted because no matter poorly you treat them, they keep on coming back for more.  

[eldomtom2]

3 hours ago, andyman7 said:

Tier 1 are 'showcase' retailers that are going to be expected to stock a broad range; as for Tier 2 and Tier 3, they are free to order what makes sense for them without having someone pushing them to order x, y and z.

I thought the point of the tier system is that Tier 2-3 can't order what they want, because they have to make do with whatever scraps the Tier 1 retailers leave them.

[melmerby]

1 hour ago, Global said:

Clearly you’ve been very lucky or I’ve been very unlucky then!

 

 

I've also had little problem with Hornby products. I had to return a Terrier because it seemed it had been badly treated during delivery.

Both W1s were perfect, if suffering from some design inadequacies.

 

A small majority of my 70+ locos are Bachmann. Mainly because they made what I wanted. I've also got Dapol & EFE products

Hornby however, has provided a large majority of my coaching stock.

 

I'm willing to try any manufacturer if the product is something I would like.

[DCB]

With so much of the retail market moving on line it makes no sense for Hornby for there to be wholesale  retail hierarchy if they can sell direct.  Trouble is they are selling to retired pot bellied collectors and that market is dying, quite literally.  Their stuff is being loaded onto eBay by their executors as we speak. 

[dibber25]

16 minutes ago, DCB said:

With so much of the retail market moving on line it makes no sense for Hornby for there to be wholesale  retail hierarchy if they can sell direct.  Trouble is they are selling to retired pot bellied collectors and that market is dying, quite literally.  Their stuff is being loaded onto eBay by their executors as we speak. 

....but we 'retired pot-bellied collectors' don't buy on line. We like to go into a shop and buy from a nice helpful, local shopkeeper whom we've probably known for many years. And my executors will dispose of my stuff through the same local shop because today's young folk don't have the time or inclination to post up stuff that they don't understand on Ebay, nor to deal with checking it works, packaging it up, sorting returns, complaints etc. Interesting, too, that the newcomers - Cavalier, Accurascale, Rapido etc are finding it useful - or maybe even necessary - to get their products into retail shops. (CJL)

[Mike_Walker]

Saying that Hornby is the only brand people associate with model railways reminds me that I'm old and ugly enough to remember when if you wanted a vacuum cleaner it was a Hoover - the name became synonymous with the product even when other brands came along they were still called a (insert brand) "hoover".  But...  where are Hoover today and there are other brands in stores.  And some folk still call them "hoovers"!

 

It might take a while but folk will gradually come to accept Bachmann and the other new comers and if they are available either in store or on line at discounted prices, Hornby's full price on line presence will only suffer.

 

Personally, I have no Hornby locos and only a couple of wagons but many coaches for the simple reason I only buy what is relevant to the location I am modelling.