[Gary]

This is an interesting topic and if we loose the small corner shop trader we only have ourselves to blame.

And Hornby, Bachmann, Dapol, and Peco probably would not be too happy either.

So what can they do about it?

They currently only supply to traders with a physical shopfront or wholesalers and both may or may not sell online.

Time to be controversial...

They should further restrict this and only supply directly to traders who do not sell online.

Howls of protest!

If traders wish to sell online they should be invited to approach a wholesaler for their entire inventory.

Hornby sell online. Not an issue as they only sell at RRP plus shipping and I cannot think of one trader that sells for more than this combined cost.

On the other hand...

...traders who sell online have probably helped to reignite interest in the hobby.

Hornby, Peco, Dapol and Bachmann should not permit items from the current years catalogue to be sold on Ebay by traders.

Its pretty much a small trader v. big trader thing and you get the impression the big trader is winning. Ebay can make small traders big traders one solution is for the small trader who wishes to increase business to set up an Ebay store and go into mail order and expand and compete with the big boys.

Happy modelling
Gary

PS a birdie has told me one big online trader is having a hard time at the moment and shifting stock at cost and taking in no more secondhand stuff as it is not shifting fast enough for the sort of money required to make a return.

 

[Gary]

Chatting to a stockist I questioned why he bothered selling locomotives if the margins were non existant as it seemed the height of stupidity to sell something for which a return was virtually zero. The answer was interesting.

10 years ago 4 coaches were the equivalent cost of 1 loco and margins on locomotives and coaches were a healthy 20% or more.

So you made as much selling 4 coaches as you did selling 1 loco and customers bought 4 coaches to 1 loco in that sales ratio.

Now with Hornby upping the price of coaches and locos for reasons of enhanced quality and detailing, from a trader point of view 3 coaches are now the equivalent of 1 loco and the sales ratio is currently 3 coaches to 1 loco.

Problem is wholesale price of locos has risen well in excess of the retail price that customers are prepared to pay and margins are now virtually nil on locomotives as a result.

And this combined with the fact that fewer coaches are being sold as a result of higher prices mean that, whilst maintaining coach margins, there is 25% less of it.

Hornby have failed fundementally to educate their customers that they should be paying much higher prices for the quality now being offfered and this stockist puts the blame for this firmly with Hornby!

The wholesale arrangements and products offered 10 years ago were far more profitable for the stockist then than they are now! And the stockist would much rather we go back to how things were 10 years ago!

And more volume was sold as the products were bought both by both collectors and as presents for the kids. The issue now is the price of stuff is so high that it is no longer bought as a present/toy for the kids on a regular basis. Dad is not going to pay £85 for a loco for his son. He is very much looking forward to stocking the RailRoad items as he believes this will be an excellent product range from a stockists point of view as it gives him something which he can start selling to the kids again.

And the only reason he offers locomotives is that they are the lossleader that draws the audience and customers in. He would prefer not to sell any and would prefer his customers to buy other bits and pieces!

The one positive though is that he claims that Hornby are now offering products that are far more attractive for the collector and collectors collect/spend all the year around so his sales curve has less of a Xmas spike than it used to. He would still rather not be selling locomotives though as if that was all he sold he would be commitiing finacial hara kiri!

There you go. Something reported straight from the frontline!

The fact appears to be that whatever is claimed, it cannot be denied that todays model railway stockists are offering remarkable value!

Happy modelling
Gary

PS I did not mention the impact of video games on the toy market during my chat and how this may have affected sales led by the kids however a changing marketplace is a factor that should not be overlooked and Hornby have probably made the product changes that they have for the changing market.