Hornby doing the dirty on another trader?

I and many, many others received a short email from Hattons yesterday, stating that all Hornby 'pre-orders' had been cancelled.  No explanation other than they could not fulfil the orders.  Rumour is rife on social media and the popular view is that Hornby are the villain of the peace.  There is speculation that Hornby is restricting supplies to traders to force consumers to buy direct from Hornby.  This would, of course, ensure bigger profits for Hornby with no 'middle-man' to cream off some of the takings. You might remember that Hornby previously parted company with Rails of Sheffield (see separate thread on this website) and a pattern of (questionable) behaviour is emerging.
So, where does this leave Hattons?  No Hornby models and no Bachmann models following a previous spat. 

I have written to Hornby asking what is the position with Hornby and their traders.  I don't expect a reply.

Terry

Maybe Hornby are upset that Hattons are producing stock that Hornby themselves might like to do now or in the future ?

Bearing in mind that Hornby don't actually produce anything, they just commission models from a factory in China, it would be a bit rich to punish another business for doing exactly the same.
I'm very surprised that there has been so little response to this thread.  'Pre-orders' are being cancelled in huge numbers and this type of behaviour has the potential to affect every modeller.

Basically, there is no point in 'pre-ordering' any Hornby model from any retailer in the UK because no matter how early you place your order, you can never be sure that you will ever receive it.

Terry

Well if Hornby think they will force me to go to them direct then they have another thing coming to them.I'm sure a lot of other modellers will feel the same way.

  Notwithstanding that we don’t know all the facts behind these goings on and that we may never get the whole story, Hornby seem to be sending a dreadful message to all model railway retailers, whom they don’t appear to fully appreciate.
 
Hornby seem to want to have the best of both worlds by being thought of as an historic family favourite, a national treasure no less, the model railway manufacturer of choice for generations and also a retailer. As Terry points out, they are no longer a manufacturer, so what are they if not a retailer?
 
They do possess a very strong brand and there’s nothing wrong with selling their contracted out manufactured products, as many other UK retailers do, Hattons included.  I’m not sure how much design and quality control functions are retained in house and frankly I’m not inclined to research it, as an era 3 modeller, I’m not a dedicated customer for their products, other than very grateful for their latest GWR Collect coaching stock, so am not greatly invested in the final outcome of the dilemma.
 
Hornby’s website gives the impression of an on-line box shifter right from the home page, with free shipping for modest orders and then claim to have over 2750 stockists worldwide! Sounds impressive, but the stockists will be hard working risk taking independent retailers who are also Hornby customers and rightly expect (and receive) good discounts from Hornby to help boost their income to pay for the traditional retail overheads which Hornby are not prepared to risk themselves.
 
So if Hornby want to be the single source of their products, let them nail their colours to their mast and become a retailer of note and respect, one with a rich heritage and stop playing games with their dealer network and modellers everywhere.
 
That’s my tuppence worth and I’ll be watching the dilemma unfold.
 
Cheers,
 
Bill

It does appear that they may be targeting the more prolific online box shifters, maybe they feel they can do this equally well in house, keeping a larger slice of the profits ( and reduce the amount of discounting ?) whilst still trying to keep a network of smaller, local retailers who will catch those customers who prefer to visit a shop rather than buy online. The best of both worlds as far as they are concerned.  As mentioned they no longer manufacture, they commission and these same box shifters are directly competing more and more in comissioning models.  Maybe it's been decided at Hornby to reduce the available revenue stream to the competition

Interesting times, I hope it doesn't spectacularly backfire on them !   :hmm

The current position appears to be that you can place a 'pre-order' for a Hornby product but no UK retailer can guarantee you will ever get the model.  This leaves the only option of buying direct from Hornby at the full RRP.   This shabby treatment of their retailers leaves a bad taste in my mouth as regards Hornby.  I certainly won't be placing any more 'pre-orders' for any Hornby product.  What is the point?  You may never receive the desired models, as in the case of the Hornby Southern coaches which I 'pre-ordered' and were cancelled yesterday with no explanation.
Hornby certainly don't come out of this situation smelling of roses.  More like smelling of bad eggs.  Their brand is in danger of being tarnished.  Once you lose the support of your customers you are sunk.

Terry

An interesting situation.

There are a number of calls for the protection, restoration and even perhaps expansion of the local model shop network.  Maybe one way of achieving this is to curtail the activities of the box-shifting warehouses. Hornby have, perhaps, delivered part of that wish by cutting off supply to the big distributor.

Unfortunately, the model shop network has been devastated and may not be able to pick up the slack.  (Before a recent trip into Liverpool, I Googled "Model shops in Liverpool".  There are no actual model shops and Argos was listed in the top 3 - that's not good!!)

Its also a tactic that might damage Hornby - a business that is no stranger to frailty. 
It does seem odd that firms like Hattons and Rails have not bent over backwards to maintain their supplier line - especially in the current climate - assuming that they had any control over the situation. I spoke to Hattons this afternoon about a pre-order I have  outstanding - an Oxford Rail product that is now 3 years late.  If that  is indicative of the state of the industry, then I fear that we are all  in for a rough ride.

.

Foolhardy!


Sounds like the actions of a company suffering from various pressures they are ill-equipped to combat

1. A swathe of new producer entrants biting away at many higher value sectors where they'd make good profits
2. Discounters getting a big share of retail profits

Hornby (IMO) always has had a sort of attitude, call it "entitlement" or something worse, while for a long time churning out much mediocre material in a quality sense. I've had to return a significant percentage of my purchased Hornby locos for this reason.

All the more this seems an odd response after having some recent notable wins like the Pecketts and new version Terriers. I think I'll write them an email sharing my displeasure. The action really limits me being overseas where I like to buy a combined order to keep costs down.

The worst of it is that to reverse the decision would be a huge loss of face and negotiating power. The Rubicon has been crossed.

This explanation recently circulated from Amanda of AJM on another group explains a lot, and also points the finger squarely (and, in my opinion, fairly) at Hornby. This is verbatim and unedited by me:

"An Announcement from www.AJMRailways.com
  
Gentlemen and Customers

  I will begin with 2 apologies, the first and most important being to my Customers (many of whom are members of this Group) in respect of the way recent events have and will affect my future ability to supply in the manner you have become used to and the second apology is for the time it has taken to convey this to you.

  As some of you already know, Hornby decided to "Band" retailers back in January. Now 4 months later they have finally given explanation to why and how each account is banded. In this announcement, they describe Band 3 retailers such as AJM as "retailers who dont have a shop or if they do it may be of such a standard no one would want to visit it". Other criteria would include bad credit history, manufacturing competing products and not stocking the full range of Hornby Brands (eg Airfix etc). While it is good to have received such clarification the initial effects of the "banding" back in January started to be felt when pre orders placed in January were then "allocated" back to much lower numbers. Gradually since then the "allocations" became more and more severe and in the May announcement confirming the banding rationale, any account in Band 3 was immediately removed from any pre order capacity and all existing pre orders were cancelled. Band 3 retailers are now only able to order "in stock" items and not future releases. So for example if a loco is released this week then Band 1 and 2 will receive theirs and if stock remains not allocated to the Hornby website then Band 3 customers can place orders a few days later.

  I have enjoyed building a business this past 12 years and having a great relationship with customers all over the globe and initially this whole situation hit me severely both physically and mentally. However, it also made me realise the old addage "life is too short" and as such, after discussion with another well known retailer here in the UK, I decided to sell all my OO scale Rolling Stock in a deal that concluded last week. While I was sad to see this happening it also made me realise the net value of the stock was much higher than I had ever envisaged and as such, I can afford to take this all on the chin and not be too worried about it from a "selfish" perspective.

  However just as the hobby is in the veins of my customers, supplying them is embedded in mine. My thoughts are to continue the AJM site offering the remaining OO ranges like Train Tech, Oxford Diecast, as well as the existing HO ranges like Faller, Noch, Prieser etc which serve both HO modellers and have some commonality with OO modellers. Similarly the "non scale" items like Block Signalling, Loksound, DCC decoders and Hornby and Peco track and points will still be available on the site.

  With regards to the other OO manufacturers (Dapol, Heljan, Bachmann, Accurascale and soon, Rapido Trains), my thoughts are to take all their future locos and offer them on the AJM site with each new loco being available for 8 weeks (or longer if a Customer says he wants one but asks for it to be held for him). After that I will delist the locos and set them for sale in the UK only as having thinned out my stock holdings I really am not inclined, at my age, to build it back up again. Should this suit my Customers I will continue to do this?

  With regards to Hornby, for as long as they are happy to allow me to have an account (and this is totally in their control), I am happy to continue to offer their available new locos again on an 8 week rolling basis. Any loco listed will be in stock with me already and I cannot take pre orders for new releases until after they are offered to Band 1 and 2 accounts as set out above. I appreciate this does mean that some locos eg Hush Hush are unlikely to be available via AJM at all.

  Dealing with Coaches and Rolling stock I do not propose to get back into this to the extent of holding vast quantities of stock for many years into the future, so am happy for any Customer to simply ping me an email with the stock codes and quantities and I can see if I can supply this order on a bespoke basis at my usual competitive prices and shipping. This will apply to all manufacturers coaches and wagons in OO scale and not to future releases as I seek to maintain a good service but avoid holding vast stock in the future.

  I appreciate that this scenario of future orders will not suit all Customers and to them I can only apologise and wish them well in the future and thank them for their past Custom.

  For Customers who are "happy to give AJM a try" in the future I again thank you and hope that I can offer you a good service with prompt replies and a reasonable level of successful outcomes on their inquiries.

  As the saying goes "every cloud has a silver lining" and my initial upset and fears etc are now a distant memory as I know whatever happens I cannot be affected by the decisions of others beyond my control and regardless of their motivations. Any sadness is only to my Customers whom I may loose or who themselves are unable to get the items they require or at least in a manner that is affordable to them.

  Thank you for taking the time to read this and again to all my Customers both in this Group and globally I can only say I hope you enjoy your layouts .. who knows .. I may even now have time to build a layout myself!

  Best Wishes

  Amanda"

I have been trying to get my head around this situation and particularly why.

But all I can come up with is a quote from OMC……..      How Bizarre!

Cheers
Evan

Reading that info from AJM via SRman, I was not sure what Amamada meant by "band", it wasn't until I read it all, I think she meant "banned".

It could backfire spectacularly as Hattons and Rails have nothing to lose now. they generate cash from second hand sales which they can plow into commissioning. If they make good choices, are fast in bringing items to market they could grow into strong competition for both Hornby and Bachmann AND also start targeting other smaller indipendant shops to stock there product, taking shelf space away from the other two.

I have to ask at this stage ?
Does anyone know who the Band 1 & 2 retailers are ?

[user=606]Sol[/user] wrote:

Reading that info from AJM via SRman, I was not sure what Amamada meant by "band", it wasn't until I read it all, I think she meant "banned".

As good as "banned" but I think it means placed indifferent Tiers. Tier 3 having very high restrictions. Unfortunate choice of wording perhaps.

As I'm still working under my baseboard, I hadn't come up for air long enough to become aware of this situation.

Sadly, I'm not a big fan of Hornby although I understand they've improved their quality lately.  I say "sadly" because it is indeed an iconic brand that, as with many other top names, has rested on their laurels far too long and allowed the opposition to take huge chunks out of their market.

I can see what Hornby are attempting to do but I fear they may have missed the boat.  The high discounting box-shifters only effect Hornby's turnover.  Hornby have their wholesale prices and if you sell enough, that's the maximum discount you'll get.  The "corner shop" retailers can't compete on turnover and therefore, probably pay Hornby more, thus increasing Hornby's profit per unit.

"That's not fair" says Mr Corner Shop - we buy your whole range of products whereas Mr Box-Shifter only buys trains. That's what I think they mean by "band".  Buy 1 unit, you're in band 1, buy 50 units and you're in Band 3 but only if you also have "proper" retail premises and sell the whole of our Empire range.  That's a normal "quantity discount" regime and has existed for donkey's years.

OK say Hornby, we'll restrict suplies to the box-shifters to give you a better chance in the train market.

Once Joe Public realises Hornby are selling direct, will they use Mr Corner Shop or buy direct ?  I suspect the latter and Hornby will lose their retail network.  If they retain their current market share, that's great, if not, what then ?

I think they're playing a dangerous game but, if both major manufacturers refuse to supply the box-shifters, I also fear for the box-shifters futures.  It would be interesting to see the current turnover figures for both Rails and Hattons since this chapter started to unfold.  My guess is they are much smaller.

retailers who dont have a shop or if they do it may be of such a standard no one would want to visit it"

This could be very dangerous ground.  Who are Hornby to determine whether or not any individual "would not want to visit" any given retail premises?  If the cost versus benefit were not stacked heavily against small business retailers I could see some interesting legal actions arising here for defamation if nothing else.  

Hornby are playing with fire.  They have done it before and it backfired big-time.  It almost cost them their entire business.  Have they not learned?  Or are they so single-minded that they are profit-chasing at any cost to pay off huge business loans from the last time?  

I don't have any outstanding Hornby items ordered.  I have been under-whelmed by some of their recent offerings and to my mind they haven't come up with a good modern-image locomotive since the Class 50 which was years ago now.  

I also fear for the remaining retail network.  They are effectively being held to ransom here.  "Buy the full range or you'll get nothing" when they may have insufficient space to hold that stock or a business history showing that some items / brands simply don't sell well enough to justify holding stock.  

Hornby has cut out the big box-shifters and the smallest retailers.  That only leaves the middle-ground.  If they take the next step and become an online-only business then others will surely move in and fill the void.  Which would be Hornby's loss but possibly not the end-consumer's nor the retailer's.  

I have followed all of the posts here carefully and taken my time to think of a response.  My thanks to Terry for raising it, because I wouldn't have known about it otherwise.  Well, not until i tried to buy something!
I confess a brand loyalty here.  Firstly because Hornby was my first trainset when I was 9 or 10, and my first trainset when I decided I was going to have another go.   And secondly because it is based just down the road  from my school and is an important employer and company within the seriously deprived Thanet area.  There is still a local pride that Hornby is a Thanet company which is famous across the world.

I think we have to consider the impact of the pandemic.  Shopping habits have changed and distance shopping has become a new normal.  I asked my sixth form students if they were looking forward to being able to go shopping again and they said they were looking forward to it a social event, but that the majority of their shopping would still be online.  Now, they may not be the biggest purchasers of model railways ("You have a model railway Sir?  Why?") but it is perhaps indicative of the change that has occurred.  Demand did not go down with shops closed, it was the supply that was a problem.  

Why sell to a shop at a reduced cost, which will then do a lot of business online, when you could do that yourself?  Especially with the bigger buyers who possibly make more from such sales than footfall in the shop. From  a purely business model, that does not make much sense, IF that is the way shopping is going to go.  It might be a gamble, it might not.  It's not a benefit to the buyer, because I can't see Hornby cutting their costs, but I do see the business thinking.  Customer service will need to be good though, and they might want to do something with their website if they want to be a major online retailer.

Anyone who saw the documentary on Hornby will be well aware that they felt most aggrieved about companies like Hattons deliberately eating into Hornby territory in manufacture of certain models, especially without any dialogue between the two.  Is this some sort of revenge?  As an outsider with no knowledge of the reasons, it certainly looks like it, but I could be barking up the wrong tree altogether.

If Hornby produce top quality models at a reasonable price with excellent customer service, and sell them directly or through small independent shops, will we really be complaining?  Of course, that might be a big ask!

Michael

[user=1512]Headmaster[/user] wrote:

……..Anyone who saw the documentary on Hornby will be well aware that they felt most aggrieved about companies like Hattons deliberately eating into Hornby territory in manufacture of certain models, especially without any dialogue between the two.  Is this some sort of revenge?  ……..
Michael

I'm lost for a good metaphor for what Hornby's game is but "Pot calling the Kettle Black" is right up there.

Take your minds back to 2014 (when coincidentally I came back to modelling). Hornby were a company in deep trouble getting worse, a product range in many cases languishing on old outdated technologies and 40 + yr moldings (in some cases).

For example - take 3 locos.

1) GWR King - I had an older style King, one of the last made in Kent (sorry Michael) It was a total dog, a total embarassment with a dodgy 3 pole ringfield in the tender and the worst wheels I've ever seen on a loco, never ran at all. 15 years later Hornby had done very little to remedy this situation.

Along came DJM with Hattons support to remedy this, a brand new state of the art marvel. While DJM was an entire Tragedy Series in its own right (no fault AFAIK to Hattons), Hornby rapidly and "magically" produced their own release in no time at all. It ended being a great success as DJM was by then doing a fair impression of Icarus.

Hornby 1: Opps 0: Customers :0 (because of the long delay)

2) Class 48xx  - The original Airfix from the 1980s was arguably better in some ways than many later Hornby re-releases / tweaks. They even proceded to go backwards between about 2008 and 2017 releasing another improvement which was a total dog. Again the DJM saga iintercepted but the product had it's own issues regarding operation. Was widely avoided despite some good models coming out of the project 

In the absence of meaningful competition Hornby have never had a decent model of this iconic GWR loco (IMO of course) and we are unlikely to see one soon

No advance in any score - everyone a loser (almost)


3) Stroudly Terrier
Another ancient moulding / interior with only minor tweaks over 40 years. The old style were still being released up to 2018 when I got my old WC&PR. (1st DOA; 2nd I've written up here)

Along came Rails /Dapol and again magically Hornby spring out with an excellent new model which proved fine competition and a great success. By why so long, so reactive.

Hard to score this - mostly winners all around this time.

I pose the question, if no one competes with Hornby will they all put on smug smiles, climb back in their bunker and make no changes or improvements for the next 40 years. Many of their actions in recent years have been purely reactive. I grant the Peckett is a magnificent advance and I'm sure there are others but I feel Hornby needs to learn it can't be the big complacent bully in the room.

It seems to me that Hornby's business model is based on being successful as both a wholesaler and a retailer. To get there they have tried quite a few different strategies in recent times. 
Perhaps this latest effort is the result of some more convoluted logic to achieve that goal. 
Smaller retailers sell smaller quantities and have a narrower range of products. The smaller shops are also likely to ask for extended credit and higher returns as they have a slower turnaround. So they are not worth the effort (ie cost) of Hornby supporting them at the wholesale level.

Larger firms including some box shifters can demand too big a discount on the wholesale price. Those firms  have also streamlined their operations so can also undercut on the 'recommended' retail price. 

Hornby are then more attracted to those retailers that buy a fuller range, pay on time, and do not compete too much on retail price.

Counterintuitively, a good strategy might be to offer a bigger discount to smaller firms. That gives the smaller shops a bigger margin and hence better scope for competing on price. They would take away some of the market share of the larger firms.

Cheers
Evan