MDC 4-4-0...whom are we kidding?

On Fri, 31 Mar 2006 14:25:13 -0800, David Nebenzahl

I see this quoted over and over ad nauseam, but where is the factual basis for the claim?
Case in point: I went into a local hobby shop in Beaverton, OR. I was looking for wooden ties. I expected to find them because on a previous visit, I saw MicroScale rail spikes for sale. After looking for a while, I asked where the ties were. "Nope, we don't carry them". OK, how about loose rail? "Nope, don't carry it". Why carry the spikes? "I dunno". Boss-owner walks up. Employee asks him why they don't have the rail and ties. He says "nobody would buy that stuff". I ask did you EVER carry the ties and rail? "No", he says. When I pointed out how ridiculous that logic was and asked how he knew he couldn't sell them if he had never tried, plus why does he carry the spikes which can pretty much only be used with the rail and ties, he got all red in the face and asked if I wanted to order the ties. Behind him, his employee was about to burst from his need to laugh. I responded that the only 2 times I had ordered from his store the *average* delivery time was 3 months and that wasn't going to happen again.
Point of the story: Many LHS are lousy business-people, haven't a clue, and take their cues from the distributors who have their own agendas. They make more on RTR, therefore that's "what people want". The real question is - which people? Customers or bean counters (who may not all count as "people" but we'll call them that to simplify things)?
I went downtown and the first store (Vic's) carried them but was out. He, on his own, called another store and found out they had them and gave me directions. Guess which stores I'll shop at from now on.
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Jim Sherman spake thus:

I'm glad you found them. But guess what proportion people like you (and me) are out of the general population? An insignificant fraction. Consider yourself lucky you can still find the bits and pieces you need to build stuff.
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On Tue, 09 May 2006 12:05:29 -0700, David Nebenzahl

Again. Where is the research to prove your assertion? I'm not saying you're necessarily wrong, just that I've never seen any actual, verifiable, research on the subject. It could just as well be an "urban myth" or, more likely, self serving disinformation put out by the distributors.
Consider grocery stores. Shelf space has squat to do with what sells, it has everything to do with discounts granted by the distributors to stores which sell only their brands. In many chain stores, you can't find half the brands that are available for just that reason. The distributor discount for playing along is a huge percentage of the profit from a grocery store. Their margins are paper thin. Only in rare cases can an "off brand" gain shelf space, usually due to customer demand.
We need to generate that customer demand.
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Jim S - Your point is very well taken. I, too, would like to see, but never have, any verifiable figures that support the idea that people who still build things are an all but vanished breed. Fully half of the fellow hobbyists I know are into kitbashing or scratchbuilding. It is only the younger guys and those individuals that have entered the hobby in very recent years, that I observe are agog over everything RTR. Save for the latest locomotives, I'd have to say that a very high percentage of older, experienced, hobbyists are just as much into building things today as a generation ago.
The problem seems to be that the manufacturers have discovered that by appealing to newer, financially better off, hobbyists that lack the time and skills through offering everything RTR in limited runs, they can increase their profit margins to a much greater degree than ever before...at the cost of shutting out those who are truly modelers.
CNJ999
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How are those of us who like to build things shut out? Because MR has become "The RTR Shopper". Because the LHS doesn't stock rows and rows of shake the box kits anymore? How does a manufacturer shut out a guy who doesn't need or want manufactured RTR or instant kits anyway? Bruce
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Bruce - How does a manufacturer shut out a guy who doesn't need or want manufactured RTR or instant kits anyway, you ask? Just look around. Most if not all manufacturers are slowly shifting toward all RTR products and dropping or severely curtailing their kit lines. In time it will become impossible to find kits (it's that way already in some hobby shops I've visit lately). Kits sell largely to guys that have been in the hobby for years and are purchased largely on impulse so that, in the short term, they don't sell out quickly. And established hobbyists are unlikely to change their buying habits. On the other hand, todays limited run RTR locos and rolling stock are to a great extent the province of newer hobbyists who panic buy, fearing they'll miss out if they don't, so the limited stock moves much more quickly. The situation with RTR may be good financially for the manufacturers but in the longterm, bad for the hobby in general. As kits disappear, you will likely see a steady decline in the number active hobbyists as the source of buildable items dries up.
CNJ999
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but in the long-term, bad for the hobby in general. As kits disappear, you will likely see a steady decline in the number active hobbyists as the source of buildable items dries up.< This is simply not true in general but may be true for certain types of kits. If you look at freight cars for example most if not all manufactures run plastic kits at various times. It's just a little harder to get them. Sometimes LHSs simply don't want to order them but they are available from the manufactures, maybe not from the distributors and these are the only people many LHSs wish to do business with. Also have you taken a look at the resin kits available and there are new manufactures coming on line frequently. As to diesels there are literally hundreds if not thousands of detail parts available to upgrade these engines. The same is true of steam. If what you are referring to is a $3 Athearn kit that one can drop twice and it's assembled those days are gone forever. If you are referring to wood kits those days are also gone as styrene is the medium of today.
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CNJ999 wrote:

The problem is that manufacturers have found that they couldn't sell those wood kits (for example) that they sold a generation or two ago. Even the simple plastic car kit (Accurail, etc) is getting hard to sell: I'm assembling them and putting back on the shelf at 2x the price, and finding a better sale than for the kits. Better profit, and a bit of occupational therapy, too -- not bad! :-)
Kit and scratchbuilding is now a hobby within a hobby. When I started model railroading 50+ years ago, people built because they had to. People nowadays build because they like it. And they expect a much higher standard of kits and detail parts than were acceptable a generation or two ago.
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Jim Sherman wrote:

My sales figures, and the shelf-time of those bits and pieces. I've accumulated quite a collection of bits and pieces - they move slowly, slowly, slowly. I'll order anything you ask for, if you guarantee to take it off my hands - I've been burned too many times by people who just wanted to have a look at something.

You've got that backwards. The grocery chains demand the discounts. What's more, many chains are also distributors.

OK, how do you propose to do it? There's only kind of customer demand that I as a retailer understand: you ask me to stock it or you order it for, and you buy for it.
There's also the other side of the counter. Customers aren't all angels, and some of them are downright mean. Among retailers, stories are common of customers who have ordered an item,looked it over, said thanks but no thanks, and gone and ordered it from a discount mail-order shop or online. One guy told me of a former customer who came back and bragged about the deal he got....
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On Wed, 10 May 2006 16:40:21 -0400, Wolf Kirchmeir

It certainly could only apply to the largest chains. Most grocery stores run on less than a 2% margin. You want shelf space and you're not Big Box Inc.? Better be ready to cough up something. Somewhere up the line, all the chains aren't distributors, they're customers. None of them actually produce their own stuff. I worked almost 27 years in the food industry and I know my company would run frequent promotional allowances to gain shelf space. The longer the government allows non-competitive practices to continue, the less choices you'll have.
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Jim Sherman wrote:

That's what I was saying.... I'll make it clearer: The distributors don't "grant discounts", the discounts are demanded by the chains. No discounts, no shelf space (strong local demand for certain items excepted.)
[...]
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On Thu, 11 May 2006 10:41:51 -0400, Wolf Kirchmeir

I said that the distributors (in effect) "bribe" the stores to gain shelf space. That results in the stores only carrying what the best "paying" distributor sells in order to be able to make a profit - BUT. It's controlled by the distributors who have a lock on the delivery process. In order to gain shelf space in this system, a manufacturer has to cough up promotional allowances to the distributors to gain shelf space, because the stores damn sure can't afford to do it and the manufacturers can't get directly to the stores. The exception is the coupon sale, but those can only work with the cooperation of the distributors OR if the manufacturer has its' own delivery system, such as a local company. If you have a consolidation in the number of distributors, then you lose brand choices and the distributors become the 800lb gorillas, dictating what is carried solely based on what maximizes their profit. When the distributors also own the manufacturing plants, you're really screwed.
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On Thu, 11 May 2006 15:26:17 -0700, Jim Sherman

Kind of like Walthers and Horizon, eh?
fl@liner
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On Thu, 11 May 2006 10:41:51 -0400, Wolf Kirchmeir

Just curious. Are either if you in the grocery or hobby business ?
Ken Day
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Ken Day wrote:

I own and operate a very small model train store, as a service to local modellers as much as anything. It makes a enough profit to finance my hobby, and a visit from a customer is a good excuse to talk trains. :-)
As a small hobby shop, I qualify for the "standard trade discount" of 40% off MSRP, unless the distributor or manufacturer happens to have a sale or promotion. (These are often of stock that hasn't moved, so it's not likely to move off my shelves, either.) 40% happens to be very close to the discounts offered by deep-discount mail-order and on-line stores; and many of these happen to be sidelines of distributors... So draw you own conclusions.
As for my knowledge of grocery store practices, there are many sources for this, including owners of local small grocery stores. Which no longer exist: their wholesale costs were usually as much as and higher than the prices at the chain store - which happened to be owned by the the same conglomerate that owns the distributor... Again, draw your own conclusions.
HTH
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On Mon, 15 May 2006 10:56:46 -0400, Wolf Kirchmeir

I thought you may be in business in one or the other since you seemed knowledgeble on the subject. Many people think that the hobby shops and grocery stores are making big bucks and no one can convince them otherwise.
As a very young man I spent about eight years ordering , pricing and merchandising for a very large supermarket. 45 employees in the 60's was a large supermarket. I just worked there , didn't own it. Back then we shot for a GPM of 18-20% which would net us 2-3%. Supermarkets now have to operate on a much higher gross profit due to increased business costs. I read somewhere the other day that Kroger is operating on a 27% gpm and netting about 1% or less.
Then I spent about the same amount of time in the brokerage business (food , non rx drugs) so I've been on both sides of the order desk.
Also did a lot construction , architectural work on the side and did it full time for a short while.
The last business was a hobby shop.....all modelers dream , right. The toughest of all the businesses , IMO. Most never realize that other than special promotions, 40% is the most discount on anything , some as low as 20% ,and then you give up most of that trying to meet competition. Some offered an additional cash discount. Walthers , if I recall correctly, had no additional discount and was usually out of stock on probably 50% or more of their mdse. I don't recall any of the train distributors offering more than a n additional 2%. Most RC related merchandise also offered a 40% discount with many items as low as 20%. Most RC hobby distributors , however , offered an additional 12% which ran that discount up to 47.2%That helped a lot. I think when I closed the business my average gpm was about 23%. Not too bad for a store only selling RC and a few trains. I used to get so irritated . although I didn't let it show , when someone was looking at..... for instance , a 200.00 RC radio system which I was only making about 10-12 bucks on and then try to beat me down maybe 50 bucks on that price. I was already meeting mail order prices on most radio systems and other leader items..
As you mentioned , many of the distributors I bought from were also selling mail order at very close , sometimes less than my cost. All the above is the way it was when I had my shop. It's now been 15 years since I closed , but I understand that things are still about the same.
I've run my mouth too long already.
Ken
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wrote:

Ain't Tammies wonderful? Like you, I am on the westside, and Tammie's is at least close. But they have little in stock other than N scale ready to run, and their ordering practices have left me with three to six month waits for items.
I've found that Hobbysmith in the Hollywood District, and especially Bob's Whistle Stop out on SE 119th and Division are great for both stuff in stock and for quickly filling special orders.
Vic's is ok as well.
Probably not surprisingly, each of Vic's; Hobbysmith and Whistle Stop are "trains only" shops. Tammies,on the otherhand, is an "all hobbies" store. I wonder if they are as bad with non train stuff as they are with train stuff.
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On Tue, 9 May 2006 12:57:26 -0700, "Jim McLaughlin" <jim.mclaughlin> wrote:

I usually make a token pass by Tammie's just in case they accidentally have something useful, but it's been off to the Whistle Stop after that. After Hobbysmith moved, there's a lot more HO stuff but they're a bear to get to with the road destruction going on out Sandy and Vic's is closest after Tammie's. You're right about ordering at the Whistle Stop. They are indeed fast. Also a tad spendy, but if they can deliver, I guess that's worth something. Too bad they're that far away.
Jim
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greybeard wrote:

Just take a look at Marklin - they forgot their roots and gone from the largest producer of model railways to a mediums sized purveyor of "collectors items" on the brink of bankrupcy.

There must be lots of second-hand Tyco/Mantua around, there's even one in my junkbox!
Regards, Greg.P. NZ
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Greg Procter wrote:

The reason for that is that Marklin _did_ "remember their roots". In fact, through the 50s to the 90s, they changed their product line hardly at all: clunky detail on diecast bodies, sometimes not even to scale, and overpriced besides. Mostly, they insisted on their own, proprietary standards for wheels and track. And of course AC. That locked customers into their product, in an era when consumers have came to expect products of the same type from different manufacturers to work together without hassles. They made toys, and the market moved more and more towards scale. The one thing Marklin have always done well is mechanisms: tough as Mack trucks. They also operated in a regulatory regimen that forced retailers to sell at the price set by the manufacturer, a German law only recently abolished by the EU. That probably left them unprepared for price competition.
Recently, they have upgraded their die work. Their new GG1s, for example, are exquisite. But overpriced.
As for Horizon Hobbies' decision to focus on RTR: the fact is that most model and toy train fans don't want to spend time building. They want plug'n'play, and are willing to pay for it. (This is the one thing that may revive Marklin, if they can improve their price/quality ratio.) I foresee continuing growth in the custom layout building sector, and increasing variety in the molded layout bases of the kind available from Woodland Scenics and others.
This forum does not represent the hobby at large: most of us do like to build. But we are a minority, and a shrinking one.
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