Large Scale Central

Walthers: More adventures in marketing Large Scale

General Discussion
#21

The MSRP seems ridiculous when you look at the “street” prices on the Internet.

The first take is that selling at MSRP in a brick and mortar store is completely silly, but I wonder if this is because this is the markup that a brick and mortar must charge.

The gap is so large between the 2 prices, I really feel that the brick and mortar are just selecting that price, rather than trying to make a set margin profit.

I think the “silly” msrp prices are part of what is hurting brick and mortar, but without knowing what these stores buy the product for, maybe that is not true, maybe they are all buying from Walthers, and that intermediate step (profit) is what is killing them…

Regards, Greg

#22
Garrett said:
They used to have a full line LS catalog years ago.
Not that many years....I have one?
#23

Greg,
I believe that it was Aristocraft who ‘inflamed’ the MSRP debacle/debate by insisting that dealers abide by the MSRP guidelines. Any dealer who retailed Aristocraft products could not advertise a ‘street’ price less than 75% of full MSRP value. This was because high volume dealers could sell Aristocraft products for less than low volume hobby stores could wholesale purchase from Aristocraft. This obviously disadvantaged the ma and pa corner hobby stores. This lead to dealers with their ‘contact us for a best price’ policy.

   No doubt companies discount purchases to bulk/high volume dealers than to low volume corner hobby stores, enabling a lower retail price after margins added.  High volume dealers work on lower profit margin,  but increased sales.  Corner stores are 'mandated' to maximise profits on singular sales by charging full MSRP.  In pre-internet days this was normal retail philosophy as consumers frequented their local hobby store,  establishing a relationship with the owner of the store.  However,  consumers seek out bargains these days and this had lead to a demise in corner store sales.  Who is responsible?  Is it the bargain savvy consumer with no thought for the future,  or is it the manufacturers eager to pass on their product to the wholesale market,  rather than wharehouse their production.

        We have a local issue whereby consumers seek out local stores that retail clothing sourced from overseas and then enter the stores to find their correct sizing,  by trying the clothes on in fitting rooms.  When satisfied with the fit of the clothing,  they then purchase the clothing online from America,  knowing that the size selected is correct.  In effect,  the local brick and mortar store has become a showroom for the internet suppliers.  The local stores have reacted by charging the consumer a 'fitting charge' (around $50), redeemable on instore purchase of the item.  Who actually is the guilty party?  Consumers in many ways have contributed to the situation by their 'greed' in achieving a deal!
#24

As long as (the lowest) price is the main consideration of purchasers, the rate of decline of the bricks and mortar stores will accelerate until there are none left.

The only real use of MSRP is to provide a starting point by the manufacturers from which the discount for dealers, quantities supplied, payment terms etc are calculated.
I predict that once the Ma and Pa bricks and mortar stores are finally wiped out the policy will change to a base wholesale price with smaller discounts applied. Usually for promptness of payment. Then the dealers that are remaining, mostly, if not entirely on line by then, will be free to sell for whatever they want to sell for until they wipe each other out.
Then the manufacturers will have to sell direct online.

Don’t believe me? Just wait and see. It will happen sooner than you think.

#25
David Russell said:
Garrett said:
They used to have a full line LS catalog years ago.
Not that many years....I have one?
Dunno, I thought it was early-mid 1990s? We have some old Walthers H0 catalogs going back to the early sixties tho....
#26

Having purchased only Aristo-Craft products in the last four years it is thus Aristo UK prices that I check.

Most Aristo products in the UK are presumably sourced through the UK importer i.e. Bachmann UK. Bachmann UK does have a a Recommended Retail Price (RRP) - the UK equivalent of MRSP - which included taxation of 20% applicable to most parts of the UK.

However, perusal of many internet and brick and mortar stores web sites show a wide variation in prices: some the full RRP and others at least showing a 20% discount. Many who charge the higher price are multi scale and model dealers; the large scale only dealer usually being the more competitive.

But whilst most seem to be surviving, although a few have given up large scale, it is noticeable that stocks in most places are quite low it seems these days.

I do share Tony Walshams view of the future.

#27

If you live in Canada you can’t their email flyer. What is that all about? Canadians live in igloos and can’t their train to run in the ice and snow???

#28
Dennis Brown said:
Canadians live in igloos????
We don't????

If it’s August, it’s grass-ski time.

#29

LGB had the store windows at Christmas time.
Round-and-round the locos pulled with no failures.
Our nearby McDonalds still has the overhead track throughout the store – over 200 feet of it. In the center is an “aquarium-like” 30’ long center piece, glass enclosed, mining train in a mountain mine setting. The trains run daily – all day loong. “Sure, this is an attraction and it works,” extolls management. So why not the other McDonalds? Where’s large scale in the restaurants? Two blocks north, and both are within 1/4 mile of KNOTTs Berry Farm, is a Po-Boys restaurant with overhead train. Unfortunately, it closed. Back to the question: Where’s the trains? Anyone suggest to their favorite eatery trains be put in?

Wendell

#30

Another California restaurant is an overhead at an IHOP on Euclid Avenue in Upland, You get a double dose of trains because it was built right next to the “real” railroad tracks!

#31

We have a restaurant with trains running overhead. Its nice to go for lunch with the kids and watch the trains go overhead. I wish we would see garden centers display g scale trains in their gardens. Then they can sell starter kits to get one started in their own garden train layout. The display should be something small, that wont overwhel someone who is willing to try it. A lot of the places that do have trains in the business are owners that are into trains.

#32

Belated response, but I agree Tim!

I remember the (what seemed short lived) change in advertised prices in the mags. I noticed some advertisements in the recent GR where all the prices are listed as “CALL”…

Not sure if it is helping the brick and mortar guys.

Greg

#33

I am always amused every time I see a Californian LGB dealer, buying stock (Bachmann, LGB and Piko) online on eBay, from a Texas eBay/retail store. Are Walthers wholesale pricing levels so high, that it is cheaper to compete with the consumer retail market on eBay than to purchase wholesale from a distributor?

#34

Tim-
You are on track. The answer is yes, Walthers does not promote – at least in their retail monthly flyer – large scale, so why go where there is promotion and pricing competition and make a purchase based on the best price.
Wendell

#35

Wendell,

Given the supply situation, can you imagine the hue and cry if Walthers would promote LS/LGB and then there would be no product? Do we really need one more source to tell us “real soon now” and delivery happens whenever, usually months if not years after the “promised” delivery date?

All the marketing is for the birds unless you have product to deliver or you have very patient customers who don’t get annoyed at the movable delivery dates. Yep and this in today’s market when everyone needs instant satisfaction because otherwise the world will end. Give me a BREAK! :frowning:

#36

Ah, insightful wisdom comes to print! Hmmm, so Marklin has a supply problem is the reason. This now makes sense why there is not a peep in the Marklin flyer re: LGB products. Any further data on the status of LGB and their relationship to Marklin? Has LGB virtually stopped producing products? Any suspicions as to PIKO really being (producing) LGB, or vice-versa, as to so as to take financial shelter under another German company?

More bits of tid are welcome in this conspiracy of confusion called LGB.

Thanks,
Wendell

#37

Wendell,
so far this year, LGB has actually delivered on a lot of its planned releases, both in European and American prototype. It amazes me the amount of new LGB stock (Euro and American) listed on eBay and not NOS being sold. Although, as I have found out through my own purchasing, some of the ‘new’ stock has taken a year or more from manufacture to reach the market (???) . I wonder if the Asian manufacturers, held off on delivery, until the company looked to be a little more secure?

While Piko has in the past been contracted to manufacture some Lehmann products, I would think that at present that Piko would be flat out keeping up production of its own product line with the every increasing ‘standard’ gauge Euro products.

#38

Tim,

Most of the product delivered had several months to many months (more than 12!) of delays. It annoys the European consumer to a great extent (strictly anectodal evidence one gets to read/hear in fora, magazines, blogs and the grapevine). Not so good in view of Europe still being the “home market” for LGB.
The bankrupty administrator (Pluta) invariably tries to put the best spin possible on a dire situation, fact is: the 2008 recession threw major spanners into the works (I call it the triple whammy!)

  1. The interest of once potential buyers for Märklin (including all parts) as a going concern has just about disappeared. For two reasons: Pluta cranked up the minimum fullfillment conditions to unheard of heights, the competition is not interested, they are busy with their own problems, since the market is shrinking!

  2. Consumers in general spend their money on necessities, model railroads are not a necessity! “The older set” who collected for many years, is getting old enough to start liquidating rather than collecting.

  3. Quality problems: nothing gets around quicker than the real or perceived “fact” of less quality for the same or more money. Quality problems also mean delivery delays, either the stuff has to be re-done (can’t be sold as is) or the defects have to be remedied, which takes time.

So what’s the bright side? LGB’s overall quality (design and production) is still better than their European competitors. Yes, one can buy cheaper and what one gets is “cheeeap, cheeeap, cheeeap” along with crappy design. No, I won’t mention names, those who pay attention know and those who don’t and go for cheap, will find out!

[b]Sarcasm on:

What LGB could do with the substandard quality items: sell them at a huge discount on an “as is, where is” basis, the stuff would make excellent kitbashing material!

Sarcasm off! [/b]

As always strictly my opinion, based on what I observe and gather! :slight_smile:

PS BTW as far as NA materials are concerned, keep an eye on promised and actual deliveries in the 1:20.3 and 1:29 segment. I won’t even mention vapor ware!

The other little item: Pluta is still running Märklin on a shoestring, supposedly with a small “surplus”. (??? creative accounting in action ???) What generally interests me in situations like this: how much money does Pluta draw out in admin fees and miscellaneous charges? How are the business plan fulfillment results?

#39

HJ,
it seems that a lot of the Chinese made stuff is getting to market (U.S. prototype), although I cannot see the Uintah surfacing in the near future. The D&S Mogul seems to be around. I do not know if China took up rights on manufacturing it, like it did the rest of the U.S… prototype.

Reports on the Chinese Kof seem reasonably encouraging. I assume that the 4/4 are still made on the Continent and apparently newly tooled coaches are around ex-Germany (grey imports!). It is not like nothing is getting to market.

#40

Tim,

Never said/wrote that nothing is getting to market, what hinders them getting ahead are:

a) production delays

b) small production runs of items that are big sellers

c) perceived or real quality problems.

Where the stuff is sourced is secondary, I’ve seen plenty of substandard coming out of Germany (any type of industry!). Can’t sell stuff, if you can’t deliver!