Accurascale acquires Heljan

[Newportnobby]

The point is though that if there is a gradual direction of travel towards direct sales only, each manufacturer going down the route will mean less products for a model shop to stock making it harder and harder to survive. As we depend on those models shops for everything we need to build our model railways (which is way more than just locos and stock) then that WILL make a difference, there is a whole railway modelling ecosystem which depends on the model shops in some form.

I appreciate that, of course, Roy, but you make it sound as if without locos and rolling stock retailers will just shut up shop. I can't envisage that ever happening as they will have to 'cut their coat according to their cloth' with model railway stuff as, with most of them, that's not all they sell

[Roy L S]

The point is though that if there is a gradual direction of travel towards direct sales only, each manufacturer going down the route will mean less products for a model shop to stock making it harder and harder to survive. As we depend on those models shops for everything we need to build our model railways (which is way more than just locos and stock) then that WILL make a difference, there is a whole railway modelling ecosystem which depends on the model shops in some form.

I appreciate that, of course, Roy, but you make it sound as if without locos and rolling stock retailers will just shut up shop. I can't envisage that ever happening as they will have to 'cut their coat according to their cloth' with model railway stuff as, with most of them, that's not all they sell

I think many would do exactly that Mick (shut up shop) as locos and stock are (1) the "bigger ticket" items that are relatively high value for the space they take up on the shelf and (2) facilitate the ability to buy everything you need in a single place.

Consider that say a Farish V2, non-sound, even if discounted to £180 will probably provide a gross "profit" contribution somewhere in the region of £30 to the retailer. How many packs of Woodland Scenics clump foliage at £10 a pack (maybe £2 gross which takes up four times the space on the shelf) will it take to generate the same return?

It currently still works (just) because the first offsets the second, but if all a shop could stock is low ticket items, then the amount of shelf space needed (and the cost of it) given the level of stock turnover necessary to generate the same level of profit would make the whole business model unviable for a typical model shop given that all the big overheads are fixed costs.

Roy

[Suffolk Rob]

This news does raise some interesting questions but, for me, mainly just as a casual observer of the OO scene.

I'll be interested to see where it goes, many elsewhere seem to think Heljan will become Accurascale's "Railroad" range but their MO doesn't seem to fit with many of the compromises in Heljan models (printed nose doors on a 4mm class 26 anyone?) Also thoughts elsewhere that the big 2 will need to change their pricing structure. Don't see that either, Branchline new tool diesels seem more a competitor for the main Accurascale range.

Heljan don't always have the retailer presence of other brand either. This was the rationale given when a few of their models appeared in the early days of the EFE rail development.

What does seem clear is that Accurascale are the leaders when it comes to self promotion(and nothing wrong with that). Meanwhile Bachmann carry on largely in their established way with good new models arriving with reasonable regularity, N included.

I suspect being unable to stock Heljan will be an annoyance for some retailers, especially those who had taken pre-orders, but this is not the biggest challenge the small independants have faced, not when compared to the growth in Internet shopping for example

[Newportnobby]

The point is though that if there is a gradual direction of travel towards direct sales only, each manufacturer going down the route will mean less products for a model shop to stock making it harder and harder to survive. As we depend on those models shops for everything we need to build our model railways (which is way more than just locos and stock) then that WILL make a difference, there is a whole railway modelling ecosystem which depends on the model shops in some form.

I appreciate that, of course, Roy, but you make it sound as if without locos and rolling stock retailers will just shut up shop. I can't envisage that ever happening as they will have to 'cut their coat according to their cloth' with model railway stuff as, with most of them, that's not all they sell

I think many would do exactly that Mick (shut up shop) as locos and stock are (1) the "bigger ticket" items that are relatively high value for the space they take up on the shelf and (2) facilitate the ability to buy everything you need in a single place.

Consider that say a Farish V2, non-sound, even if discounted to £180 will probably provide a gross "profit" contribution somewhere in the region of £30 to the retailer. How many packs of Woodland Scenics clump foliage at £10 a pack (maybe £2 gross which takes up four times the space on the shelf) will it take to generate the same return?

It currently still works (just) because the first offsets the second, but if all a shop could stock is low ticket items, then the amount of shelf space needed (and the cost of it) given the level of stock turnover necessary to generate the same level of profit would make the whole business model unviable for a typical model shop given that all the big overheads are fixed costs.

Roy

I hear what you're saying, Roy but, unusually for me, I don't see such a doom laden future. OK, any model shop with 'Railways' in their name would have to change it and, undoubtedly, there would be many redundancies and reduction in shop size maybe but much depends on the owners. If they are dyed in the wool model railway people they would almost definitely shut up shop but if they are just dedicated retailers of modelling products I think not.
Any road up, I'll be dust on the breeze before this would happen, I reckon

[Roy L S]

@Suffolk Rob in isolation I agree, the loss of Heljan products to retailers will for most model shops either be a minor inconvenience or if not stocked, have no impact at all.

It is the wider impact of the DTC (Direct to Consumer) model on the viability of model shops if it becomes more widely used by manufacturers that is the concern. Admittedly at this point it is only a theoretical concern and with Bachmann's ethos of not selling direct and only supplying bricks and mortar model shops there is hope it may not develop much further.

However with margins being squeezed there must be a temptation for some other manufacturers to consider the same approach over time. It may work for a while, but in my opinion it would in the end likely cause great harm to the hobby (and therefore their businesses) were it to become more widespread.

Roy

[Roy L S]

Any road up, I'll be dust on the breeze before this would happen, I reckon

I am sure you will be keeping your watchful moderator's eye on us for many years to come Mick!

[Suffolk Rob]

@Suffolk Rob in isolation I agree, the loss of Heljan products to retailers will for most model shops either be a minor inconvenience or if not stocked, have no impact at all.

It is the wider impact of the DTC (Direct to Consumer) model on the viability of model shops if it becomes more widely used by manufacturers that is the concern. Admittedly at this point it is only a theoretical concern and with Bachmann's ethos of not selling direct and only supplying bricks and mortar model shops there is hope it may not develop much further.

However with margins being squeezed there must be a temptation for some other manufacturers to consider the same approach over time. It may work for a while, but in my opinion it would in the end likely cause great harm to the hobby (and therefore their businesses) were it to become more widespread.

Roy

You may well be right Roy but I think this may be a specific case.

I base only on what I read rather than any knowledge but I get the impression that Heljan would either have been sold or gone out of business.

When I add to that my uniformed impression that Heljan price and quality didn't always match,I begin to think that Accurascale think there are worthwhile sales in the range to justify further production but not at an RRP that allowed both manufacturer and retailer margin.

For all the value that others bring to railway modelling, the big 2 still seem to be that with the sheer variety of their tooling and if either went down this route that would be a game changer. But didn't Hornby go the opposite way with their TT range?

[ntpntpntp]

Seems to be some "support your independent retailer" content appearing on Facebook, I've had at least 2 emails with it too. (Rails and TMC)

[njee20]

Kernow and Gaugemaster have sent the same comms. Very interesting to see the retailers standing united. The whole thing appears to have left a very bitter taste in a lot of mouths, which I can understand frankly.

Trains4U's narrative on it was interesting - they're an Accurascale retailer and a Heljan one, but weren't told anything ahead of this, totally blindsided by it. I can't help but think Accurascale may need to climb down slightly on some of this.

[Bob G]

Seems to be some "support your independent retailer" content appearing on Facebook, I've had at least 2 emails with it too. (Rails and TMC)

It's interesting that the thread on RMWeb moved as this one has from the acquisition message through outrage to what are the retailers going to do if everyone adopts a D2C model (and then it was locked by RM administrators).

I've had the emails too. The body text is the same from every retailer. Just the presentation and tweaks to make it retailer specific.

There are photos in the header blocks of 30 independent retailers (some of which don't stock Heljan, by the way) but the first two are Rails and TMC, so it feels like a retailer cartel quickly got together to launch their "Retailer First" campaign on the back of this message, in response to the D2C approach for Heljan.

It seems quite brutal. For example, Rail's own sponsored Warships with early 3 character headcodes are now no longer "available only at Rails", but are now "available only on Heljan's website", and at a lower price. Heljan 47s are now sub £100 or sub £200 with sound, whereas some box shifters are still trying to sell sound versions at 15% of the previous RRP of £350. I'm sure that the dust will settle, and retailers and manufacturers will get used to it, but I think the most important point to remember is if this business model was not adopted for Heljan, the firm would have gone bust.   

Bob

[njee20]

Is that fact? I've not following the intricacies of the whole thing. AS don't seem to have covered themselves in glory at this point!

[Skyline2uk]

IMHO the biggest slap in the face to retailers is the massive (and in some cases it really is £hundreds) discount suddenly offered overnight online against stock they have already paid for based on now defunct RRPs.

In some cases retailer exclusives have also been snatched away and that feels a bit nasty.

Setting aside the ins and outs of the financial health of Heljan, the apparent lack of comms with their former dealers is, as some have said already, brutal.

Skyline2uk

[Bob G]

Is that fact? I've not following the intricacies of the whole thing. AS don't seem to have covered themselves in glory at this point!

If you mean the business model then yes, this approach is said by AS to be the only workable solution to saving Heljan.

[njee20]

Well they're not the ideal source of information on such things at this point. I read that Heljan weren't actively seeking a buyer, which is very different to being on the brink of collapse.