Let’s face it: 2009 has been a year of survival for the hobby industry, just as it has for many other businesses. While Washington says the recession is over, everyone outside the Beltway is asking, “It is?”
The economy is but one of the stories that has affected the diecast airplane model industry in 2009. It’s been a busy year, with some good, some bad, and some ugly. So without further ado, here are this year’s Top 10 newsmakers for the diecast retailer, not necessarily ranked in order of relevance:
1. The economy: Not that this needs a lot of reporting, because we’re all living through it. The economic slowdown late 2008 became a full-fledged recession in 2009, with small retail bearing the brunt of consumers’ diminished spending habits.
The retail hobby business fared fairly well through the first quarter of 2009, with dealers tightening their inventories and consumers still buying. Many dealers reported a slowdown in the late spring which continued through the summer. Also reported was a shift away from high-ticket items to accessories and items at lower price points. Several retailers have reported the holiday season to be off to a slow start, but are hopeful sales will rally closer to Christmas.
2. China slowdown: Problems with China’s toy industry have been brewing since 2007 when it was hit by a massive recall. Add in changes in labor laws, increased environmental scrutiny, and compound it all with the global economic downturn. The result has been closed factories and delays in deliveries of new products. Production backups at firms like model railroad manufacturer Sanda Kan has been especially vexing for U.S. manufacturers. Also playing a role in the unpredictability of when a new product will be available is the overseas shipping industry, another business hard-hit by the economy.
3. Consumer Product Safety Improvement Act (CPSIA): Signed into law in August 2008, the law went into effect in February, 2009, catching many companies flat-footed and making them scramble to meet its mandates. Intended to prevent the problems that caused the massive toy recalls of 2007, it set new lead and other chemical testing and documentation requirements on toys and products consumers – primarily children 12 and younger – might come into contact with.
Many companies in the hobby industry were forced to relabel products to skirt the age requirements of the new law. In the broader toy industry, many items, including apparel, bedding and books could not be sold and had to be destroyed. Numerous small companies have gone out of business. One poll put the cost of the CPSIA at $2 billion to the toy industry.
Ironically, the large toy companies whose recalled products brought about the law suffered least. Almost a year later, there are still reports of toys sneaking onto store shelves that don’t meet the law’s requirements.
4. Märklin insolvency: Talk about bad timing: on the eve of the Nuremberg Spielwarenmesse Toy Fair that was largely going to be a 150th birthday party for Märklin, the German train manufacturer-which also owns LGB – declared bankruptcy. The unfortunate event cast a pall over the show, but receiver Michael Pluta did make an appearance to answer questions.
In the bigger picture, new product development for the company has slowed, as have exports of Märklin and LGB products to North America market. Perhaps the most visible impact has been on the U.S. large-scale segment.
After putting together a reorganization plan, potential buyers have been identified and and the sale of the company could happen this spring.
5. More German insolvencies: Märklin wasn’t the only German model railroad manufacturer to reorganize in 2009. Fleischmann also entered bankruptcy and is in the process of restructuring. Another casualty of the economy and slumping European train sales has been building and scenery manufacturer Faller, which, like the other companies, has seen a significant portion of its workforce slashed to stay alive.
6. Hobby trade shows: It was a mixed bag in 2009, with the economy playing the biggest role in the drop in attendance. Retailer numbers were reported up 10% at the National Retail Hobby Store Association’s Table Top Expo in Las Vegas, however, exhibitors were down. After selling out of booth space early for the 2008 iHobby Expo, 2009 saw about 25 fewer exhibitors, with dealer attendance comparable to the previous year. The bright spot? iHobby Expo drew more than 20,000 consumers, eclipsing 2008’s numbers by more than 5,000.
7. Train shows doing well: The January World’s Greatest Hobby show in Philadelphia in drew possibly the largest crowd ever to attend a model train show in the U.S.: just over 40,000 in two days. Almost 25,000 attended the first day, causing a 5-mile backup on the route to the show.
The WGH shows continue to average about 25,000 people per event. Additionally, individual shows like Trainfest in Milwaukee continue strong. This year’s event in the Brew City drew more than 21,000. Model railroading is dying? Hardly.
8. Amazon.com: This is a story that’s going to be making news for some time to come. The late summer brought rumblings the massive e-tailer was looking to expand its hobby offerings; the fall brought confirmation from the company itself: Among the hobbies represented are coin collecting, die-cast, hobby tools, models, radio control, rockets, science, sports trading cards, stamp collecting, games and model railroading.
9. R/C explores new marketing channels: There is no denying that R/C, overall, has been down for the last year. As hobbyists held on to dollars, R/C companies looked to utilize their marketing dollars outside the traditional hobby channels to reach a wider audience.
One of the biggest players in this movement was Traxxas, which not only penned a deal with Pep Boys to sell products in its stores, but also landed top billing for the Off-Road Championship series. A coalition of respected names in R/C, which includes Tamiya, Kyosho and HPI Racing, formed the R/C Motorsport Experience and exhibited at the Toyota Grand Prix in Long Beach, Calif., this past year. That show alone exposed the R/C hobby to 180,000 visitors over three days. Only time will tell whether this new marketing approach will build a broader R/C audience.
10. Fantasy leads plastic model resurgence: According to manufacturers, distributors and retailers, plastic models have been selling well even with a recession on. What has been a surprise is the banner year that fantasy and sci-fi plastic models have had.
Moebius Models, building on its Aurora repops, has made licensing agreements with Marvel Comics, DC, and Universal Studios, and is producing kits as fast as it can. Meanwhile, Round 2 is rereleasing many old Polar Lights kits and making new molds for its Star Trek license. Even Revell has thrown its hat into the ring, repopping its own classic Aurora monsters and Babylon 5 kits, along with continuing its partnership with the Star Wars franchise.
The other important factor in the success of these types of kits has been price. There have always been sci-fi and fantasy model makers, but the kits are often expensive and not widely available except to those in the know. Recent releases have been accessible, priced right, and some are targeted at novices or youngsters, which doesn’t hurt.
All of this in the face of increased production and shipping costs is a testament to the resiliency of plastic models. The buying public has proven to be open to products that are new, different and eye-catching.
Source: modelretailer.com
