This week we received an announcement from Hornby America about a new policy by Slot It that could be the beginning of a major change in the way slot cars are sold in North America.
Here’s the announcement:
Without a doubt this will be controversial. If it is tightly enforced and if that enforcement effort is able to deal with all the dodges some dealers will use to get around the policy’s requirements, it will mean an end to dirt-cheap prices for Slot It cars. Some hobbyists will not like this at all. Some dealers, certainly, will not like it because it blows away their entire business plan, at least in regard to Slot it and Policar.
Other hobbyists will welcome this new policy. That’s because it has the potential to make Slot It/Policar products available in many more places. As things now stand there is zero incentive for most local hobby shops to carry slot cars when there are people blowing out even the newest releases at prices as low as $5 over dealer cost and sometimes even less. There is no way most hobby shops can even begin to make a profit at such a low margin.
We get e-mails from customers who tell us they wish our shop were located in their home town because there is nowhere to buy slot cars and related items anywhere within driving distance even though there are hobby shops not far away. When we travel we make a point of visiting as many local hobby shops as we can. I can tell you that it is rare to see a shop with slot cars and when we do the selection typically consists of a couple of race sets, a few packages of track, a dozen or so cars (if that) and maybe a few of the most basic parts such as guides and braid. When we have a chance to talk with the owner we nearly always hear that the reason for not carrying much if anything in slot cars is that they can’t sell the stuff for profitable prices. A common story is the sight of a customer roaming through the store checking eBay on his cell phone.
Now there will be a least one manufacturer’s cars that these local shops can sell with the assurance that they can move them at a decent profit and not be undercut by Internet dealers who have little or no overhead and, in many cases, don’t need or intend to make a living from the slot car business. The retailer who has to make a living and pay the bills will be all in favor of the new policy. He will want all the manufacturers and distributors to adopt it.
Of course, this same thing happens in every other part of the hobby business and in retailing in general, but it’s much more of a problem with slot cars. There are several reasons for that.
One is that slot car racing is not a widely and deeply established hobby in America. There are few, if any, places in America where you can open up a new hobby shop and count on finding enough of an existing customer base for slot cars to justify investing in it as a product category the way you can for radio control, model railroading, gaming, and other categories. That’s because there just aren’t that many slot car racers to begin with and they are sparsely scattered across a very big country with lots of open space between population centers. The store has to build a slot car following essentially from scratch, and why bother when there are all those other categories with at least some number of ready-made customers?
Another reason, one that follows from the first, is that most hobby shop owners are not slot car racers. Most of them are either R/C enthusiasts or model railroaders. When you go into business you more than likely will stick to what you know and love. That’s what gives you the knowledge base to sell and service the products and the passion to see the business through to success. I can tell you from my own experience that the only reason I am in the slot car business, as opposed to some other category of hobbies or something else altogether, is that I’m a lifelong slot car racer. It’s the only hobby I would even think of starting a business in. It’s the only one I know enough about, and that’s despite 30-plus years of professional experience in the general hobby industry.
Yet another, and perhaps in some ways the worst reason, is that the slot car business has a “history” and not a good one. The slot car hobby reached these shores around 1960. By 1963 or so it was a fad. by 1965-66 it had grown to monstrous proportions. And then it crashed, as in straight into the ground leaving a big, smoking crater. A lot of people lost their shirts. There probably has never been anything quite like it in the history of the American hobby industry. Insane discounting wasn’t the only reason for the crash but it was one of the major ones. And the hobby industry has a long memory. Those in the business who weren’t there have heard the horror stories from those who were.
All of that taken together is a big mountain for today’s slot car business here in America to climb. That’s why the hobby and the industry need a greater than usual degree of nurturing to get them to where they need to be. Far more than in most of the rest of the hobby industry, the last thing they need to survive, grow, and flourish is suicidal discounting. Of course, sane pricing is not all we need, and I’ll be writing about that in future blog posts. But getting retail pricing under control is the biggest single thing that will provide fertile ground in which slot car retailing can put down lasting roots.
Now make no mistake, I don’t fault anyone for shopping for the best combination of price and service they can find, wherever that is. That’s just the free enterprise system. The problem is not with the consumer, it’s with the industry and its will, or lack thereof as the case may be, to put both the hobby and the business on a sound footing. For my own part and VLH’s we’re in for the long haul no matter what the rules are. But the hobby and the industry as a whole are a long way from where they should be in a country with the population and economy of the United States. We welcome anything that raises the chances of more local shops selling slot cars. That will be nothing but good for hobbyists across the land and therefore for us.
Slot It is just one company, but it’s an industry leader and its new policy has implications for the whole slot car landscape. Other companies will be watching. If Slot It’s MAP policy (which, by the way, is not just for North America, we hear) succeeds in growing the market and bringing new dealers into it, other manufacturers and distributors will follow. And that could change everything.