Model Railroading -------------------------------------------------------------------------------- Date: August 29, 2005 04:49 Walthers at Wal-Mart this Christmas? Author: KevinB -------------------------------------------------------------------------------- From the Milwaukee Business Journal: For those who aren't model railroad enthusiasts, William K. Walthers Inc. is probably an unfamiliar company, despite its 73-year history in Milwaukee. But by this Christmas, Walthers' new products could be a household name for Wal-Mart shoppers. Therein lies the massive opportunity -- and the potentially humbling learning curve -- for the family-owned firm that has built its reputation supplying 22,000 hobby shops. The triggering event for Walthers' first Christmas with Wal-Mart stores and other mass merchandisers like Meijer stores, was the July acquisition of the Life-Like Products toy and hobby division. The price was not disclosed, but it was easily the largest acquisition in Walthers' history, said Phil Walthers, a third-generation family member who has been president since 1987. The deal was financed with bank debt. Life-Like's previous owners had arranged the contract with Wal-Mart prior to the Walthers transaction. Wal-Mart will sell Life-Like HO scale slot car sets that are licensed to carry the NASCAR name. The miniature race cars are a new category for Walthers, which specializes in model trains. The list price for slot car sets runs from $100 to $212, but they'll sell for less than that at Wal-Mart. For example one set, the "super action speedway," has a list price of $143, but Wal-Mart's online site is carrying it for $78.84. Holiday priority Phil Walthers says the first priority is shipping the products to Wal-Mart in time for the holiday shopping season. "A lot of product is in the pipeline," Walthers said during an interview in his wood-paneled office at the company headquarters on Milwaukee's northwest side. "We'll get it delivered properly." In October, Walthers will begin negotiations for Christmas 2006 with Wal-Mart and others. He knows the high-volume business will mean lower profit margins than he's used to, but he sees it as an avenue to introduce young people to the hobby industry. He also hopes to convince Wal-Mart to carry additional products in the Walthers line. Most hobbyists today are "guys in their 40s and 50s," says Walthers, who is 57. He wants to improve the quality of the hobby products sold at Wal-Mart so that kids will gain a positive early experience with hobbies and get hooked.
I feel sorry for Walthers. Walthers might be big in the model RR business, but they are just another fly to be squashed to Wal-Mart. Check out the article I liked to below and then think about this quote from Walthers: http://www.fastcompany.com/magazine/77/walmart.html
I have no doubts that Walthers is clueless about the mega-corporate world they're entering. Boxcab E50
It wouldn't suprise me that by Christmass 2006 Wally World will own Walthers. Especially if the hobby stuff catches on. Our local Wally World only sell model kits of cars, planes and boats, but if they did handle Train stuff the LHS would soon be shutting its doors!
Boy this is a real mixed bag. I can see how Phil views this as a great way for the "Worlds Greatest Hobby" to increase it's visability, reaching a greater number of people. I never imagined Walthers being the supplier of the entry level "toy" sets, but it is a niche that needs to be filled. Since they are honoring a contract started by Life Like, it does give them a foot in the door. Not to mention a great way to run out a bunch of old inventory as well as putting their name out where John Q Public will see it. If Walthers can meet the Wal-Mart demands for on time delivery and lower prices it should improve the way they deal with their own suppliers and possibly make them the Wal Mart of model railroading. WalMarthers. After all, most of what is in the "reference book" is never in stock or even available, so it's an area of buisness they need to address. I don't think expanding beyond the beginer set would be wize. Our hobby is aspiring to higher quailty, and if Wal Mart can make Levi make a cheap pair of jeans what would happen to Walthers? Distribution of hobby quality supplies is already established. It is one business Wal Mart hasn't totally killed yet. Our hobby benifits from the social side of the LHS. Wal Mart can't provide anyone who knows about gold fish so we'd really be out of luck. Wal Mart carried the John Deere trains, as well as cheapy sets. I think that's fine for the Christmas stuff. It will be up to us to let both Walthers and Wal Mart know that's all we'll buy from them. As much as we want lower prices, we want the higher quality available in the free market.
I think most of us agree that the hobby could use a hot spark to fire it up. The question is, will this work?
My big fear here is that somehow this will damage the quality of hobby. Walthers can't deliver 1/3 of what they show in the catalog and list on line, much less hit a Christmas deadline. But therein lies my fear. If the Walthers machine is focused on hitting WalMart deadlines w/ slot cars, etc., seems to me they are going to let the model railroad products slip in delivery even further. Wm. K. Walthers catalogs used to be a book we opened, full of stuff we all wish we had. Now the book is full of stuff Walthers wishes they had. I don't see how "Uncle Willy" can pull this off when they can't even deliver columns and caps at the same time to match their wall modules. I hope the average model railroader isn't hurt by this w/ an even more scarcity of stuff actually hitting the hobby shop shelves.
Am I missing something here? The article only talks about HO slot cars - not train sets. Or is this just another opportunity to target the two perennial favorite’s W’s - Wal-mart and Walthers. Although the article doesn’t specifically mention it, I would really like to see starter train sets sold in mass at Wal-Mart. There is massive exposure potential to a mainstream crowd that would never set foot into a local hobby store. It could be a huge boost to our hobby if parents started buying up these sets for their kids for Christmas instead of whatever cartoon fad is on the market. The real question is whether the “Worlds Greatest Hobby” campaign is up to the challenge of mounting an effective follow-up to this before most of the kids/parents put the train set away deep in the toy bin. Overall - I’m a bit surprised that a topic like this would start here. I thought the Wal-Mart bashing crowd was over on another forum. I would not be in this hobby if it were not for discount places like Wal-Mart or Michaels to find reasonably priced scenery supplies, etc. - not to mention everyday items for real life. Maybe some here are in a position where money is not an issue and you can shop any place you wish. That's great! No one is stopping you! But there are some of us (actually far more than you think) who are staying in their tight budgets because of places like Wal-Mart.
I agree that the exposure from the sales at Walmart would be great for the hobby if Walthers is able to get some train sets in there, but that is probably what Vlasic and Huffy thought as well. When push comes to shove, we'll see if they can keep up and keep their head above water financially. And about Walmart. I recommend that everyone who has doubts about Walmart go to Walmart Watch and see what they are really up to. Also, I challenge you to convince me that Walmart is really cheaper. Many products at Walmart can be found at Dollar General, Fred's, Family Dollar, or countless other discount stores for the same price or cheaper. The way Walmart works is that it has great deals on select items (like $3 gallon jugs of pickles). So you go in and get your great deal on pickles and go ahead and pick up some other items.. at regular price (or higher). Walmart also counts on impulse buys. You go in to get a few groceries, and then you see that new DVD, pair of shoes, tool set, whatever.. and get it just because it's there. I stopped shopping at Walmart for 2 years and was surprised when I discovered that I actually spent LESS money NOT shopping at Walmart. When I bring this up, most people tell me that they don't impulse buy at Walmart, but I know that is BS and so does the Walmart CEO's wallet! Finally, I've noticed one subtle item about Walmart. They used to have big signs on the outside of the building that said Satisfaction Guaranteed. But I've noticed that they no longer put these signs on the new Walmarts they build and have even taken them down on a couple that they have remodeled. Although this is a more recent development, I think in reality my satisfaction stopped being guaranteed when Sam Walton died. Sorry about this. I get really worked up about Walmart. This will be my last post on this topic.
I agree that they are not always cheaper on every item. But this is true of any store. Every store has their set of products that they sell as loss leaders and/or have better purchasing agreements in place with the manufacturer. You just have to be a savvy consumer and know your prices. Setting high margins on impulse buys is something that Wal-Mart didn’t invent, nor is the only one to do this. Most everyone employs this strategy, and it has been around for decades. I can’t speak for the people you know, but I’m certain that there are enough consumers who “impulse buy” or stores like Wal-Mart wouldn’t try to accommodate them. But there is nothing illegal about it – unless you want to press charges against the consumers who foolishly pay more for something (I say foolishly – but sometimes it costs more to spend the time & gas to go somewhere else to save a dollar).
I kinda thought when I seen a post with the word Wal-Mart in it there would be a heated discussion! I don't mind if Wally World sells train stuff, If I could get a deal on stuff I probably buy it there. Its just that the old LHS would be no more, just like every other store in our town. Half my family income comes from Wal-Mart, the wife works there, just because there's nowhere else to work and I have half a filing cabinet of horror stories I could share. But I don't think this is the right place to be doing it.
Walthers will be selling slot cars not trains, or did I misread the original post? The bigger implications of Walmarts dealings are rather frightening. [ August 31, 2005, 12:08 PM: Message edited by: traingeekboy ]
It's about time Walmart woke up & started to sell trains in their toy dept. Last year, Sam's Club sold a Bachmann Holiday set, and will do so again this year. It's OK for the Big size set to be sold there. It's time for some Normal size sets to be sold at WalMart. The LifeLike sets will be better than the NewBright plastic toy junk WalMart usually sells. I hate to be in a hobby shop when someone comes in looking to add to or get repairs on that junk. At least the Hallmark card shop collection looks nice. Part of the deal may be for WalMart to introduce Walthers to the factory where the sets will be made.
Life Like HO slot cars are smooth running reliable little buzzards. I think Walthers has a good line to sell to Walmart. Walthers can't expect to make any kind of real money with Walmart but it's a good way to get their name exposed to the mass market. Walmart has attempted to sell HO and N scale $25 starter sets off and on over the years with little success. I doubt anything will evolve this time around if that's what Walthers is thinking. They last about a day and end up in the trash. People get distracted. I am very dissapointed with what happened to the Life Like N scale line. Life Like made basic, smooth running, well detailed diesels that sold for nearly less than half what Atlas and Kato sells for. They came with Rapidos but were easy to swap to Micro Trains couplers for $3.00 an engine. All of a sudden, knuckle couplers were added and the prices went through the stratosphere. Now that Walthers owns Life Like, the MSRP on these diesels exceeds Atlas and Kato. They are not as good as Atlas and Kato and Walthers is dreaming.
I did see Athearn train sets at Wal-Mart during the past holiday season. I do go to Wal-Mart quite a bit. As for the impulse buying, that is not a real problem with me untill I get inside my LHS!!! But I guess we shall see what we shall see, what ever the long term outcome is.
Since I work for a manufactuer (Testors) who deals with Wal-Mart I will keep my post to the facts and non political. If Walthers is following the business model and I think they are, they will offer Wal-Mart with just basic "mass retail" items, ie slot car sets, train sets, maybe track. Don't worry about seeing Kato or Atlas stuff there, that is what we call specialty items. This is the same model that both we (Testors) and Horizon Hobbies (Athern) has done. We sell Wall-Mart Die-cast model cars and 1/4Oz. paint, not Model Master military or Floquil RR colors. We sell the items that are geared to a newbie that may get serious and trade up his die-cast Dodge Charger kit for a plastic Sd.Kfz that can only be found at a hobby shop. It's the same model that Testor, Cox, Bachman and others have done with K-Mart, Mejeirs, Bradleys ect for years. That said, Walthers has an excellent opertunity to sell a good basic set, with a disc inside explaining the Worlds Greatist Hobby so if the intrest is there, the mass retail consumer can take the next step and know where to take it. When I started N scale my first set was a Life-Like Little Joe set, now I hardly buy anything decorated and choose to kit bash to my hearts content. Granted, out of ten sets sold at Toys-R-Us, one guy became a die hard train guy, but think of the opertunities with the mass selling power of Wal-Mart. For Walthers to succeed, they need a small staff to take care of Wal-Mart. Laugh if you will, but dealing with Wal-Mart is a full time job, I know because that is what I did for two years before taking over Floquil and Pactra. We can all speculate on how good or bad this is going to be, but it really is in the hands of Walthers, the LHS is not going anywhere, cause Wal-Mart is not going to carry RR paint, decals and buildings. They will only carry what can be sold to the mass retail customer.
I never shop at walmart. Their founder was a much different man than the goons who run it now. I'm sure he's rolling in his grave like a chicken on a rotisserie. Good luck Walthers.
I've played paintball for about 13 years now. I've seen it go from a "military extremist" activity to weekend hobby to sport shown on ESPN. A few years ago, Wal-Mart started selling enrty level paintball guns. Yes, it has helped get paintball out into the mainstream. But it has done more harm than good to the sport overall. Walthers is honoring Life-Like's slot car contract with Wal-Mart, and has nothing to do with trains at this time. However, if Walthers is smart, they'll use this foot in the door opportunity to introduce other low end train kits as well. Will Wal-Mart be the end of Walthers? Not likely. Wal-Mart would be uninterested in 90% of Walther's products, if for no other reason than the price. Model trains, other than basic beginner sets, have no market for the average Wal-Mart customer. In my own area, I've seen what Wal-Mart can do. Where there used to be 6+ grocery stores, only 1 remains...and I doubt they'll be around much longer. Even major stores like Kroger have gone out of business. If you need something, Wal-Mart has it. Everyone goes to Wal-Mart, because that's all there is...they crushed all the other stores.
