Walthers & Wal-Mart

[Anonymous]

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.


[Editor's Note: There are two additional pages to that story that weren't included here. To read them, go here: http://milwaukee.bizjournals.com/milwaukee/stories/2005/08/29/newscolumn1.html?page=1 and click the page numbers in the bottom right corner of the story.]

[BRAKIE]

Well that's one way of reaching the mass public and I dare say far better then hobby shops simply because millions go to Wally World....

[Anonymous]

eh.. I'll stick with the hobby shop thank you.

But.. I did slot cars as a kid decades ago. I might just take a peek at the wally offerings.

[Anonymous]

Well. in some communities where WalMart competes with hobby shops for consumer's recreational dollars, it could spell the end of hobby shops.

At one time Tyco made HO race car sets. Tyco made a real sweetheart deal with Kmart. Kmart sold the sets and cars below hobby retailers cost. This effectively killed hobby shop sales of race car sets and accessories. When Christmas was over, the hobby shop owners did not want to buy any more Tyco products because they feared that Kmart would again kill sales of Tyco products. Tyco went bankrupt!

Phil Walthers is gambling with his existing hobby shop business.

[howmus]

QUOTE: Originally posted by CapnAmerica

Well. in some communities where WalMart competes with hobby shops for consumers recreational dollars, it could spell the end of hobby shops.

At one time Tyco made HO race car sets. Tyco made a real sweetheart deal with Kmart. Kmart sold the sets and cars below hobby retailers cost effectively killing hobby shops sales of race car sets. When Christmas was over, the hobby retailers did not want to buy any more Tyco products because they feared that Kmart would again kill sales of Tyco products. Tyco went bankrupt.

Phil Walthers is gambling with his existing hobby shop business.

First there was Vlasic, then Tyco, now Walther's. My respect for Walther's just took a nosedive, maybe I'll try Horizon after all. I don't shop at Mall-Wart!

Actually, what Phil Walthers is doing is honoring a contract that was already a part of the sale. It is very much of a catch 22. Hopefully he will not resign the contract when it comes up and save the hobby from extinction.

[Anonymous]

QUOTE: Originally posted by CapnAmerica

Well. in some communities where WalMart competes with hobby shops for consumers recreational dollars, it could spell the end of hobby shops.

At one time Tyco made HO race car sets. Tyco made a real sweetheart deal with Kmart. Kmart sold the sets and cars below hobby retailers cost effectively killing hobby shops sales of race car sets. When Christmas was over, the hobby retailers did not want to buy any more Tyco products because they feared that Kmart would again kill sales of Tyco products. Tyco went bankrupt.

Phil Walthers is gambling with his existing hobby shop business.

I agree 100% While I would like to see the hobby grow and get to a greater audience, to see Walthers "sell out" to the small business killer Walmart is a sad thing. I try my best to buy from other businesses when it comes to anything I can get from a "small business" even if it means spending 2-3 dollars more. Unfortunately to many people are after the lowest price in town, which I see many here doing with buying from the Internet stores. I actually just ordered a Chopper III and the MRC diesel sound system from my LHS as opposed to ordering online and save a few dollars. But then my LHS has been very good about giving me a 20% discount on almost everything I buy, and will take a bad locomotive back after having it a week or 2 if it turns bad.

Just my 2¢

[Anonymous]

Honoring the existing contract for delivering Life Like products in 2005 is something different than negotiateing for Christmas of 2006. It appears that Walthers is looking forward to their own deal in 2006.

You know, I'll bet that Phil Walthers has not yet told his dealers about his WalMart plans.

[rexhea]

No fear! Unless Walthers makes a big change, the shelves will be empty because of back orders. [xx(]

REX

[stokesda]

I wouldn't worry too much about the long-term effects of selling Walthers at Wal Mart (if that is what is going to happen). The K-Mart/Tyco effect will not repeat itself because at the time that happened, toy race car sets were very popular. The sad truth about model railroading is that people (i.e. the general public) just aren't as interested in it as they were decade ago. There may be a brief spike in MR interest in the general public, but in a couple of weeks it will die down as the next fad comes around the corner. That's just the nature of our fast-paced, instant thrill, immediate gratification, popular culture.

I predict that if Walthers decides to sell train stuff at Wal Mart, it will be short lived. It won't take long for the public interest to die down, causing Wal Mart to dump the Walthers stuff because they need to make room for the next big thing. Then it's back to the LHS/Internet/eBay.

[Duce]

Ill have to agree with you stokesda. I dont think that there are enough people that will buy the product to make a profit. The best thing we can do is not buy our supplies from walmart. Like Stokesda said if the true models dont buy it then it will be short lived.

I my self go out of my way sometimes driving up to 150 miles to buy from a hobby shop. I like to put my hands on what im buying and it also keeps the "little guys" alive.

[rlandry6]

I seriously doubt that Wal-mart is going to sell anything but the cheapie toy store type stuff. A shelf with Spectrum or Proto on it would be a surprise indeed. Walmart is not know for quality, only cheap. As far as supporting the LHS's, I would like to, and I do when it's feasible, but when I can buy a loco, from $40-$125 less online at BLW, or Kleins.... Well, you get the idea.. When that changes, I'll do all of my shopping intown..

[IRONROOSTER]

I suspect that Walthers has to make this work or face bankruptcy. In order to sell a lot of Life-Like slot cars they are probably going to have to continue to deal with Wal-Mart. If Wal-Mart sells Life-Like train sets, then hobby stores won't be able to compete with these products.

OTOH I can't see them selling the upscale Life-Like products since there is unlikely to be enough demand to support Wal-Mart volumes. Other Walther's products I think face the same problem of not having enough sales volume for Wal-Mart.

The silver lining in this cloud is that if Wal-Mart sells lots of trains we should get lots of new hobbyists who will turn to the hobby shops when they are ready to go beyond Life-Like.

These are truly interesting times.
Enjoy
Paul

[ereimer]

as long as we're talking christmas train sets i don't think it will affect the LHSs too much . they will notice it of course as they all sell sets , and if someone comes in to buy a set they can always try to upsell , so they will lose some business . and i can't really see wal-mart dedicating a whole aisle to hobby supplies , which would kill LHSs as wal-mart has killed many other local businesses .

the real danger i see here is what happens when walthers can't make their ship dates , don't have stuff in stock etc. as i so often see on their website , even for the walthers branded items ?
wal-mart didn't get to be (one of?) the world's biggest retail chains by playing nice with their suppliers , i think phil walthers is going to find that out the hard way

at least WALthers and WALmart start with the same letters , then we won't notice when it becomes WALmart Trains instead of WALthers Trains

[fishplate]

Hey!! How about buying Athearns HO scale "JD" tractors at Wal-mart. I SAW, I BOUGHT,
all they had. Same price as the hobby store, just more of them.

[Anonymous]

The bad thing about Walmart is IF they see a profit to corner a local business market nationally, they will with a vengence. But as stated by some others, if Walthers can't keep shelves stocked, Walmart will drop them like a hot potato.

[dinwitty]

If you can get the masses interested in the trains again, that helps.
You would likely see the mass market toyish stuff at wallyworld, go to your hobbyshop for the quality stuff.


LifeLike already had the contract out for the Walmat thingy, Walthers is obligated to carry it on.

[RedGrey62]

Before I say what I want to post, let me first say that I am no fan of WalMart. Their practices helped put my small sports shop out of business. HOWEVER. I think this is nothing more than some other folks have already stated, Christmas train sets that one normally finds at WalMart anyway. Only now, Walthers is delivering the goods. There are some manufacturers that have rules to keep WalMart from getting higher end stuff to sell extremely cheap. When Rebok won the contract for all the NFL teams, they limited the high end jerseys and such to specialty stores and not the big discounters. Some of the train manufacturers may do the same.

I don't see them really competing with the LHS as they are not going to special order stuff, or know their customers well enough to know that they need to order a Burlington for me, CSX for Bob, UP for Fred, etc.

RedGrey62

[loathar]

QUOTE: Originally posted by rlandry6

I seriously doubt that Wal-mart is going to sell anything but the cheapie toy store type stuff. A shelf with Spectrum or Proto on it would be a surprise indeed. Walmart is not know for quality, only cheap. As far as supporting the LHS's, I would like to, and I do when it's feasible, but when I can buy a loco, from $40-$125 less online at BLW, or Kleins.... Well, you get the idea.. When that changes, I'll do all of my shopping intown..

You must not have been looking for train stuff at Wally mart lately. They have been testing the market with high quality low priced stuff for about a year now.It always sells out in about 2 days. I look forward to this because I don't have an LHS anywhere near me and S/H on mail order is going through the roof.Bad for some people and great for me AND for our hobby. MORE exposure and maybe it will pull in the reins on some of the REDICULAS prices some LHS's are chargeing. Match Box is also going into high quality HO scale vehicals too.My friends, I think we're looking at a storm on the horizon, and it's name is not KATRINA.

[Anonymous]

I don't think this will lead to Wall-Mart carrying any more than slot cars, and a few cheap train sets. I doubt that they could have anything that would help the experienced modeler. Besides, I wouldn't go shopping for trains in a Wall-Mart, it’s a zoo. Not to mention Mike at the LHS has been a great asset offering his knowledge and recommendations, just try to get customer service from a Wall-Mart. I don't see were this mentions anything but train sets.

[davekelly]

I doubt seriously that we will ever see more than train sets and maybe some structures or track at Wal-Mart. Just as there isn't a whole lot of plastic models there now. But perhaps if Wally World were to stock some medium end trainsets that will get more people started in the hobby and then going to the LHS to expand. Could be a win-win.

[ericsp]

It has been awhile since I was in a Wal-Mart, and even longer since I was in the toy area. However, I seem to recall seeing model aircraft there. The hobby shop I go to has more model aircraft than trains.

[bogp40]

And they're counting on Walther's for prompt delivery of the toy sets for Christmas, this I got to see.
Bob K.

[Anonymous]

but it says nothing about trains in the story just slot cars so i dont think we will see trains at wal mart and if we it will probly just be sets and some ez track

[Anonymous]

OK let the bashing begin I think it would be a great idea for walmart to get in the market. Maybe more people would get into our hobby. I like my LHS the guy that runs it is a great guy and friend and when I'm home I spend a lot there to support. him. But in small towns the LHS is like the local drug store a dieing breed. For those of you that don't like wal-mart don't go. No one is holding a gun to your head to shop there. Sam Walton had a good idea and it made him and his family rich.I donot know many people that would like to do better for there family, so In small towns Wally world is mostly all we have and they employ a lot of people yes the pay is not the best but it is a job And for a lot of us with familys that still want to enjoy our hobby even on a small scale wal mart might be the route to go If Mr Walthers has to do this or wants to do this I wish him luck. Ok start the bashing...

[pedromorgan]

over here wall-mart is ASDA. i dont suppose life like products will make it this far!

Peter

[Anonymous]

QUOTE: Originally posted by davekelly

I doubt seriously that we will ever see more than train sets and maybe some structures or track at Wal-Mart.

Similar to what's on the shelf at hobby-lobby.

[Fergmiester]

QUOTE: Originally posted by rexhea

No fear! Unless Walthers makes a big change, the shelves will be empty because of back orders. [xx(]

REX

Zzzzzing!

Ye of sharp tongue Rex, though well said!

Dave: Your on the mark as Wally World will not carry the little stuff that we need to make a good hobby great.

$50 dollar Starter sets doth not maketh the hobby nor account for the LHS bank roll.

As for Walther's profit margin going down

I don't think so!

Prices may drop but volume will sore

Fergie

[Anonymous]

QUOTE: Originally posted by Fergmiester
[Prices may drop but volume will sore

[:D] "Sore" as in "Ouch, that hurts!" or "soar" as fly high?? [:D]


Bob Soaring Boudreau

[Fergmiester]

QUOTE: Originally posted by FundyNorthern

QUOTE: Originally posted by Fergmiester
[Prices may drop but volume will sore

[:D] "Sore" as in "Ouch, that hurts!" or "soar" as fly high?? [:D]


Bob Soaring Boudreau

Oh the slings of arrows.

If If walther's affiliates with Wal-mart will they become....

Wally-Others?

[%-)]

[tsasala]

I heard Walmart is trying to "upscale" their products to compete with Target and other companies that are starting to take part of their sales. Perhaps this is an attempt to capture a niche market??

-Tom