Model Zone in Administration & to close

[Hardtarget]

Yet in the U.S. they manage to keep quite a few of their LMS's going, wonder where it went wrong in the U.K.?

Remembering the haemorrhage of LMS,s started in the late 60's, early 70's.

Number of thoughts,

1. Lack of stock knowledge.

2. Lack of customer service.

3. Lack of stock.

4. Lack of training.

5. Don't give a damn attitude.

6. Poor management.

7. Greedy people at the top (knowing now the principle shareholders are a banking group !!! )

8. or simply, too many lookers and not enough buyers?

I think a bit of all that tbh. But ultimately its the price you sell things at as to whether you get sales which are fundamental to a business and more importantly the bank roller of the company. In this case it was Lloyds who pumped in 5.6m into the take over in '0,9 so it was inevitable that they would want a return at some point.

[Colin @ Freightdog Models]

I really feel for the staff going through the administration process, the last airline I worked for did it twice, thats a year I'd not want to repeat. Good luck to them, hope they can keep them going, as MZ is the only reason for me to go shopping in Crawley these days (and I admit I'm a browser, but I do buy occassionally)

Colin

[Kallisti]

One of the problems in the UK is that rents and rates are so high - this has been announced at the time when the next quarter's rent is due to be paid

[Sisaphus]

They opened a massive store here in Birmingham a few years back. God knows what the the rent must be - astronomical given its prime position (Lower Bull Street), but I have always had the impression on my visits that while there are plenty of people browsing few were actually buying.

Hopefully the administrators will be able to salvage something from the ruins, but it will be based on the accounts and returns of the individual stores and I suspect a great many will disappear if they cannot be made profitable PDQ.

I would certainly be sorry to see the Brum store close especially as the manager and staff have been a good supporters of Midland Expo.

Edited June 26, 2013 by Sisaphus

[chadders]

I can't understand why they would open a big new store in London just a few weeks ago. Surly they must have had some kind of inclination that this was coming.

[Séan Pádraig]

The new London store was not an additional store but rather it was to replace/relocate the old Holborn store and would have been planned long before the Holborn store closed.... the problem that store faced (as discussed in the thread announcing it's opening) was it was smaller than the store it replaced and the stock on the shelves reduced.

[chadders]

Yeah, I know it replaced Holburn, but why spend money they know they haven't got. Their last financial report filed showed a net value of £1.2million in the red. Those kind of figures don't just creep up in a company.

http://companycheck.co.uk/company/06836329

[dfqweofekwpeweiop4]

We'll all have to keep tabs on what happens. I always liked browsing the Chester store, even if not buying anything. If they do go under, it will be interesting to see who picks up Hasegawa and what they will do with the prices (lower them hopefully!) and we'll also all have to watch out for a closing down sale if that happens.

thanks

Mike

[Nathan Robinson]

Having a quick look at the financials dated June 2012 seems they went bust just before the annuals accounts are due.

They had around £9m of short term assets with short term debt of £5.5m, which on the surface is not too bad . The problem is that £6.3m of assets is tied up in stock, which is not particularly useful when the rent cheque is due. This explains the deep discounting that seems to have been semi-permanent recently.

The other problems seems to be long term debt. Long term liabilities of nearly £9m. Add on a £1.8m overdraft and I wonder if the bank wasn't willing to plug any short fall and they pulled the plug? Not sure what story the 2013 accounts would have told either.

Modelzone Holdings Ltd makes a reasonable gross profit from selling kits etc but it turns to a loss when all the overheads are deducted. Will they survive? God only knows but with a turnover of £33m I'd hope so. Perhaps they will go the same way as Jessops, surviving but in a very much stripped down form with a lower cost base.

[prowler0000]

Are any of the stores still open?

[Kallisti]

Interesting analysis Nathan. Is that long term debt anything to do with the leveraged buyout in 2009?

[Nathan Robinson]

Can't tell what the long term debt is. seems like a reasonable assumption though. If memory serves, Jessops were sorted out in a couple of weeks. Hopefully, Modelzone stores, unlike Jessopns can stay open throughout.

[Amo Aero]

Yet in the U.S. they manage to keep quite a few of their LMS's going, wonder where it went wrong in the U.K.?

Remembering the haemorrhage of LMS,s started in the late 60's, early 70's.

Number of thoughts,

1. Lack of stock knowledge.

2. Lack of customer service.

3. Lack of stock.

4. Lack of training.

5. Don't give a damn attitude.

6. Poor management.

7. Greedy people at the top (knowing now the principle shareholders are a banking group !!! )

8. or simply, too many lookers and not enough buyers?

If it is of any consolation at all to you, here in the USA we have lost many local hobby shops. As many in this thread have observed , it is very difficult to compete with online sales, and I would also agree with all of the reasons given in your 8 point list above.

Hobby shops in the USA have been a dying breed at least since the '80s. I fondly remember almost a dozen in just my extended area, now long gone. The only one remaining near me is a 20 minute drive away, and I only make that trip if I am desperate for paint. They are mostly a model train and RC planes shop, but do have quite selection of plastic kits. Of their kits, aircraft are very poorly represented. The management does not understand plastic aircraft kits at all--the same crappy kits have been sitting on the shelves for years. They are literally covered in dust and grime, but every time there is a price hike they put the new higher priced sticker on. I suggested to the register clerk more than once that they put the old airplane kits on sale and use the proceeds to buy some new kits that aircraft modelers would actually be interested in building, but he is just a minimum wage drone and has no interest in exerting himself more than he has to.

[Lightningboy2000]

I went into the Ipswich store yesterday and saw the usual sale offers. I did come away with a double reduced Revell 1/72 Canberra for £5.99, but when you see private sellers on ebay listing kits like this for £.99p then something is seriously wrong.

Some of us just want to go out as opposed to sitting and waiting for mail to arrive.

Wer'e very lucky here in Bury St Edmunds with The Model Junction, which is the last great model shop in East Anglia not counting Hannants. I do wonder though how tough it must be to run a chain of model shops, when there's only so many serious modellers in the UK. When you see Jessops & HMV tentatively return from the brink, then there must be hope for Model Zone.

Best wishes to them

Martin

[JMChladek]

If it is of any consolation at all to you, here in the USA we have lost many local hobby shops. As many in this thread have observed , it is very difficult to compete with online sales, and I would also agree with all of the reasons given in your 8 point list above.

Hobby shops in the USA have been a dying breed at least since the '80s. I fondly remember almost a dozen in just my extended area, now long gone. The only one remaining near me is a 20 minute drive away, and I only make that trip if I am desperate for paint. They are mostly a model train and RC planes shop, but do have quite selection of plastic kits. Of their kits, aircraft are very poorly represented. The management does not understand plastic aircraft kits at all--the same crappy kits have been sitting on the shelves for years. They are literally covered in dust and grime, but every time there is a price hike they put the new higher priced sticker on. I suggested to the register clerk more than once that they put the old airplane kits on sale and use the proceeds to buy some new kits that aircraft modelers would actually be interested in building, but he is just a minimum wage drone and has no interest in exerting himself more than he has to.

I wouldn't necessarily say a "dying" breed, but certainly a changing one. My folks own an independent shop in San Antonio, Texas. It is run by my brother and sister and for its size, it has continued to thrive, while not necessarily being a profitable enterprise (at least it is breaking even). I am not really involved with it directly, although I do see what amount of money has to go into it. But, I have worked for a grand total of nine years for a pair of Hobbytown franchise stores in Omaha, Nebraska. So I've seen a few things.

First of all, I do see that hobby shops as we know them need to diversify to a certain extent. It sounds like Modelzone was trying to do that by having RC cars and planes. Even with as narrow a focus as my parents' store has (plastic models, trains, figures, gaming supplies, some books), it makes up for that by having a rather loyal client base. Hobbytown on the otherhand tends to be more like Modelzone with it having plastic, RC planes, RC cars, slot cars, trains and other hobbies such as rockets, telescopes and puzzles. But, of the stores I worked at, one was rather HUGE and it needed to be in order to stock all the parts for the RC cars and a diversified inventory. By comparison, the second Hobbytown I worked for is a bit smaller and has to be a bit more selective of what it carries (thankfully, plastic models is one of its primary draws) since it lacks the real estate to expand.

At a glance... and be aware this observation is coming from a Yank who admittedly doesn't know ALL the subtle nuances of doing business in the UK... it seems like Modelzone might be a victim of two things... lack of space in most of its stores to really have a diverse stock and maybe the inability of the shops to tailor their inventories to their the local communities. In the states, Hobbytown is a franchise, meaning the owners of each store have a certain amount of power to purchase what they want. But there ARE some items they HAVE to carry. At the LaVista, NE store, plastics and trains sell well. RC cars sell a bit, RC planes not quite as much. The Omaha store on the otherhand... much bigger and A LOT closer to a couple local flying fields. So, a lot more planes and parts for them are carried while plastics don't sell as much (but a diverse stock is still kept).

If what I am reading is correct, it sounds like most Modelzone stores carry the same stock in a "cookie cutter" fashion. It can work if a certain product is in demand at ALL locations, but if a few shops have product stuck on their shelves that doesn't move, it is potentially a losing proposition since they can't order more of the "in demand" stuff. A mail order firm doesn't have to worry about how much of what it carries and it can alter its stock accordingly with it all being hidden from sight.

Another dirty little secret of RC cars and planes is a kit or ready to run product selling for X price actually does not have as much of a profit margin in it as all those little spare parts for said car or plane do. BUT, that big box takes up a lot of space on the shelf. Plastic kits by comparison tend to have a better markup and profit margin. In the Omaha store I worked at, A LOT of shelf and peg board space was dedicated to those RC car parts and THOSE are what helped to pay the bills. You would not BELIEVE how many bags of spare RC car parts just ONE Tamiya kit has, let alone four or five cars each from four major RC car brands. The RC car aisles look almost like a hardware store! It can get worse over time as new cars come out with totally different parts geometries (meaning more space to dedicate to parts for the NEW product).

Now if I understand UK building and zoning laws, it can be a lot more difficult to buy a patch of land to build a new store compared to the US. The costs are enormous and depending on the location, there can be all sorts of red tape from town councils, historical societies, health and safety and the like. In the states, especially in the midwest where I live, the population density isn't as big as it is in the UK. There is A LOT of land available and so one can theoretically build a new facility just off of a major road and cities like Omaha are expanding all the time. But you don't necessarily have that in the UK. So it is down to trying to cram inventory into shop space in a spot that might have been built in the 1950s (or earlier in some cases) and having to live with it because it can't be expanded (and I don't think TARDIS technology is coming along anytime soon).

As I said, this is just one foreign observer's take on what might be possible contributions to Modelzone's problems. As I see it though, a hobby shop does need to have a certain amount of autonomy to survive regardless what somebody in a corporate office says. Hobby shops have to work leaner and meaner to attract enough customers to survive in this age when "more" isn't necessarily a better or even a possible thing.

[Max Headroom]

I predict a massive reduction of stores and developing the online side of the business.

Trevor

[SimonR]

Lets hope Modelzone can pull through in one form or another, feel for the staff in the Norwich store as they used to run the Kellers model shop before they were bought out by MZ, couple of the guys have been there for years.

If the worst does happen I wonder what Airfix/Hornby will do as MZ is probably their best avenue into the High St and with the lack of local hobby shops we now have they will need to find somebody to stock their products.

What are me & the boys going to do now when Mum goes shopping?? (at least Norwich still has Langleys in the city centre!).

[CockneyCol]

Complaints about browsers but not buyers, that suggests the buyers have made a massive number of mistakes with the wrong stock at the wrong time, £40+ for a 1/43 diecast model and display cases full of them...during my visits I've heard many potential customers laughing at the costs of them. This sort of thing is an on-line market as it costs to have shelves of stock sat for months on end over multiple outlets.

Coupled with the on-going complaints to being more of a toy shop rather than a model shop.

Can't be all things to all people

[Bri48]

"On 26 June 2013, Richard Michael Hawes, Nicholas Guy Edwards and Robert James Harding of Deloitte LLP were appointed Joint Administrators of Modelzone Holdings Limited, The Amerang Group Limited, Modelzone Limited and Amerang Limited (together the "Companies"). The affairs, business and property of the Companies are being managed by the Joint Administrators. The Joint Administrators act as agents of the Companies only and contract without personal liability. The Joint Administrators are authorised by the Institute of Chartered Accountants in England and Wales (ICAEW). All licensed Insolvency Practitioners of Deloitte LLP are licensed in the UK"

I assume the first responsibility of the Joint Administrator is to find a buyer for Modelzone. If it doesn't happen the the sad fact of the matter is it will go into Liquidation and inevitably be wound up. Long ways to go yet...probably....creditors to be sorted out etc etc.......but rest assured with Insolvency charges @ £400 per hour nice pickings if you can get them!

[Séan Pádraig]

I have in a previous life collected dicast cars and MZ was one of the prime sources for feeding that habbit... I have around 40 1/18 scale and 120 1/43 in the collection but rising prices meant I stopped aquiring diecast over 5 years ago... a typical 1/43 today cost about the max I was paying for a 1/18 model.

[John]

I'm still of the view that the retail model trade in the Uk hasn't fully recoverd from the boom and bust of Beatties. Their agressive store opening policy put many LMSs out of business and when they collpased it left many towns with no outlet. My home town never had a Beatties - although they were looking at a unit in the local "mall" - and we still have an active LMS even though it's more of a diecast shop than a kit shop.

John

[Séan Pádraig]

If the worst should happen and MZ closes ol it's shops then how much of an imposition to established modellers will that really be.

I now buy far more of my kits and accessories at model shows or via the internet (Littlecars, eBay, HLJ etc). And if I am being honest if all sources of new kits were to suddenly dry up then my stash would keep me going for many years to come.

Will we now see Hobbycraft expanding their plastic kit range?

Edited June 27, 2013 by Séan Pádraig

[Alan Kelley]

Well my experience with modelzone hasn't been good. Any kit I buy from them has a £15 postal charge. Wonder what will happen to imports of hasegawa now as amerang are the importer. Might we see more realistic prices without the huge markup uk prices have been hit by?

[Scratchbuilder]

Well, well. You poor devils!

I have never even seen a modelzone shop, much less been in one. In fact, apart from our local toy shop (and heaven knows how they remain open) I haven't set foot in a model shop for about 15 years! That was when I flogged some ancient model boats to Galaxy models in Norwich.

I make everything I need. I now buy some metals from any of Albion Alloys outlets via the internet and everything else comes from that local toyshop, with paints and Milliput coming from a branch of Boyes, local to my son. Otherwise I'd use Creative models who are a 25 minute toodle away from my house. Or buy second hand off ebay and the through the good offices of the chaps on here reducing stashes. Because I don't do military, it doesn't interest me one bit what the latest "must-have" is or where I can or can't get it.

I am also married to a wonderful lady who HATES shopping, so I never get dragged round town centres. In fact our nearest town centres are so depleted that they're not even town centres any more.

Ain't I the lucky one?

Martin (living in his own little world, trying to make it littler)

[Séan Pádraig]

Well apart from the mild "I'm alright Jack" overtones You are indeed fortunate to be so skilled at scratch building... many of us are barely able to build out of the box... and as such are more reliant on retailers for our needs... reading all the posts it is fair to say most of the posters do not rely on MZ as a prime source of kits and accessories and so most comments relate to the state of affairs where a company like MZ could end up in adminstration... modellers by nature are a resourceful bunch so will get by.

Edited June 27, 2013 by Séan Pádraig