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Turbo charging sales

Hobbies get a boost

By Peter Suciu -- Playthings, 9/1/2002

With models, trains, board games and paintable figures, hobby stores have always been popular with boys who didn't want to grow up and men who wished they were still boys. While not much has changed over the years as far as the male psyche is concerned, a lot has changed in the hobby arena—both the array of products and the array of consumers.

"I get (everybody from) little kids to older ladies coming into the store," says Darren Pozzi, general manager of D&J Hobby of Campbell, Calif. The San Francisco Bay area superstore has plenty of items to appeal to the hardcore hobbyist no matter what that hobby may be. When asked about hot sellers Pozzi adds, "it depends on the time of year, but everything sells pretty evenly. From models and crafts to RC."

That seems to be the consensus among the different hobby retailers that spoke to PLAYTHINGS. Many of these stores have learned over the years what moves and what gathers dust, and as a result the stores have kept up with customer demands. If anything, some of the hobby merchants admit that they're more surprised by run-away success than all and out bombs.

"Rockets are really taking off," says Tim Bosak, owner of Cleveland, Ohio's Depot Train and Hobby. The store specializes in model trains, but also draws a variety of regulars with more than 30,000 products ranging from military model kits and action figures to games and even a few puzzles. Key to this store's success is that Bosak provides quality service to his customers and works to offer reasonable prices. "People know we order really regularly. We make our orders every Monday and try to have products on Thursday. I seek out deals and find items on sale where I can so I can give the customers a deal too."

Model trains have long been a backbone of many hobby stores and Bosak doesn't see that changing anytime soon. "Trains come and go and sometimes they do better than others, but we're continuing to see strong sales right now."

The current rail barons of the model railroads continue to be HO scale and to a lesser extent the N scale, both of which are consumer friendly in terms of accessories such as buildings and terrain. Bosak adds, "It is easy for our customers because we carry so much. It is like one-stop shopping for them."

However, model railroading could have woes that rival Amtrak. Across the country at D&J, Pozzi sees that interest in miniature locomotives has all but derailed completely. "If it wasn't for slot cars, we wouldn't even carry trains. It is mostly an old-timers thing and I don't see it coming back again for us."

There is further agreement that trains aren't drawing in younger hobbyists and as the current generation gets older they may stop buying as much. Their disposable income will decline as they reach retirement age and there is a feeling among retailers that the hobby could use a makeover to draw in younger fans. Model railroading does seem likely to continue to run but the tracks won't be as crowded as they once were.

The other timeless favorite of hobby shops, traditional model kits, is fading away like an old soldier. The California-based store sees a trend where interest in die-cast and pre-assembled kits is replacing build-it-yourself models. "In only a few years it went from 'I don't want a pre-built RC kit,'" says Pozzi, "to pre-made cars and tanks are all anyone wants. Back a couple of years ago, they wanted to do it themselves. Now all they want are the pre-built cars."

The trend has paved the way for some comers like Hong Kong-based Sunco, a manufacturer of a new line of die cast, Titaniums. The Titanium body is partially die-cast metal and has 26 points of articulation.

Model building seems to be a dying art except for the very serious adult builder, adds Depot Train's Bosak, who continues to carry metal tank treads and barrels as well as detailed parts for those more serious builders. He says that the average consumer for those items is far from the youngster of the old days and is now mostly men aged 35 to 55, who never stopped building kits.

One area that bucks this trend and continues to see rapid growth in the model category is with the miniature figures of Warhammer from Games Workshop and similar unpainted figures. While there is less skill involved in assembling these vehicles or troops (they have fewer intricate pieces than traditional kits), painting and playing with the soldiers is their true raison d'etre. Games Workshop's own stores teach customers how to paint and customize the miniatures, and the company utilizes a coterie of volunteers called Outriders to liaise with hobbyists at independent retailers. The fact that these kits are used as part of a miniature combat game system further helps separate them from being mere models. As a result, the brand has become something of a runaway hit at hobby stores and has expanded to mass retailers as well.

The company currently boasts 31 Hobby Centers in the United States and 14 more in Canada. Tim Huckelbery, spokesman for Games Workshop, tells PLAYTHINGS that their presence is not meant to compete with traditional hobby stores but rather to supplement and even increase the demand for the products. "These stores are really there to show off the hobby to people who have never seen it before," he stresses, "which is why we put them in larger malls throughout the country. We view them as a way to create new customers."

Michael Kilbert of New York City's Compleat Strategist, a mini-chain that has been around for more than a quarter century and currently has stores in Connecticut and Pennsylvania, shares that sentiment. "People that are new to the hobby go to Games Workshop's stores but we draw a lot of our usual trade on Warhammer right now. Nothing else is as strong as that product line."

Kilbert notes, however, that the WizKids figures, including the new Marvel HeroClix and MechWarrior lines, are starting to draw a lot of attention and could eventually surpass the Warhammer brands. These plastic figures don't need to be painted as do the Games Workshop figures, and more and more hobbyists and collectors are being drawn to this new gaming system. It seems likely that both systems will continue to coexist but as D&J's Pozzi pointed out, consumers went from not wanting pre-built cars to only wanting them already assembled in a very short time span. It is conceivable that the same could eventually happen with miniature figures.

While plastic models and trains might be on a decline the same certainly can't be said for die-cast miniatures, which continue to draw collectors of all ages. In fact, toy cars are easily one of the hobby market's most successful sub-categories and that hasn't declined even with competition from video games and other activities. Additionally this is one area where the little guy manages to own the road as much as the major toy companies. Items from specialty makers like Corgi and Classic Metal Works are holding ground against big time players such as Mattel.

There is something for every taste, and this is one case where collectors aren't left searching for that impossible-to-find item. "I've never heard anyone saying that they can't get enough of anything," states Classic Metal Works President Bill Giacci. "The real collectors are getting everything they could possibly want and maybe more!"

The same statements hold true over at Mattel where Matchbox is celebrating its 50th anniversary and the Hot Wheels brand remains as strong as ever. The basic cars are the number one toys three years running in dollars and units, according to NDP's TRSTS data.

"Hot Wheels are as popular with kids as they are with collectors," says John Blaney, brand manager for Hot Wheels at Mattel. "In a time when classic brands are resonating better than ever with consumers, the Hot Wheels brand is in a unique position to generate shared experiences between dads and kids."

Hot Wheels may face some fierce competition from new players including Jada Toys, which is introducing an urban spin on traditional cars. The Los Angeles company has secured licenses with such key brands as Dub Magazine, a publication covering automotive lifestyles. Jada's Dub City line of die-cast cars features huge 20-inch rims and monster stereo speakers for a street-smart twist.

"The focus here is the urban market," says Bill Simons, national sales manager at Jada Toys. He expects the cars to fall into the hands of a younger target audience than, say, American muscle cars, which make up a giant chunk of traditional die-cast. Because oversized rims and the street look in general are major trends in automotive lifestyle, he adds, the products will appeal to a wide demographic.

One point that worries some in the hobby market in regards to both specialty and mass retailing when it comes to die-cast is how the prices have held steady even as other costs have risen. "Toys in general haven't kept pace in terms of cost," says Giacci, "and toys are a hell of a bargain."

While many of the current die-casts are being produced in the Asian Rim including China (instead of the traditional locales of France and England) this hasn't meant that all costs have gone down. "Prices dove in terms of labor costs," Giacci explains, "but licensing has gone from zero or two percent in the 1980s and is now sometimes more than 10 percent. That can be a lot of money for a $5 item."

This is made worse by an over-saturation of companies producing similar products with a limited audience. "There is still much falling out, I don't know how so many companies can compete." The other area that worries a specialty producer like Giacci is the how the collector's market often drives up prices of items originally intended as pure toys. The result is an over-inflated market—something that can hurt toy buyers during a boom and leave collectors with overpriced items after a bust. "There needs to be a decision by the consumer of what is a collectible and what is a toy. The two should co-exist on the same shelf but that isn't always the case."

For the Hot Wheels brand, toys and collectibles do co-exist as best they can. Mattel releases about 20 cars a month in its Basic Car $1 line, and, Blaney emphasizes, the company is also focused to put limits on its harder to find models to help allow the products to maintain their collectability. "Obviously, if we make too many of the hard-to-find models, then they lose their collector value."

Whether it be the trains of old or the Dub City cars of new, there remains plenty for the hobbyist and causal browser alike. Innovation in product lines and the desire from stores to adapt to changing times is what will keep the hobby sector growing well into this new millennium.

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