Having been involved in the model trade since 1982 including 7 years in th late 80’s/early 90’s when I ran my own shop I can honestly say that it is very difficult now to make a living from a model shop selling at full retail price let alone discount prices. The truth is that the turnover is comparatively small and the profit margins are poor compared to other “hobby/luxury goods.
Sports shops, jewellers and most gift shop items give a profit margin which is anything from twice to four times the margins available to model retailers.
I worked out that to pay rent rates and electric a back street model shop would need to turnover at least £100,000 a year and that is a tall order when you are in a back street. Don’t forget the above turnover is to pay the basic overheads from the profits and doesn’t include paying the owner any wages costs for employing staff or costs of extra stock to expand the business.
Modelzone are in a different situation as they are owned by a major importer who is able to finance stores in major shopping malls. The big malls have more visitors than the back streets so by being able to afford a prominently positioned shop they are able to attract more of the passing trade. You could argue that everyone else has the same opportunity but the financial risk and initial outlay involved to establish a shop in a modern shopping mall (including fitting out) costs is likely to be at least £100,000 to £150,000 and then you have to have more money to keep it stocked and pay the rent and rates until the cash flow picks up.
Unfortunately many small shop owners seem to forget that a smile and friendly advice goes a long way to helping ensure customers return but it seems to be the ones who offer poor service who survive.
Corgi have lurched in and out of trouble for a long time now. Modelzone have been buying Corgi overproduction at silly prices for a long time (by that I mean for years rather than months). Modelzone can afford to buy large qualtities if the price is right and Corgi have often chosen to sell them stock cheaply rather than continue to rent warehouse space to store the unsold stock so the arrangement has worked OK for both parties but there is only so long that a manufacturer can overproduce and then sell off the excess for peanuts before the whatsit hits the fan.
The problem is that there has been so much cheap Corgi around that it made it hard to sell new releases at full price because many collectors decided that it was better to wait as the model they wanted was likely to be available at a clearance price within months.
I suspect Hornby have the market knowledge to get Corgi back on track and the massive dumping of over produced stock should become a thing of the past. Stable prices for new releases should also mean that you can buy with confidence and not have to worry about your full price purchase being devalued by dumped stock a few months later.
Hopefully the Hornby buy out will prove to be a positive move. One thing is for sure and that is that Hornby have rescued Corgi from the abyss – they have definitely not bought Corgi to prop up Airfix.
From a retailers point of view the move to get youngsters interested in Airfix by making Dr Who kits (something which should appeal to the young and many older people) was a good thing. I know from running a shop that building kits is a lost art amongst the younger generation and the Dr who strategy just might get some building kits who will then move on to the aircraft ranges ensuring a good future customer base for Airfix and helping secure the future of Airfix for future aircraft kit enthusiasts.

Tried to post a PM about your reply but your box is full