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
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.
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.
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.
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.
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.
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.
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…
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.
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
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.
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.
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.
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.
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.
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.