Lionel’s column #2 – Feelings about market situation

Hello all,

For this second column, only a few days before Nuremberg Toy Fair, I would like to write my feelings about current market and market evolution.

During my life, I’ve been at all points of the RC market; firstly as hobby user, then as private racer, and a few years later as distributor (RMW 1992~1997), then as retailer during 5 years (1997~2002), and currently working as product designer / distributor for HRC Distribution for the tenth consecutive year.

I also come from a family who raced RC before I start, as my cousin was racing 1/8 on road at the end of the 70s.

So, during my almost 30 years in RC (and the last 24 as job), I seen many things changing.

Instant Profit:

I saw many actors of the market trying to get instant profit instead of a long term project:

  • Brands selling directly to end users, or to retailers without national distributors.
  • Shop claiming to be distributors to brand to obtain better discount, but actually never distributed any product to other retailers.
  • Drivers creating online shops only to get material for them and their friends at better conditions; usually with a main job and no real dedication to their “shop”.
  • Distributors selling directly in parallel to their retailers.

Etc, etc, etc.

My opinion, and I always had the chance at HRC to be followed by Stefan Hartweg (the “H” of HRC / my boss), is we (not only HRC, but all the brands and distributors) have to maintain a minimum of market structure, even if it looks old school and not efficient at short time. In fact, we need users in regular and physical shops. This is, in my eyes, the only way to maintain RC hobby alive at long term.

So, at HRC, we decided since years to don’t sell directly through a HRC online shop. Only retailers are delivered by us. We also make big efforts to keep regular retailers competitive on the market.

For sure, we can get more profit by creating an online shop, but our long term vision and our experience show us it’s the wrong way.

The regular shops, only way to get newcomers:

Nobody wakes up a morning by saying himself “I am going to begin RC hobby”. For sure, the only serious way for RC hobby to get newcomers is to continue to show RC cars on hobby store window on cities. All other ways are currently marginal or confidential.

RC car hobby has no TV show (or at least “marginal” ones, in terms of audience / exposition on medias), no sport results displayed on newspaper or TV, and all our races are usually organized away from public. For sure, local and physical hobby shops are the only real “tool” we have to get beginners. On the contrary, an online shop only gets customers from people who already practise, or at least know the hobby, so it doesn’t really “create” or share beginners.

I had a Toy and Hobby shop for 5 years; during this period, I saw many people having a crush simply by passing in front of my window. They saw RC cars, or any other kind of product on the window and enter the shop to ask information, to better know the product they seen etc. This is not possible with an online shop where visitor comes only by already searching a product. Even web advertising system is based on the web surfer’s interests, and display adds only for products or domains already known by him.

Of course, clubs also create some passionate peoples, and convince some of them to join the hobby, but this is marginal and confidential… clubs are usually away from centre of cities, it’s a bit like online store: in the majority of case, nobody goes to a club by “accident”.

This is why it’s extremely important for all of us, manufacturer / distributor / retailers / clubs / racers / bashers / simple fans of the RC market, to make all we can to maintain the “real shops” in place.

The online sales are only dividing the customers and weakening the physical stores; even if it’s a service appreciated and asked by many users and racers; as well as a very good way to get instant success for many brands and dealers, especially for the new ones.

Please, understand that I am not reactionary. I like internet! I’m a true and serious graduate webdesigner! I know certainly better the web than many people. But for sure and since years, we are destroying the hobby by closing the physical stores, and we already can see the effect of this online market since years, and this phenomenon amplifies every year with the closure of more and more physical stores.

Brands confusion and multiplication:

Of course, I’m not on the best position to tell to passionate people they are wrong by creating their own brand. I just have to tell things have never been so easy to create a brand, and there is no sufficient place on the market to provide success to all these brands.
Some are very confidential, and many of them will remain confidential for years, and some other will reach success. Some other are historical brands and was simply the basis of our hobby… many of them will stay on their level, and some other will disappear. That’s life, that’s the market. Sometime you take risks and it pays… or not.

The only sure thing about that, is we have too much brands on the market. Not all will get enough success to continue, but all are participating in the weakening of the others.

To make their place, new brands are usually selling directly, which is the only way to get instant results and success… and of course, is also one cause of the lowering of the regular shops. I deplore that, but I also understand and accept it. This is a challenge to work with this situation.

Brands are also restructuring, changing, and sometime they are also closing. We saw so many market changes the 5 past years, situation sometimes looks crazy.

At HRC, we already have been a bit “victims” of this kind of change, with brand changing their market politic; then we decided to secure our positions. We built a very strong and safe relationship with Team Magic and decided to rebrand many products under our own “HRC Racing” brand, to be safer and get more control on our products and costs.

Market evolution:

Many people are thinking the natural market evolution is on the internet. It’s probably true, but this doesn’t mean this is good.

First side of the evolution, we can already see every day (at least every month), is the drastic reduction of the number of hobby stores in many countries. This is not only due to the internet sales, but of course also due to the global economic situation (honestly, if we analyse the global situation, we can find the same causes that make troubles in the RC market).

The other side is “big” shops going bigger and bigger. We have all some examples in mind, in Europe, USA or Asia.

In fact, the more important you are, the more you can lower your costs and your prices, and to offer services more advantageous or important to your customers; and reversely for the smaller ones. So, the gap between the actors of the market increase years after years.

This is something we all have to think about. It’s not something purely natural, it is something we let happens, because we think it’s something normal, and it currently doesn’t disturb us. But maybe we are more concerned than we think; it’s a long term choice to do.

Own situation:

I’m totally aware I’m somebody in a very privileged situation. I’m living in Switzerland; I have multiple and very interesting jobs with HRC Distribution, Team Magic consulting, and also for my own businesses AdaptaWeb & AdaptaPrint.

OK, I work around 60 hours a week; but when you do what you like; when your job is also your hobby, this doesn’t really count; especially when your office is at home, with a nice collaborator like I have.

HRC has never been in a so good situation on the market, especially in Euro zone. This show the Stefan’s choices and business plans are the right ones, we continue and stay on the good way.

But, I’m a bit sad, at least disappointed, to look some market changes and some of its actors in difficulties (even if some of these changes are good for HRC), because I know many people, and the big efforts some of them made for “nothing”. I also know how difficult it could be to create a business, and to keep it safe.

Lionel Troyon – TM team manager and product designer

Notice about columns: the ideas and terms written in the columns published on the HRC blog are personal views and ideas of their author only, and not official publication of HRC Distribution.

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