After taking some time out to "let the dust settle" a little bit on last weeks announcement, we think it's worth providing some further clarity on some points that came up online over the weekend. Some misinformation seems to have poked an oar in, which we will correct, and also explain how and why this acquisition will work.
We will also be happy to answer questions from you on this, but would ask first to watch the video announcement, read the points below, or also come visit us at shows to ask too.
If you are a retailer, please feel free to contact our trade point of contact if you have an Accurascale trade account, and if you wish to obtain one, send us a message via the website.
With that said, let's get into it!
What exactly has been acquired?
Accurascale acquired Heljan’s tooling, intellectual property, stock, and branding. This means we now have full control over the future development and production of Heljan models as well as all tooling, branding etc.
We have not bought Heljan as a company, and as such had no contracts or agreements on existing distribution deals or commissions unless deposits were paid and contracts were signed to reflect this.
How Are The Ranges Going To Work?
We find a picture speaks 1000 words, so hopefully the below highlights exactly what will happen:
All upgraded tooling from the Heljan OO gauge range which will be now be available in the Accurascale range and retailer network, save for any specific models subject to charity specials, expensive licencing agreements or modified or special variants. This means OO gauge Heljan models will return in the Accurascale range at a lower price point, with further enhancements, and will support trade for many years to come. An example of this is the Class 153 and Class 155 DMUs.
What Has Led Heljan To Selling Some Lines Direct Only?
In the last two years, Heljan lost key retailers like Hattons and Olivia’s, along with numerous smaller model shops. This significantly reduced the routes to market, leaving stock sitting unsold. Much of this stock would have been committed to production, thinking that these retailers would still be in place, and buying patterns would remain.
It is not easy being a manufacturer, as you are predicting how many units you can sell in 3-4 years time when you start a new locomotive project now. In this very unpredictable world, that is a challenge and a half! After all, who predicted that Hattons would fold? Each day costs money in any business, with bills and wages to pay and the need to recoup investments for future projects.
When other large retailers then make lowball offers for remaining stock, Heljan were often selling at break-even or a small loss to try to turn that stock back into cash to keep the business rolling. The larger retailer then sells the stock at heavily discounted prices, making a nice profit, while the manufacturer loses out. This can create a death spiral, as Heljan experienced.
We all love a good sale, but when you see the prices at over 60% off, you know someone is losing money, and the market had been trained to wait for Heljan's prices to reduce significantly. Heljan was also being strangled by an archaic distribution system, which resulted in the eyewatering RRP prices we were seeing for Heljan models compared to competitors like Accurascale were until we joined forces.
Direct selling is not the spark that sets off the demise of the local model shop, it is the reaction to local model shops closing around the country over the past 30 years or more and requiring a new strategy to sell models to your market.
Tell Me The Advantages Of Direct Selling?
O Gauge was particularly noticeable for this price slashing, so by making it direct only, the range can be made profitable again, while still offering the "market price" that was settled on by the big retailers and their slashing sales. It merely passes big savings onto modellers, and allows future investment in new tooling. This means O gauge locomotives from £249.99, meaning that it is very much attainable for modellers once again.
TT:120 was on course to suffer in a similar fashion, with a frankly silly RRP of £199.99 for a Deltic when an Accurascale one was £30 less in OO. By going direct it can compliment the price structure set by the big retailers for Hornby TT:120 models while also turning a profit for more TT:120 models in the future, and pass savings onto modellers and allowing us to invest in new TT:120 models.
The OO Gauge Models that will remain in a blue and red box will now make up a budget friendly range, akin to Hornby railroad. This will encompass older tooling (think Class 52, Hymeks etc) which are too long in the tooth to upgrade to Accurascale standards, and would likely not be seen again had Heljan remained as they were. We can now offer them in small production runs, competing against Hornby Railroad ranges etc. at a very attractive price point between £99.95 and £120 ish mark. Perfect for new entrants to the hobby, the detailer who likes a cheap project and those who model on a budget. They still run like swiss watches and will also get upgraded electronics. If we sold them through retailers, they would be Accurascale loco prices, so only viable in a direct selling structure.
What About Retailers?
You may scoff at my next point, but this is actually great news for smaller retailers.
Here's why: This comment here is a true story from a former employee of Hattons, posted on RMWeb.
The Hattons hierarchy were raging that Accurascale would not bow down to their buying might for their models so they could undercut the competition and leverage a competitive advantage.
Why did Accurascale do it, when Hattons were willing to throw wads of money at them when they were a still young company?
They did it to protect the small retailer, and make selling their models a level playing field for everyone.
Accurascale's terms are still the same; everyone gets the same deal, no better terms for big buyers, they get to sell at a very attractive RRP and get FULL MARGIN, and it doesn't matter if they are a one man band or the biggest in the business.
Now there are Heljan OO scale models joining the Accurascale range, so they too now are subject to the same terms. This prevents more undercutting of Heljan range of products by those with more buying power, lower RRPs to entice in customers, no distributor extortionate margins making RRPs unrealistic and models as a result are easier to sell as an Accurascale model and a healthy margin to keep retailers making money.
All that is lost to trade is a couple of TT models which may open back up to trade should the volume in the scale materialise, the small retailer will never be left with an expensive O gauge model sitting on the shelves for years while the bigger retailers blow them out for half the price, and old 00 models that would not be rerun anyway, should the old sales methods remain in place. By selling these models it will encourage people into the hobby, and drive sales of track, controllers, rolling stock, other models and accessories. Newer and the better Heljan locos will go into the Accurascale range and be available to sell on their shelves.
That's how we support our 170 independent retailers.
Will Heljan models change under Accurascale?
Yes, in the near future.
Models being upgraded to the Accurascale range in 00 will have to meet the detail, specification, accuracy and value levels expected from our customers. This includes electronics and sound too. We will be VERY selective in what models joins the Accurascale range.
Older 00 models will get an updated PCB and sound ready options, and we will have more news of this soon. O gauge? Expect some Accurascale magic to filter in, beginning with the Class 37/5 and Class 37/7 run, which will have more news on soon.
The Warships and U1 in 00 will be delivered as Heljan models as they are too far through the production process to implement any changes.
HO Continental models will be to full fat Accurascale standards for any new tooling.
What About Spares?
This is something that caught Accurascale by surprise, as they did not know there was an issue getting spares, particularly around O gauge.
To clarify:
- The former Heljan owner arranged with Gaugemaster to supply parts for customers who bought models before the acquisition.
- For models sold by Accurascale and IRM, we will supply spare parts directly for any warranty issues in the existing Heljan terms. Models upgraded to Accurascale range will get full Accurascale warranties.
- We also plan to support historical customers where feasible with the sale of parts where needed, but these need to be manufactured. Please bare with us and we will have news later in the year.
Will You Buy Back Retailer Stock?
We hope we don't offend someone by saying this, but this is the most preposterous suggestion we saw over the weekend, made by a YouTuber who really heavily rowed back on their comments on one forum they posted it on.
Firstly, it was not Accurascale's stock to begin with, as the buyout was an asset purchase. Secondly, we have talked to three retailers, and all have confirmed that existing Heljan stock is flying out the door since the announcement was made, as everyone is now talking about the brand, and that is not at reduced prices to match what is on Heljan.com People who don't do online have stocked up at shows and at retailers, just like the retailers wanted. It has been a boon for their sales.
Even Rails, who price matched us when the news first broke, put their prices back up quite quickly on Friday. Make of that what you will.
What Do We Think Of The Independent Model Shop Campaign?
We think it's an excellent initiative and one we fully support in principle, and as we keep saying, we will continue to support our 170 retailers and look to grow that base with Accurascale branded models in the future.
However, the campaign was set up in a reactionary manner to the news last week, spearheaded by a business that has lost a lucrative distributor deal for Heljan. We understand it, hell hath no fury like a distributor scorned, but despite their claims, they were informed by previous Heljan management a week before the news that they were losing Heljan as a business, just not to whom.
As Accurascale has no professional relationship with this company, and confidentiality around the deal was a legal requisite, they were not informed by us that it was us.
The campaign has served little more than to try damage our reputation in revenge, thrown shade on the larger retailers themselves as many customers label their intentions to protect the smaller retailers as "hypocrisy" as they have been trying to put them out of business for years, and as above, we have done more than other manufacturers to protect the interests of the small retailers with our "level playing field" approach. We were informed that several retailers had their shop fronts displayed in the graphics for the campaign but didn't want any involvement in it, only being given an "opt out" opportunity to not have their shop fronts featured rather than "opt in", which many missed and is a bit cheeky to do by the campaign leader to say the very least.
We would advocate a properly run campaign for the smaller local model shops, perhaps run by one of the railway magazines or similar. We are also trying to help small retailers with our Accurascale Joint Limited editions to give them a unique model to sell, who may not have the buying power to commission a run themselves, with the first being our Accurascale DRS Class 37 for Rainbow Railways.
We would also encourage any retailers with concerns to reach out to their Accurascale trade manager directly and have a conversation with him. Many retailers at Model Rail Scotland did just that, and were left feeling a lot more assured, clear and confident about the future and how this works. One even hugged Fran, but probably regretted it afterwards!
We would also advocate a similar campaign for our model railway clubs, who are the true communities of the model railway scene, but that's another story.
Final Thoughts
We hope this provides clarity. The Heljan acquisition is an opportunity to combine the strengths of both brands, provide better value, and maintain long-term support for retailers and hobbyists alike.
Thank you for all the support, kind words, and congratulations. It genuinely means a lot to everyone at IRM, Accurascale and Heljan. This is one of those moments where we have to stop and take it in – considering where we started, this really is a “pinch yourself” milestone.
You folks got us here with your support and purchases, and we thank you greatly for that.
It was also fantastic to meet so many familiar faces at Model Rail Scotland. The encouragement, chats, and well wishes reminded us exactly why we do this. Many of you helped set us on this path, and we don’t take that for granted – thank you.
Sales on Heljan.com have been off the charts too, so thank you to everyone who is buying from us. Even a very vocal retailer on Facebook about how awful we are and demanded others boycott both brands has been stocking up. Not everyone practices what they preach! Maybe the noise and attention boosted our sales!
Please feel free to ask questions on RMWeb, at shows, or via email, we just ask that you read through the above first!
Thanks again for all your support – it genuinely means everything to us.
The Accurascale/IRM/Heljan team.
