High-speed train instead of steam locomotive - the ranking of which miniatures are particularly desired by model railway enthusiasts recently provided a clear picture.
"The new ICE 4 was an absolute hit," says Florian Sieber, head of the model railway manufacturer Märklin.
The company had included the train, with which the major railway company is currently expanding its fleet, in its program - either with a continuous red side stripe or with a green line, with which the major railway company advertises its contribution to climate protection.
Timo Kotowski
Editor in Business.
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Märklin is asking 749 euros as the purchase price for the basic set with five cars - it can hardly be found anywhere else in online shops in the network price competition for less than 650 euros. The high-speed train thus took on a role as a sales booster, and finally there are extension sets for model railroaders who can have more cars stop at small platform edges on their home layouts.
In the current fiscal year, which runs until the end of April, sales should increase to at least 130 million euros - after a big jump in the previous year.
Märklin had increased sales from 112 million euros to 128 million euros.
When Sieber and his father bought the previously insolvent model railway manufacturer, sales were around 100 million euros.
"The increases in sales show that more people have started playing with model railways again," says the 36-year-old Sieber.
Offspring for small trains
In the corona pandemic, lockdown phases initially slowed things down, which also made production in the Märklin plant in Hungary more difficult. But then the pandemic had a positive impact on business, as old and new enthusiasts are likely to have preferred the railway operation at home to public activities. Newly produced locomotives and wagons did not have to be stored to a large extent at the beginning of 2021 - although the Christmas business was just over - but would have found buyers directly.
However, it is not so clear whether young children will actually be attracted to the toy, which in the past had the reputation of being a hobby for retirees.
Märklin opposes this, advertising small locomotives with videos on YouTube and pictures on Instagram.
The average age of buyers has fallen, but most customers are still older than 45.
This could also be due to the fact that fathers built small railways with their children, says Sieber.
operational delays
Despite the jump in sales, Märklin also reports a number of delays in the operational process.
The product line for pre-school children, Märklin My World, which is supposed to get the particularly young offspring that they are looking for, did not contribute to growth.
“But that was not due to demand, but to goods that arrived late.
We didn't get deliveries until after Christmas," says Sieber.
Märklin had changed a contract manufacturer in the Far East, and the new one had difficulties with the more difficult procurement of raw materials and bottlenecks in logistics.
The further journey becomes more difficult.
When looking for skilled workers to expand production capacities, Märklin can hardly find what they are looking for, and at the plant in Hungary they are also in competition with the local automotive industry when looking for employees.
In addition, metal, plastic, cardboard - actually all raw materials and preliminary products that Märklin needs, have become more expensive.
"The increased procurement costs have not yet arrived in the product prices," says Sieber.
It is due as a fare increase for the mini-trains, surpassing the recent surcharge on the large German model.
Small locomotives and tracks would have to be at least 4 to 5 percent more expensive in 2022, says Sieber.
The surcharges should take effect from April or May.
Up to 20 percent more expensive
Price hikes will rule the 2022 game. Sieber, who after taking over from his father is also at the head of the Fürth toy manufacturer Simba-Dickie, sees surcharges as unavoidable in almost the entire range. The company's product range extends from Eichhorn wooden toys to Smoby play kitchens and Noris board games to the Bobby Car, a toddler slide car. For stuffed animals, he sees surcharges of 10 percent as necessary in a year-on-year comparison, and for remote control cars even up to 20 percent.
One problem will be that toy prices have so far been based on amounts such as 19.99 euros or 49.99 euros. "These psychologically important marks will be torn," said Sieber. It is unclear for the entire industry whether this will lead to parents and grandparents being reluctant to buy. It is just as uncertain whether the surcharges aimed at by manufacturers can also be maintained in the highly competitive online trade. “The considerable price increases for raw materials and freight rates have so far not been fully enforceable on the market. That will trigger margin pressure in 2022 and also in 2023," said Simba Dickie CFO Manfred Duschl.
Last year, the group's revenues increased by 5.5 percent to 754.1 million euros. For the year that has just begun, another leap in sales of a similar magnitude to EUR 798 million is targeted. However, this is likely to be almost exclusively due to price increases and hardly to increased sales volumes. “We are putting more goods in the warehouse and are therefore taking a risk. But if demand stays good, we can beat our conservative forecast.”
More warehousing is also necessary in the toy industry in order to avoid repeated delivery bottlenecks in the important Christmas business.
The cost of container transport in the Far East has skyrocketed.
According to Siebers, switching to transport by plane is not an economical alternative for many toys.
The transport costs for this could hardly be reflected in sales prices - especially since cuddly toys, for example, took up a lot of space in cargo holds despite their low weight.