Why has Menards been so successful?

I agree David. I applaud the traditional line,  I like the scale cars better,  We are still waiting for a scale black tank car, I am sure Menard's will have to make a new mold, but they will make it pay with their marketing model.

John

I have never seen it, but from what I have read, their "O" Gauge tubular track could stand some tweaking.

Some of those pros are precisely because Menards' does not rely on trains for their corporate bread-and-butter. As such some of what they do cannot be effectively copied by the likes of Lionel, MTH, Atlas, etc

1: Price

There is probably near nonexistent (compared to dedicated model train firms ) pressure to sell out a particular production run in the same model year it was released. How many of their early boxcars cars are still available in their warehouse/s years after release? And let's not forget some of their products are purchased in such quantities that they can even be offered as loss leaders (i.e. the flatcar-with-small-vehicles that are occasionally offered as freebies for buying a freight car)

2: announce products only when ready to ship

No one outside the staff charged with such things knows how long new products are in development before they're ready for sale. Menards' is in a unique position to be able to do that. No dealerships or distributors (two kinds of entites that need to match orders to sales estimates) lie between their factories and their store shelves--they are effectively direct-to-the-public. 

Refer to Number 1 to explain why they have no (or minimal) need to match production quantities to sales estimates (for a single model year). A quote from a Weaver interview years ago is telling: "I'd rather make 500 and sell out then make 700 and be left with 200 sitting on the shelf". The other train makers no doubt feel the same way. Menards' doesn't have that problem.

I have a carton for an eight-pack of Army flatcars-with-minivan that were recently offered as freebies. Among the nomenclature is this telling item:

If you can crank out 1250 8-pack cartons of any kind of O-gauge freight car in this day and age, you're not going to be terribly concerned about how quickly they sell out.

3: customer service

This is something that can be emulated to an extent (watch any of Tommy Z's videos ). But "easier said than done" likely becomes more and more a factor the more esoteric an item gets. We've been told Lionel gets its parts on high-end equipment from extras they order specifically to be dismantled for parts inventory. I suspect MTH operates in much the same way (I've seen their parts department, and I'm still waiting on a black Premier Superliner truck back from when Jim's Train Shop was winding down operations--there aren't any in stock and won't be till the black-trucked Superliners are rerun).

Oddly enough this probably means their European O-Gauge could be relatively easy to get parts for, since so much of that lineup is repeated year-to-year.  I suspect the practice of "Keep the old one, we'll send you a replacement gratis" will be one that you shouldn't hold your breath waiting for the dedicated train companies to emulate  

---PCJ

In every industry, companies are torn between delivering product of value to their clients and achieving "reasonable" profits while covering their expenses.  As companies grow, their expenses and overhead grow at the risk of eventually undercutting their overall value proposition to clients.  And from time to time, an enterprising entity sees this for what it is and enters the market with the ability to deliver similar -- and at times even identical -- products at substantially lower prices.  

We've seen this a few times in our corner of the world: first with MTH, then perhaps more dramatically with K-Line, and now most notably with Menards.  In all these cases, the comparison point has been Lionel with its bloated expense base and unnecessary overhead -- both of which opened the door for other suppliers to jump at the opportunity to lead with markedly lower price... a LOT lower!  

David

I am just a casual observer of the Menard's being as I am strictly a tin guy, although I occasionally buy some of their cars when it's buy one, get one free. These go to our club for raffle prizes etc, so here is my SWAG of how they do it.

One of the big cost for trains is tooling. I seriously doubt they have any or commissioned any. The manufacturers in China in MOST cases actually own the tooling. The Menard's and the folks in China work together to make runs with tooling already in existence, but decorated uniquely for Menard's. As noted above, a run of 10,000 cars and they had no major tooling costs. Lionel and MTH can only dream of selling that many of a single item in a short period of time. This is also why there only select types of cars being produced. I doubt Menard's wants to get into the tooling business. Much better to make use of what exists. The same goes for all the cars with loads. These are probably toys that are already being made, but decorated to suit the Menard's request. Again, no tooling.

Their desire to make you happy and willingness to communicate is also a big plus.

That's just my guess, but I hope for all you they keep it up. Now if their Chinese partners could just stumble on a bucket load of tooling for tinplate.

Steve

david1 posted:

we all know that Menards has been successful but why?  Here are a couple of my thoughts,

Pros, 

Price,

announce products only when ready to ship

good choices on what to make. Like the buildings

Great graphics 

customer svc.

CONS,

Quality is hit and miss but it is improving with every release. 

Couplers, too tight or they don't open  ( see above )

On a scale of 1 to 10 with 10 being the best I rate Menards cars and buildings, I give them a

8.  

I will continue to be a Menards customer. 

Dave

 

 

Simple.  They are not a train manufacturer.  Their core business is far from making train items.  They can sell low because they can make up costs on just about anything else they sell.

That being said, they are also imaginative in what they produce.  The items for the most part are well accepted.

They are using existing tooling; they are decorating in only the more popular liveries/roadnames; they have great customer service; they control their distribution network; they are staying away from locomotive manufacture; and this is not their core business. Once they stray from these precepts, the worm may turn. 

They are filling a void left by the demise of Kline and Weaver.

They appeal to the baser instincts of economy that are embraced by this community,

I can put together a nice consist of Menards boxcars or hoppers for the price of a single six-pack of cars from the major manufacturers.  Given the fact that the graphics are done quite well on the Menards cars, when they're rolling by, who really notices the lack of small added-on details?

I've noticed the quality of the trucks has improved from the first cars I bought from Menards, so I suspect they're evolving the product quality as well.

MartyE posted:

... Simple.  They are not a train manufacturer.  Their core business is far from making train items.  They can sell low because they can make up costs on just about anything else they sell.

That being said, they are also imaginative in what they produce.  The items for the most part are well accepted.

Marty,

That's true to some extent, and what you're suggesting is the trains are essentially a "loss leader" for Menards.  But at some point, the "train division" has gotta pull its own weight.  No company is gonna "fund" a poorly performing division beyond some pre-defined start-up period. 

And as I said earlier, we've seen this sort of thing happen a few times in the past 4 or 5 decades.  In its heyday, K-Line offered unbeatable prices with features that were not only equal but often exceeded what Lionel was offering -- especially with respect to passenger cars and the company's scale line of aluminum tank cars.  Simply OUTSTANDING.  Today Menards has stepped into that market with great fanfare.

If we're simply looking to build large rosters of unit freight trains, Menards has the market cornered right now.  And kudos to Menards for executing such a well-designed plan.  Their line of building accessories further adds to the company's value proposition.  Yet for other folks looking for absolute highest level of separately-applied details on their rolling stock, that's where importers like Atlas-O and 3rd Rail still garner a loyal following of clientele who don't mind paying the price premium that comes along with those features.

David

#1 reason.....PRICE. 

I didn't NEED more box cars......but the price made me curious and I ordered. 

Then the Power Plant came out and again....PRICE tempted me to buy.  I was blown away by how nice it was. 

#2....Customer service. Had a small issue with an order....Menard's resolved it 110% and fast.

#3 Mark from Menard's....a face on the company that we can interact with daily.......don't under estimate that. 

All this would be for not if the items were junk......everything I have bought is A+.

Pretty easy to see why it works......

Rocky Mountaineer posted:

MartyE posted:

... Simple.  They are not a train manufacturer.  Their core business is far from making train items.  They can sell low because they can make up costs on just about anything else they sell.

That being said, they are also imaginative in what they produce.  The items for the most part are well accepted.

Marty,

That's true to some extent, and what you're suggesting is the trains are essentially a "loss leader" for Menards.  But at some point, the "train division" has gotta pull its own weight.  No company is gonna "fund" a poorly performing division beyond some pre-defined start-up period. 

David

Not really a loss but they are not relying on the sale of trains to operate the company like Lionel, MTH, and others.  Their profit margin can be substantially less than the for mentioned companies because trains are not the primary business.

Gentlemen,

   I believe Menard's has a good business plan when supplying their O Gauge Train Rolling Stock, Track and Buildings.  I do not believe they are running this dept at a loss.  They are making the correct business moves at  reasonable cost for them and their customers.  Setting up repeat customer purchasing.

1. Menard's is getting good business advise for building and supplying sought after rolling stock, like their Nose Art Box Cars and Military transport Cars.  Which makes good profit margin for their business.

2. Further they are giving their customers a free piece of rolling stock along with their purchases.  Great PR move.

3. Upgrading Trucks and Couplers when OGR members advise them to do so.  Listening to their customer base and acting on it.

4.  Giving great modern day customer support.  - Sets up repeat purchasing for their business.

A modern day business plan that actually makes a profit.  I will continue purchasing from Menard's.  Wish they had a store in Wilkinstownship/ Monroeville, Pa so I could walk in and purchase.

PCRR/Davy

As you recall Williams offered a nice modest product at a fair price. WBB has changed that, while nicer they have lost the ideals Williams had set. Menard's is following Williams idea by offering simple products at a fair price with real nice buildings to top it off.

I don't understand how they can do so well selling trains, they are only in one small section of the country.

eddie g posted:

I don't understand how they can do so well selling trains, they are only in one small section of the country.

On line ordering has no boundaries.

eddie g posted:

I don't understand how they can do so well selling trains, they are only in one small section of the country.

Eddie: Most of Menards products are sold on- line on their web-site. Only during the holidays, stores have them in stock. Thats why people are buying their great products coast to coast.

eddie g posted:

I don't understand how they can do so well selling trains, they are only in one small section of the country.

Their offerings are also online and available nationwide. I have a Menards locally but I do understand that their shipping charges are also reasonable.

As a retired analyst for a top 5 bank.......I must analyze all things....ask my wife...it drives her crazy. 

Yes...Menard's sells more than trains....and thus does not live and die on the sales of them.

BUT....from my dealings manufacturing hobby products in China, owning hobby shops and running hobby businesses.......this is my spin.

Menard's is using Henry Ford's method of manufacturing.  Make a good product and a price all can afford. Make a profit....if only 1/2% per item profit....but sell more than anyone else. You end up growing fast and making a profit. 

The other O scale train manufactures use the 'max price market will bare' method. It does make you more per item.....but not much growth.  It's a valid and popular method....but very different from Ford's.

In defense of our established manufactures.....they are spreading the cost of locomotives and fancy electronics over their entire line. This increases the cost of a box car.  But Menard's is rolling out many more SKU's (items) than the others....so they have their own production cost too. Two very different methods of selling model trains.  

I myself am happy they entered the market....I think it's a good thing. 

For me, they are replacing the old industrial Rail prior to Atlas buying them.   When I was looking for non scale/proto cars, I could go to my LHS and pick up all manner of rolling stock for $15 to $20.

Menard's is satisfying that part of the hobby, and doing a good job of it.    Also, what was posted above is spot on: Menard's bottom line does not depend on the very small train market.

Cadillac survived the Depression because Chevrolets, from same company, sold. Menards trains can be carried by the rest of their home supply sales, maybe using the volume sales method that drove Henry Ford to buy out the rest of his investors.  Ford sold Model T's, as does Menard's, other two sell Pierce Arrows and Packards. (Ford is still in business) 

I love GREAT American companies. Sam Walton was a hero. I drive a FORD diesel. 

A great industry was created by Bill Ruger. Menards has always treated me the customer very fair. 

McDonalds still gives me a nice shake. ( no pun). I own stock in CSX ( NYSE). 

The LCCA is really a lot of fun.  It's great to be an American. 

Read  on..           http://quotivee.com/2014/artic...repreneurial-spirit/

As others have said, Menard simply knows how to do business! Good inventive products, good prices, good marketing, our own adoptive son Mark, and tremendous customer service. Where else could I afford to get hoppers, boxcars,  military loads, excellent creative buildings etc and about a million free trees, box trucks and Kubota tractors? Add to that having fun with Cabinet Bob, it just doesn't get any better! LOL

Small tangent on why Menards is successful. FWIW
I'd like to share this experience with the goal of letting ogr members who don't have a Menards store in their area. I was looking for a particular weathered box car. Wasn't available online. But on a lark, using the item SKU on the website, I started searching Menards listing of individual stores on the website, to see if they might have the item in stock. A bit cumbersome, I admit, but after scrolling a few pages of store listings(taking a couple of minutes), bingo. Three items available at a store a couple hundred miles away. Called customer service at that store who had staff track down the items, and then shipped them direct to me. Paid by cc. So, even if you don't have a store, and item unavailable "online", you might get the item through the back door. TW

Plain and simply said:  Menards is all about MAXIMIZING what we get for the given amount of dollars spent. 

David

Within the last decade or less, the "train manufacturers only" folks have seemed to cater mostly to the retiree, bottomless pocket, big spender guys and gals. Many of us were sucked into that "spend big or go home" mentality. Some of you can definitely afford it having inventories that must range into the $50,000 to $150,000 or more range. I was shocked to see that I have over $10,000 in my modest collection!  I dare say that my spendthrift Mom and Dad would have been shocked to see what I have paid over the years. I had almost stopped purchasing any new rolling stock as I have definitely gotten "sticker shock" the last few years. I truly have had a hard time justifying that type of spending for toys, even with my three kids having left the nest and all I have to spend my money on is my trusty golden retriever. 

With that said, Menards has brought the whole affair back to normality for me. Their items are now affordable for the budget minded folk. I no longer feel as guilty when I make a purchase (other than thinking, "don't you have enough?") I have bought quite a few of their offerings. Their marketing ploy is fun too...it is rather exciting to see what is going to be released next and available immediately. 

Rick

Don't discount the fact Menard's sells so many other things that support the sales of trains.....if the trains were losing money Mr Menard would have bailed by now......he still needs a positive bottom line.  

I subscribe to AMC Dave’s (and some others) post(s) up above…price. What I see and what I get from Menards (I have a good handful of their boxcars) is a decent looking piece of rolling stock in eye popping colors for a fraction of what I would pay to the big train guys. Probably helps that I am a 100 percent conventional operator on a PW-style layout and am not even close to being overly picky about the finer details. Menards fits the bill.

My other comment is there’s lots of comparing apples and oranges in this thread but that happens a lot on this forum. Suffice it to say I recognize the folly of some on the forum who are always trying to compare companies that have totally different goals/business plans/products.

Btw, I just placed an order for a 4-pack of Menards Western Pacific boxcars.

We all here are only giving our personal thoughts on how Menards stays in the train business. None of us have the inside business model of Menards. We should be thankful that there is a business that is making o-scale trains that we all can afford. I have a few items with more coming. 

Thanks Menards

"They are filling a void left by the demise of Kline and Weaver."

Well, no. K-Line? Marginal overlap of product type/level/accuracy, on K-line's low-end. Weaver? Not at all, I'd say. Weaver was a 1:48 company, selling scale equipment at big prices (even their rolling stock had not been basic - or cheap - for years). Weaver? Tubular track?

I've never even laid hands - or eyes - on a piece of Menard's product. I have only seen photos of it here. It appears to be a decent, toy-ish line of spotty quality. Improving, if you say so. If I were not a Hi-Railer I'd buy some, I'm sure. But Weaver - or K-line - they're not. Yet (and I hope they get to be).

But - I'd say that their continuing success has all the hallmarks of an operation that has someone, or a couple of someones, in charge who just know what they are doing, and higher-ups who are smart enough to know it. Decent, if not great, product - but savvy management.

Now - where are the locomotives? Where is the basic, small, 0-36 0-6-6-0,  at a basic price, modeled in such a way that the toy-train guys get it because it's cute and doesn't cost the world, and convincing enough that us Hi-Railers buy it because of what we can make out of it and put in it? 

Plastic would be fine. The 3RO diesels don't seem to mind.

Great price, Great products and Great service and only getting BETTER. This is a recipe for success. I don't have any trains but I'm usually on this forum everyday. I have followed Menards and the posts pertaining to them and their products over the last two years. Announcements are made, products are sold and any problems are quickly solved.  To me, this is a good way to run a business.

I have a number of freight cars with similar paint schemes/road names from Menard's, Atlas, Lionel and MTH.  The Menard's car are nicely done, but not nearly as nice aesthetically and mechanically as the much more expensive cars from Atlas, Lionel and MTH.  I like toy trains so I don't mind that the Menard's freight cars clearly look like toys,  and those from the others look like scale models, in every respect.  That doesn't take away,  in any way,  from the fact that the Menard's cars are great value if the purchaser isn't looking for state of the art operation and decoration/scale fidelity.  They are lovely toy trains, very much in the postwar tradition, at much more affordable prices. I will certainly continue to buy the occasional NYC, New Haven and Burlington Northern/Great Northern products that catch my eye from all of these vendors.

The reasons they can do this and still make a profit are all summarized by those with more knowledge and experience than I.

Steve "Papa" Eastman posted:

One of the big cost for trains is tooling. I seriously doubt they have any or commissioned any.... Again, no tooling.

jay jay posted:

They are using existing tooling;...

The theories behind their use of existing tooling from another manufacturer have been shot down several times. Unless anyone can identify the previous manufacturer, it appears so far that the Menards stuff is all proprietary, much of it cloned from other models. This looks like the case for buildings, rolling stock, & track.

I think all the laser cut structures are all original to Menard's.....they did sell some other manufactures at one time. (power plant, Pepsi, Red Owl etc)

Add MARKETING to the rest of the reasons. 

Look at the number of threads about Menards on OGR and the number of people reading and commenting. The numbers for a relative unknown only a couple of years ago is amazing.

PR feeds on itself and Mark does a masterful job keeping us interested. Their presence in OGR and CTT has to be noted... just look at the amazing list of products. Experts in on-line marketing and have the staff to make it work.

Wally World has taught about low prices. Menards learned that lesson well and what in the beginning had problems has rapidly become good. Plus if it is not right, they make it good FAST.

They do not have distributors, instead they have stores. So, where there is a store, customers get to see, feel, touch, and, if it is not in inventory, they can order and obtain it quickly, not built to order.

Menards is fun to watch and actually appears to appreciate and value customers. I feel like I know Mark and know that if I ask him a question, I will get a fast reply.

#1 reason, exceptional customer service and responsiveness to customers 100%.  Listen up MTH and others who hide and ignore customers problems and questions.  Ive frankly lost interest in MTH due to this.  Keep up the good work Menards!

eddie g posted:

I don't understand how they can do so well selling trains, they are only in one small section of the country.

I wonder if their success bodes well for our hobby, in the long-run.

We have discussed the future of our hobby often with all kinds of predictions. I myself see the hobby flourishing as long as us old timers are in it, but I truly do not see how a younger generation that was never enamored by trains, nor enticed by relatively inexpensive Lionel or Marx sets early on,  get into it. It has been cost prohibitive. You may believe that the electronics and wifi will bring a tech savvy generation in, but I am one who doubts that reasoning. I do think the Menards offerings give a glimmer of hope that families can get their feet wet without paying a heck of a lot to expand. They may not be as detailed, but that means less things to break off a model by simply handling (I speak from experience)...a prerequisite for younger hands. 

Rick