Why has Menards been so successful?

Menards appears to me to be an intelligently run company- I have noticed the Menards stores in my area now carry a limited stock of grocery items and also pet foods. I feel that few other 'home supply' stores in my area stock this variety of items. 

It's very convenient for me to stop at Menards for a home repair item (or six) and pick up a few grocery items at the same time.

I believe the first store chain to do something like this was Meijer markets who called their stores 'Hypermarkets'. In SW Michigan (where Meijer originated), it's difficult for other stores to compete with Meijer due to their concept of 'one stop shopping'.

I would not be too surprised if Menards is following the same business model, but from a different angle.

As far as the Train hobby is concerned- I had heard some time ago that someone in the the Menard family (John?) is a train enthusiast. Perhaps it's as simple as their way of giving back to the hobby? It would not surprise me in the least if this is the underlying reason for Menards being in the scale train business.

Several have noted that they can't go on forever treating trains as a loss-leader.  Yes they can!

1.  Menards is a privately held company. No shareholders or Wall Street griping about under-performing segments.

2.  Menards foray into trains was (allegedly) at the behest of a family member who loves trains.

3.  You love trains, own the company outright, and don't give a flyin' flip about trains turning a profit?  Do what you dang well please!!!

Personally, I'd like to see the layout of whichever Menard member is the hobbyist.  Reminds me of the old (?) shaver commercials:  "I liked (shavers) so much, I bought the company!"  As I mentioned in a related post a few months ago, as long as trains are not HURTING the company, they don't have to justify continuing.

I still maintain that with the track intro, then the fastrack adapter pieces, we'll soon see switches. I'll betcha a Coke that we'll see them for Christmas.  Can't be too far away until they intro something like an Alco engine. *Someone* has to have the tooling just sitting around....

One thing I didn't see mentioned is the distribution chain. Menards is the importer, distributor and retailer all in one. Many items my LHS sells come from a distributor, or 3 tiers of profit to keep everyone in business. The importer (Lionel, MTH etc.), the distributor and finally your LHS each has to make a profit. Since Menards is all of these in one, there is only one tier of profit, theirs. They also have tremendous buying power, unlike our other train companies. As said above, they can order thousands of an item at one time and are probably not concerned whether they sell right away or not. Our other train companies probably can't tie up that much of their funds like that, especially not for multiple items. They have to order in smaller quantities and more often if the items sells well.

The thread assumes facts not in evidence.

"HOW DO WE KNOW MENARDS TRAINS IS SUCCESSFUL??"

I know I buy a lot but that is not a qualitative statement as to success.  I hope it is successful for Menards to keep making trains and stuff. But what facts  support the assumption of success?

Although trains are reportedly a hobby for one (or more) of the Menard family I have to wonder if they would continue offering train items if they were a big loss item? They seem to come out with a new item almost weekly and now have quite a catalog of items to offer. They also continue to improve their items so they are obviously interested in developing quality train items. I have to wonder if they would continue to do that, especially quality improvements, if the train items were a loss item?

You are correct in stating the thread assumes these things, but I think the known facts are pointing in the direction that they are at least doing ok, or making what they think they think is sustainable be on their train items. But, of course, this is truly all speculation on my part here, as I have no inside information. Only Menards can say for certain what is actually happening with their train items. I am also pretty certain we (as consumers, forum members, train fans etc.) will never be privy to this information. 

I believe Menards is also privately owned by the family (please correct me if I am wrong here) which is also pretty impressive for a 300+ store chain with stores the size of Menards and the inventory they must all require, all with no shareholders!! Probably another fairly good reason to believe there is some profit in their model train line. 

Correct.....99.9% of what we are saying is 'educated guesses'.  But if I was doing a 'due diligence' review of Menard's I don't see them 'playing' with trains if they were not making a profit. It may be the Henry Ford profit where he set a price for the Model T and when told it was impossible told his men 'you will....and make a profit....if only pennies'. 

If they are making trains at a loss....good for them.......I'd be nice to have that kind of hobby budget!!!

From a guy in the northeast....

It's very simple- power tools, lawn tractors, and trains all under one roof.

Pure genius

They do make some nice stuff too!

Menards fills a low cost market that is greatly needed. Let us not forget that if it was not for Lionel and MTH spending millions on research and development that huge market may not exist. Everybody wins.

Rod Miller

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. 

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

The caution is that K-line overextended itself too quickly and it came crashing down on them. 

AlanRail posted:

The thread assumes facts not in evidence.

"HOW DO WE KNOW MENARDS TRAINS IS SUCCESSFUL??"

I know I buy a lot but that is not a qualitative statement as to success.  I hope it is successful for Menards to keep making trains and stuff. But what facts  support the assumption of success?

 

 

Agree! The other issues is selling multiples cheap. Where's the point you saturate the market.  

Plus, look at all the free advertising threads like this generate. 

It probably gets some folks who don't have a local store buying online for not only trains, but other stuff also.

Rusty

Lots of good responses here so far. I have seen pros and cons but with Menards there way more pros then cons. 

Some of you guys need to see what is going on here, if you want more detail, more scale looking then there is AtlasO scale, Lionel scale and MTH premier. But for me Menards is making cars that I really like, military cars, box cars that are near scale, flat cars with and with out loads that are scale length and they make some that are not. 

To those that are not Menards fans, that's ok, the other mfgs. listed above will gladly take your money. 

I like  Menards and will buy a majority of my freight cars from them. 

RSJB18 posted:

From a guy in the northeast....

It's very simple- power tools, lawn tractors, and trains all under one roof.

Pure genius

They do make some nice stuff too!

Thanks for the "like" Mark.  So when are you guys going to open a store on Long Island?

They certainly fill a niche for the lower end train market and all the various reasons why that has been working have been discussed in depth.  I have the 60' scale flats and with repainting, some additional details, and new trucks they would make a decent 2 rail car.  Outside of that, there isn't much they offer for the scale modeler. There isn't anything wrong with that.  It is the differences in the hobby that make it fun, not the sameness.  

I could have populated my entire layout with Menards buildings. While I own and do appreciate Lionel, MTH, and Atlas buildings, the Menards items are a very welcome addition to the hobby.

IMHO, they offer great value in the built-up building category.

I wish Aldis sold trains...I'm there like 3 times a week !

Thankfully, the Menard's pre-built buildings are not merely "me too" variants of past or present Lionel, MTH, or Atlas O accessories or buildings. I just ordered the MENARD'S POWER & LIGHT building; not because I needed an electric company on my layout, but because it could easily be re-decorated as a LINEX OIL PIPELINE TERMINAL building and placed near the oil field on the layout.

I e-mailed a tech rep at Menard's for info about removing the neon-like signage on this building, and he offered helpful advice. In my PC, I created a replacement sign for the building; not an ultra-cool, neon-like version like the "stock" sign, but I believe it will suffice to support the illusion. Refer to the attachment.

I'm not a petro-industry-savvy guy, but the big diesel-powered generator inside this building looks like it could be the hub of an oil-field-related facility.  Further, a Lionel LINEX oil derrick, a LINEX tank truck, and a LINEX oil storage tank extend adn enhance the illusion. I may order a Lionel LINEX oil tank car and park it on a stub siding at a loading platform.  Can't have too much LINEX!

Others commented on the "reason" for the Menard's train line-up is related to a family member who is also a train hobbyist. Another interesting note -- the dog figure included in many of their products is apparently a family pet -- a clever "footnote" -- like the family dog (Nipper) shown on the RCA Victor record label listening to "His Master's voice."

Mike   (ritrainguy)

Question: 

Are menards flat cars with the army helicopter scale??  Are any of the flatcars with army cars scale??   Sorry to hijack the tread but I really wanted to know the answer to this question.  Thanks

For the younger folks I think it would be great if Menards came out with a starter set at Christmas. Engine, cars, track and transformer. Don 

I willingly confess to being a "postwar" train addict, but if I was not, Menards would probably be my first choice for rolling stock and buildings. As others have stated, the economics are spot on.

Chris Livesay posted:

Question: 

Are menards flat cars with the army helicopter scale??  Are any of the flatcars with army cars scale??   Sorry to hijack the tread but I really wanted to know the answer to this question.  Thanks

The 11.5" and 14.75" flatcars are scale width (2.5"). They'll pass for a scale proportioned car (particularly the low-riding 14.75" cars) if you're not fixated on having a specific prototype.

---PCJ

For the buyers, the answer is good/ok quality for a very cheap price. Many in the hobby love a deal.

from their standpoint, the answer is scale.  Their scale allows them to have a business that does not have a real difference in the cost base because of trains.  Distribution, buyers, importing, storefronts, web site, credit card processing, all of this is in place because of their core business.  

As others noted they have also avoided any products that are complex.  No animated devices, no electronics, no engines, no control systems.  All items are relatively simple so much easier to have higher customer satisfaction and low warranty costs.

All they need to cover is the variable cost, a few dedicated people(may simply be "mark from  menards) and some advertising.  No company staff, payroll processing, rent, ( dealers, master distributors and their associated mark up).

Based on this, you can see how they are uniquely positioned to  offer cheep products and stay in business.  Any stand alone supplier would go broke with out the core business to cover the fixed costs.

Rich you've nailed it.

RSJB18 posted:

RSJB18 posted:

From a guy in the northeast....

It's very simple- power tools, lawn tractors, and trains all under one roof.

Pure genius

They do make some nice stuff too!

Thanks for the "like" Mark.  So when are you guys going to open a store on Long Island?

RSJB18,

It would be a tough market geographically for us but who knows for sure, right? We could build a pretty great lumberyard near Central Park!

-Mark the Menards Train Guy

Right product, right price, right time, great service.

That's it.

What impresses me the most about Menard's are their buildings/accessories. Name one new "structure" in the past 5 years from MTH, Lionel or Atlas...  Only Woodland Scenics has produced anything remotely new. Yet, Menard's manages to introduce a truly new structure at least every quarter!!  And... they come with state of the art LED lightning and  (don't forget) Jack the German shepherd.  As far as the introduction of these structures (and the accompanied buzz on these forums) they are running laps around the competition, Paul

Great question David !  Here is a simple answer from a very simple man; 1-  Find someone who knows and believes in the product. 2 - Give that person the lead way to research what the markets wonts, and 3 - offer your line at a price mark the potential customers are willing to pay.    

Bingo, a new K-Line!

gg1man posted:

...  Bingo, a new K-Line!

I think that very thought has crossed many of our minds! 

Hey Mark build this one please. 

There were hundreds of thousand of these tank cars from the war years to the 60's and mostly black like the one above.

If I did not have a room full of trains, I would buy more.  Maybe if they imported mort SP Overnite boxcars....

They offer great service, and have a far better selection than HomeDepot or Lowes, most of the time in many categories. That is what makes them a successful multimillion dollar home improvement chain. 

I venture trains account for a smaller percentage of sales than Lttle Debbie snacks, which they also sell. 

Come on fellas, get out of the train hobby mindset. Sure Ford Motor Company made Kingford Charcoal, but is that what the brand is known for, was that what made the company successful, no, they are a car company. Menards is a home improvement company, perspective folks.

If John Menard is the driver behind the train line, great, thank him by shipping at their stores -- for more than trains. 

If you are into any sort of model trains, you are going to need lumber, wires....

In the postwar era there were many Lionel service centers in hardware stores.  For years there was one in La Porte Texas.  One morphed into a big train store in New York City.

One slight issue.  Have the trucks so they could be replaced easier!

David1, 

If Menards used the same business model as Pathmark, the 2 of us would know where Menards would be these days!

But seriously, Menards is pumping out affordable in pricing rolling stock, buildings, etc. May not have all the highly detailed components that some people want, but they have carved a slice of the pie in the toy train market quite fast. They recognized that niche and went for it.

Gentlemen,

   I know we like to dream about K-Line and Menard's being kind of the same, especially us older guys.  However in reality business wise they are not even close.  Menard's is a much broader based company, with a lot more assets than K-Line ever dreamed about.  Menard's has a nice O gauge hobby section to their over all business operation.  It makes the O Gauge section/department (I will not call it a Division) of their business a protected entity that K-Line never dreamed about.   Menard's entering into our hobby was a real nice business move for them, and a great addition for us old time hobbyists.  

Pine Creek/Dave

I think the big L and M and W could learn a thing or two from Menards.  Sell it when you've GOT IT!

The "order it now and wait a year or two"  or "advertise it now and we'll have it available to buy in a year or two" marketing system has got to have an impact.  I know that I have not ordered some items because of the extended time between BUY IT and GET IT.

Just MHO...

I have to agree with Eddie...

Menards business model is set up for the internet age of 2017.  People want items NOW.  Amazon is a perfect example of that. 

It seems like other train manufacturers are still stuck in 1957 when it comes to their business model.  Put a catalog out there and hope for the best if an item will be produced and shipped MONTHS, if not a year or so down the line. LAME!

I'd love to go on one of the dedicated train manufacturers websites and buy some $20 boxcars, tank cars or whatever and have them shipped right away.  But it seems that will never happen.  It's not really my loss... it's theirs.  They could've had my money, but Menards gets it instead.  

I'm in California and a year and a half ago I would've never thought that about 40% of my rolling stock would come from a Midwest hardware store chain that I've never even set a foot inside.....

Truth is stranger than fiction! Lol!

L must be paying attention.  They have those 6 pack gons at about $20.00 each! Not boxes, but they are cars M has not imported yet......

The Price point is right and their products are well thought out & orginal. I just wish there was a Menards in New Hampshire!

eddiem posted:

...

The "order it now and wait a year or two"  or "advertise it now and we'll have it available to buy in a year or two" marketing system has got to have an impact.  I know that I have not ordered some items because of the extended time between BUY IT and GET IT.

...

I'll echo those thoughts as well.  Combined with the fact that many folks posting here have a good number of trains on their roster already, I'm gosh darn tired of ordering and waiting.  Instead, when I have the urge to buy something new, I just stop in at one of the local train shops or take advantage of the GREAT sales the forum sponsors seem to be offering almost monthly.  I realize it fights the "new trend towards BTO", but the list of items I'm pre-ordering gets shorter and shorter each year.  I thought the last MTH catalog was terrific, but I only pre-ordered the CP Holiday Train and the RockyMountaineer locomotive (with hopes that another locomotive and passenger train aren't too far behind). 

I think we're all just tired of the BTO business model -- and all the inherent disappointments that come with it.   Menards has been the breath of fresh air that this hobby has needed for quite some time.

David