With regard to the delivery of TMCC II, that is now scheduled for Late February, pursuant to a discussion with Mr. Calabrese last week. The story states January, but it has been pushed back since then.
The Past Is Prologue
Train hobbyists familiar with the history of Lionel® know that when New Yorker Joshua Lionel Cowen entered the electric train business more than 100 years ago, he setup shop in lower Manhattan. During Lionel’s golden years following World War II, the company had an office and display showroom at 15 East 26th Street in mid-town Manhattan. After General Mills bought Lionel in 1969, the company moved to Chesterfield, Michigan. The connection to New York City all but disappeared.
The good news is that on February 16, 2006, President/CEO Jerry Calabrese announced in an online press release that Lionel would open an office and showroom in Manhattan. In essence, the company has come full circle and returned to its roots in New York City. On October 17, 2006, I visited Lionel’s new office and met Mr. Calabrese, who now works at this location as home base (see photo 1).
Photo 1
The New NYC Office
The new office is located in the NAP building, on the northeast corner of Madison Avenue and 33rd Street, not too far from the old office/showroom on 26th Street. The offices for Calabrese and Vice President of Marketing Mark Erickson are on the 11th floor. A large room on the second floor currently contains three small operating display layouts shown in photos 2, 3, and 4. Currently, the room is used to display and demonstrate Lionel products to corporate buyers from retail stores.
Photo 2
Photo 3
Photo 4
Jerry explained the purpose of a New York City office as “Being close to the executive offices of potential retail buyers, such as those who attend Toy Fair, and licensors like NASCAR. Retail buyers representing the major department stores will not travel to Chesterfield to see Lionel products,” he said, “so if they won’t come to the mountain, we’ll bring the mountain to them.”
The Man and His Plan
Calabrese became the President and CEO of Lionel LLC in September 2004. Prior to that, his career posts included: President of Marvel Comics Group, the ad agency of record for NASCAR’s 50th anniversary in 1998, a Senior Vice President for Playboy, and Editor of “Games” magazine. He is an expert at rebuilding and redeveloping hobby-based businesses, which of course makes him ideally suited to lead Lionel.
When I asked him about Lionel’s current marketing plans, he was eager to talk about it. He has a specific two level vision for the company — to offer a diversified line of high-quality Lionel products and to broaden the retail base where the company’s trains can be purchased. He cited The Bose Corporation® (maker of speakers, Surround Sound™ systems, and the Wave Radio™) as a business model that Lionel should try to emulate.
Quality throughout the Line
“In order for Lionel to be successful, we must offer a diversified product line in terms of cost, but with high quality,” he said, “beginning with a $200 starter set such as the Pennsylvania Flyer set [6-30018] for first-time buyers at one end of the spectrum and continuing to top-of-the-line products such as the Acela set for $2,000.”
He stressed that quality consciousness must include everything in between: low cost accessories, expansion packs, and mid-priced engines in the $300 to $800 dollar range. “Once a ‘newbie’ to the hobby has purchased a starter set, the next step may be to add-on an expansion pack for that set. That’s why we offered them for the less expensive starter sets a couple of years ago. Similarly, it’s the reason for presenting additional passenger cars, the elf hand car, and an add-on figure set for our very popular Polar Express set [6-31960]. The third step would be to point customers to a mid-priced engine, and the ultimate goal would be to get as many devoted enthusiasts into the hobby as realistically possible.”
Seeking Retailers but not Discounters
Jerry emphasized that Lionel must expand its retail base beyond the traditional hobby stores in order to reach more first-time buyers and bring them into the hobby; thereby increasing sales. “Lionel needs to sells trains in mainstream retail stores where they will be discovered and purchased by the general public,” he said.
“We have worked hard to convince upscale retail stores to carry Lionel train sets with the understanding that the trains would not be cheaper versions of cataloged sets nor built-down to meet a certain price point. We told retailers of the value, tradition, and quality of the Lionel brand, and we pressed for agreement about not discounting the sets. Also, retailers will not be entitled to sell our other items such as track and operating accessories. Those products will be reserved exclusively for the hobby store market.”
Making a Christmas List
He cited several specific examples of how Lionel would accomplish this during this holiday season. First, they teamed up with Target, the nation’s second-largest retail store chain, as its exclusive general merchandise retailer. Target will sell an exclusive uncataloged starter set with the venerable 4-4-2 Atlantic steam locomotive and tender with Trainsounds and four freight cars for $249. The set will include such extras as a tractor-trailer truck, play mat, and railroad signs. Jerry excitedly referred to this set as “the big box of trains” (see photo 5).
Photo 5
Lionel will also provide its starter sets to upscale stores including Macy’s, FAO Schwartz, Dillards, Fortunoff, and Belks this Christmas season. All these stores will carry the Polar Express set, O-gauge Christmas set [6-30039], and the Holiday Tradition Express G-scale Christmas set [7-11000] (see photo 6). Lionel has sold almost 20,000 G-scale Christmas sets to retailers and hobby stores.
Photo 6
Most of these stores will also be selling the Thomas and Friends set [6-31956]. Macy’s will offer the Pennsylvania Flyer set and the New York Central Flyer set with Trainsounds. Because it is located in the south where NASCAR events are very popular, Belks will also be selling NASCAR train sets.
Due in part to these efforts, Calabrese expects Lionel’s gross sales for 2006 to be in the $65 to $70 million dollar range. Lionel will honor its one-year warranty for purchases made in retail stores as a confidence builder.
Visual Excitement on Rails
Lionel has installed operating display layouts in some retail stores — at Macy’s in New York City, FAO Schwartz stores in New York City and Las Vegas, Fortunoff stores in New York and New Jersey, and the Dillards store in Dallas, Texas. All the stores will have one or more of the three layouts shown in photos 2 through 4. TW Designs in Dallas, Texas built the layouts.
Lionel will also operate two large public layouts during the holiday season in New York City; one at the New York City Transit Museum within Grand Central Station (42nd Street and Lexington Avenue), and the other in Santa Land at Macy’s at Herald Square (34th Street and Sixth Avenue). The Grand Central layout will be open through January 15, 2007.
What’s Happening Now?
He described Lionel’s much-anticipated, new Big Boy locomotive, the first engine available with TMCC II Legacy Command Control™ as featured on the cover of the 2006 Volume 2 Catalog. “Dealer orders for this locomotive exceeded expectations by fifty percent — an encouraging situation, especially since this locomotive is expensive, listing for $1,700. The free Legacy set offered with this loco was the driving force behind it.”
Both the locomotive and TMCC II are currently scheduled for release in January 2007. TMCC II was first demonstrated by Jerry and Lou Kovach in Denver during the LCCA Convention in July.
NASCAR train sets were scheduled to hit stores in mid to late November, in time for the Christmas season. The NASCAR expansion packs are scheduled for release in January or February 2007, in time for the beginning of the car-racing season.
Regarding the future integration of the K-Line brand into the Lionel portfolio, Jerry said there will new K-Line products offered in 2007 with an emphasis on mid-priced locomotives in the $300 to $800 range. On a related note, K-Line orders from the old K-Line Collector Club, most notably the SD-70MAC diesel locomotive, are scheduled for January 2007 delivery. Lionel previously agreed to honor Collector Club orders placed before K-Line declared bankruptcy but not delivered.
What’s Happening Next
Lionel’s product plans for 2007 will include an O-gauge Harry Potter Hogwarts Express passenger train set for release in the summer (see photo 7). This set will bear a retail price in the $300 range. Jerry hopes this set will become the successor to the popular Polar Express passenger set.
Photo 7
Lionel will offer familiar trains in G scale: a Polar Express set and a Thomas the Tank Engine set. To me, the most interesting thing about these sets is they will be powered by a rechargeable battery pack instead of a transformer and operated by an infra-red remote control. The trains will be retail priced in the $130 to $140 zone. Lionel has entered into licensing agreements for these sets. Jerry showed me a pre-production sample of the Polar Express set (see photo 8). The locomotive will not have a puffing smoke unit. The observation car has a panel in the roof that flips and shows the “hobo ghost” from the movie on one side (see photo 9).
Photo 8
Photo 9
A G-scale General set will also be produced. With the rechargeable battery pack and remote control, it will list in the $120 to $130 range, as a licensing agreement is not involved. Lionel will also offer low-cost accessories to those who have previously bought starter sets. One of the items will be a play mat with computer-generated imagery on it. The ballast on the production sample was so realistic that I had to touch it to determine if it was real ballast or part of the computer-generated picture.
A second accessory item will be a “scenic panorama” desert scene (see photo 10). The panorama will have openings through it so that track and a train can pass through. It is possible, but not yet definite, that the computer-generated play mat and scenic panorama will be sold together as a modest-cost accessory set.
Photo 10
Stay Tuned for More
I’m sure there will be other surprises in the pipeline for hobbyists in 2007, but I didn’t expect Calabrese to reveal them all and risk deflating the excitement when the Lionel 2007 Volume 1 Catalog arrives in a few weeks. Monitor your mailbox!