A huge range of opinions!!
I had dumped all of my HO equipment, and scrapped the "open grid benchwork" that I had attempted to build (poorly) for years, as I moved (again) around 2004. While on a winter getaway in 2013 I stopped on a whim at a train shop in Ft. Myers FL that had a simple, but large O Scale track w/ a LionMaster steamer set up.
I decided to jump into trains again, this time with a flat tabletop layout. The reason I chose O GAUGE WAS the reliability of three-rail equipment and track. Not "fiddly", as are N and HO (IMO). This after years of attempting to build HO scale layouts- none of which ever ran at all. I had an O gauge track plan developed, and even had a modular set of tables built to order, medium-sized with 048, 060, and O72 curves. I started off w/ postwar conventional and in the 8 years since, I have moved on to buy used Legacy, a few NEW Legacy, and LC+ locos.
A couple of years into building my layout, I bought a Starter PRR "Pennsylvania Flyer" LC set for grand daughters as a Christmas present. I was blown away with what could be bought for $ 250, as were the grandchildren pleased having it. I have since bought the same set for three families of grandchildren, and have caused friends to do the same for their grandchildren.
My visitors can't tell the difference between "scale" and O Gauge. They don't SEE the 16" passenger cars as being "shorties". And they think the layout is terrific, some even think museum quality (no way is it!!).
From a business standpoint, no doubt the largest dollars of sales in Lionel's business must be the sets, which means (today) Lion Chief lines and theme sets.
At the same time, the "scale" crowd IS willing to spend a LOT more for a locomotive that is 1:48, has a bunch of features. I think many never RUN them- they collect them, not any more as "an investment", but just because NOW they can afford them, and like them. That makes Legacies that are new -never run- available at good prices. The market is now better for Lionel with MTH out of the picture.
So- there are two opposed market segments, separated by price, theme, and complexity. If I were Lionel, I would split the catalog- Legacy in one small catalog (maybe even only an online catalog), and everything else, with LC+ and LC+ 2.0 being the step up. The LHS will still carry the lower-priced items, as their customers seek out and order them. But the real volume IS and had always been, "toy trains". Even big-box stores (like Menards) would likely carry the sets.
