Republicans picked up seats in the House (but still are the minority), and all eyes were on the two upcoming Senate races in Georgia (runoff is Jan. 5, 2021) that will ultimately determine who controls the Senate.
The election isn’t confirmed at the time of this writing, but there’s no doubt the outcome will be the major driver of sales in 2021, barring any additional unforeseen social or economic shocks. Even if the Republicans only lose a seat or two but still maintain control, a Democrat-held White House along with a blue House of Representatives will most likely result in more anti-firearm bills being introduced.
The media coverage of such bills alone will further drive demand based on the fear of future restrictions, even if the bills ultimately don’t pass. Likewise, if key Second Amendment-related cases go before the Supreme Court as expected, any outcome negative toward firearm rights will further drive sales.
Predicting 2021
Though well said by many people many times, 2020 was certainly a crazy and unexpected year. While no one ever wished for a global pandemic, social unrest and a contentious election, these unwanted forces have carried the firearms and shooting sports industry to new, all-time highs. To speculate on what to expect in 2021, let’s first review 2020.
Early 2020
Going into 2020, the multi-year issue of too much supply was fading. Clogged pipelines resulting from wholesaler closures and over-ordering related to speculation on the 2016 election were finally clearing. In mid-2019, consumer firearm sales started growing, likely from a combination of increased demand and discounting partly driven to move surplus inventories.
By early 2020, price discounting eased, resulting in better margins for manufacturers and retailers. Consumer demand for firearms continued to grow in January and February, matching growth rates generally seen in the second half of 2019, and well ahead of the declines seen in 2018 and early 2019.
With many businesses setting their budgets and production plans at least a year out, the slight growth rates experienced in late 2019 and early 2020 were already likely enough to clear inventory in 2020.
COVID-19’s Emergence
By early spring 2020, everything changed. No one anticipated COVID-19’s emergence and its impacts. COVID-19 rapidly disrupted life and supply chains in nearly all industries, driving shortages for many items. Fear in some communities of theft and violence associated with shortages of basic goods began 2020’s unprecedented growth in firearms.
Combined with the George Floyd tragedy and the associated social unrest and fear for personal safety led to even more demand growth. Calls to defund police broke out across the U.S., driving more people to buy firearms and ammunition at record rates to protect themselves. As we nudged closer to the November election, fear of additional social unrest associated with the outcome likely accelerated demand further. Demand continued at levels never seen before.
Data back these claims. NICS checks reached and sustained record levels. Firearm sales in March through September 2020 were 90% higher than the norm for previous years. January through September 2020 NICS checks were 13% higher than the total annual average over the last five years. Much of this growth was driven by new customers, with NSSF estimating 40% of sales were to first-time firearm buyers. Considering only four to five months earlier none of this was expected, manufacturers and the supply chain were scrambling.
A Record Year
All this new and accelerated demand has made for a record year in the firearms and accessories business. Unlike previous peaks in firearm sales where only certain firearms or ammunition facing potential restrictions or shortages were affected, this time all types of firearm and ammunition inventory sold. Any residual inventory from the 2017 “Trump Slump” likely cleared — as did surplus from 2018’s wholesale closures.
Price reductions and rebates were not needed to attract customers, thereby boosting net margins. As inventory fell and popular calibers became difficult to find, consumers essentially purchased any firearm they could find. The restraint to greater sales were the lead times needed to produce and deliver more inventory, along with COVID-19-associated forced business closures or limitations in many locales.
New customers who waited in long lines to purchase a firearm expressed surprise it wasn’t as easy to purchase as they had thought, not realizing the federal and/or state requirements and restrictions to purchase one.
Accessory Sales
What about accessory sales in 2020? Southwick Associates tracks firearms and accessories sales for businesses. One of our tools, the HunterSurvey and ShooterSurvey consumer tracking study, shows firearms enthusiasts are still buying accessories.
With 79% of shooting-related purchases including an accessory of sorts (optics, storage, cleaning supplies, parts, etc.), this is on track with purchases in 2019. Recognizing the huge increase in retail transactions in 2020, this still shows a large increase in accessory unit sales.
Consumers are spending more on accessories too, an average of $271 in 2020 — up from $243 in 2019. While each sale of a firearm typically generates an immediate sale of one or more accessories, it also sets the stage for later sales as the new owners understand over time which accessories would be of service.
Accessory sales should continue to do well into the foreseeable future.
Contrasting Fortunes In Hunting
Though not growing as fast as firearm sales in general, hunting-related sales appeared to do well in 2020. Based on state license sales data, hunting license sales were up over 13% through September.
Albeit not including hunting licenses’ key fourth quarter sales, this is the healthiest increase we’ve ever seen, putting more people in the field as well as in retail stores across the country. Not all parts of the hunting community are doing well, however.
Outfitters and guides — plus the businesses supporting traveling hunters — are certainly suffering from 2020’s travel restrictions and uncertainty among hunters over the spring and summer when hunting trips are typically booked. Don’t forget these businesses in your 2021 plans.
2020 Election Impact
Leading up to the election, pollsters projected the White House to go to the Democrats, as well as the U.S. Senate. Writing this in mid-November, ballots were still being counted in some states, and concern has been raised over irregularities in the presidential results. While the media declared former Vice President Joe Biden the winner, lawsuits contesting the results were being pursued by President Trump.
“ Unlike previous peaks in firearm sales where only certain firearms or ammunition facing potential restrictions or shortages were affected, this time all types of firearm and ammunition inventory sold.”
How Buying Habits Will Change
All types of firearms are selling out — not just key items as before (i.e., Modern Sporting Rifles) when people felt legislation might threaten their ability to own one. Many customers will come back later to buy their preferred firearm — once available. This will further drive demand in 2021.
However, after the 2016 election-related over-supply issue, companies will likely be shy on investing in too much to chase the demand but will also need to replenish their depleted inventory throughout the channel. This should result in higher pricing and healthier margins as consumers will pay to receive the product they want. We expect consumers will have greater amounts of spendable cash in their pockets in later 2021 once vaccines are distributed, which will result in pent-up demand fueling the economy back to healthy levels — barring any unforeseen shocks.
Overall, 2021 holds promise for all levels of the firearms and accessories industry. We expect first quarter sales to meet or exceed sales in the same period last year, both for firearms and accessories, as the new Congress and likely a new White House resident begin discussing their intentions. All this, of course, assumes no more major shocks to the supply-side.
At this time, we don’t think the rest of 2021’s sales will exceed 2020’s record levels. Part of the reason lies in the lack of excess firearms inventory that was present in early 2020 and, hopefully, lesser social unrest pushing demand higher. Likewise, if ammunition supplies remain low, to some degree new firearm sales will be discouraged.
COVID-19 related or not, we expect sales of all consumer products to continue shifting more toward online in 2021, so those firms with better positioning online will see improved sales — both retailers and manufacturers.
Pursue Reengagement
One key point is, as seen in sales runs in previous years, many new gun owners did not become active participants. Considering the significant increase in new gun owners in 2020, longer-term stability and sales growth can be found in welcoming these new owners, then encouraging and helping them become active participants.
“ We expect consumers will have greater amounts of spendable cash in their pockets in later 2021 once vaccines are distributed, which will result in pent-up demand fueling the economy back to healthy levels — barring any unforeseen shocks.”
Otherwise, their new firearms will remain in a closet. It’s up to all of us to help these new gun owners and ensure they become an active consumer/participant at the range and in the store.
Please note we only offer a short-term forecast given all the political, economic and social uncertainly we face today. If the House, Senate and White House all become blue, longer term sales — even by late 2021 — are at severe risk.
Be vigilant.
