Dealers: Facing The Challenges

Following “Dynamic” 2014, What Do Dealers Expect In 2015?

The aftermath of 2013’s record-breaking year created a number of challenges for dealers, including rising levels of inventory as demand decreased while facing unhappy customers due to the prolonged constraints in the ammunition market.

“This year was one of the most dynamic years we’ve ever seen in our business,” said Paul Mangelos, manager at Barnwood Arms in Ripon, Calif. “The year began as a continuation of 2013’s craze, bringing tremendous sales numbers. However, we saw a pretty drastic slowdown in the second quarter, which caused a bit of an inventory problem for us as we were too slow to react to this change and our inventory grew disproportionally high.”

“The biggest challenge we faced this year was managing increased inventory,” said Carl Ingrao, owner of Four Seasons Firearms in Woburn, Mass. “As we all know, 2013 demand was unprecedented and consumer buying was at frenzied levels — making product availability very tight.”

As sales slowed this year, dealers were faced with a surplus in many product categories.

“To address the problem of increased inventory, we returned to our traditional selling methods by refocusing our weekly eFlyers, sponsoring sales events and working with suppliers on putting together special ‘Package Deal’ offers,” Ingrao said.

“A big challenge our [P-20 Performance] dealers faced was not receiving key inventory items and then suddenly getting tons of offers that flooded the market,” said Miles Hall, owner of H&H Shooting Sports Complex in Oklahoma City. “We’re now feeling the new trend is a ‘race to the bottom’ on pricing.”

“Customer fatigue and communication were the biggest challenges in 2014,” said Kris Jacob, president of Bullseye Shooting Range in Marin, Calif. “Following a year of challenging supply issues in the industry, customers aren’t returning to the ranges and stores as frequently as we’d expect — even though the consumer base has grown considerably over the past several years.”

Ammunition continues to challenge retailers, who are caught between low supply and high demand, specifically in rimfire calibers. Hall has noticed a significant drop-off of new shooters who are frustrated by the lack of ammo.

“The lack of ammunition — especially .22 LR — was and is the really big challenge facing dealers,” he said. “The millions of new shooters who have joined the shooting sports don’t understand the problem and have since moved on because of this. In their eyes: ‘Why would you buy product if you can’t shoot it?’”

Widespread ammunition shortage has created a spillover effect, impacting gun sales, according to Dennis Rohman, general manager of P2K Shooting Range in El Cajon, Calif.

“Rimfire ammunition is still not available in any quantities, which has resulted in almost no .22 firearm sales. I believe we’re at a saturation point where many experienced shooters — and the new ones we were lucky to bring in — are now out of the market due to shortages and price increases,” he said.

“The lack of rimfire ammo has hurt our rimfire sales,” said Jim Rauscher, president of Joe’s Sporting Goods in St. Paul, Minn. “We’ve found while placing an order on a certain load that the manufacturer no longer produces it. They need to inform dealers on what they plan on making so there are no ghost orders.”

Dennis_P2K_Dec14

Dennis Rohman, P2K Shooting Range general manager, predicts the biggest
challenge dealers will face in 2015 is bringing new customers back.

Forecasting 2015

Given 2014’s challenges, we asked dealers for their predictions for the biggest challenges they’ll face during the 2015 New Business Year.

“Going forward into 2015, our biggest challenge is forecasting consumer demand,” Mangelos said. “The last two years have been very unstable for us, experiencing quite a lot of growth, but also a very quiet last five months or so. As we head into the holiday season followed by our purchasing season, we’re more unsure of what to expect than in years past.”

“Our biggest challenge moving forward is bringing our new customers back. The industry has grown and now there are more stores and venues with fewer customers. The lack of ammunition selection with the current pricing will be our customers’ biggest complaint,” Rohman said.

Kimberly Stafford, owner of Tejas Shooting Sports in Odessa, Texas, foresees increased competition from the Internet and the continued ammunition shortage as posing problems for dealers.

“The Internet problem is nothing new, but since we happen to be in a buyer’s market right now, it seems to be having a greater impact on sales. Obviously, the problem with ammunition impacts ammo, gun and accessory sales, and I think we’re going to be facing these same challenges in 2015,” she said.

For 2015, Richard Sprague, president of Sprague’s Sports in Yuma, Ariz., says his major concern is adjusting inventory and personnel “to meet current business demand conditions.” In addition, he plans to seek out manufacturers who offer the best dealer support.

“The biggest challenge I see for 2015 is staying on top of all regulatory responsibilities and growing partnerships with those manufacturers who will offer the best support to the independent retailer — MAP pricing and co-op support are high on our radar. SIG, Benelli, Browning, Oakley and Yeti offer decent MAP programs; others need to follow suit,” he said.

With lower margins on firearm sales, Hall predicts it will be difficult for dealers to market to their customers.

“The mass exodus of new shooters is still happening and most dealers are helpless to do anything about it. Because of their low margins, firearm sales have a limited effect on advertising budgets for dealers looking to market to this very important and large group. The current market glut is only pushing prices lower,” he said.

There is some optimism for dealers looking ahead to next year.

“I believe 2015 will be a more traditional selling year, with inventories in check and consumer demand stabilizing, maybe increasing over 2014,” Ingrao said.

Jim-Rauscher

Jim Rauscher, president of Joe’s Sporting Goods in St. Paul, Minn.,
plans on buying closer to his store’s needs in 2015.

Strategy For Success In 2015

Savvy dealers looking to make 2015 a profitable business year say they have a plan to attract and retain new customers. Marketing to the community, promoting manufacturer rebates and offering quality service to customers will give independent storefront dealers an advantage over Internet sales and large chain outlets.

“We’re increasing our marketing budget to bring back previous patrons. Firearm manufacturers are offering several promotions and we’ll use our advertising to increase promotion awareness and hope it gives us an advantage,” Rohman said. “We’ll continue telling everyone about our great customer service and family-friendly environment.”

“The last two years, while being profitable for us, have led us away from what we have been traditionally. We were so swamped with people coming in our doors, clamoring for virtually anything we could give them, that we lost some of our most precious commodity — the knowledge and service we provide to our customers,” Mangelos said.

To meet the changing market, Mangelos is adjusting his selling strategy.

“We’re heading into 2015 with a more conservative approach to pre-ordering than we did in 2014 and will focus more on our customers, selling them more than just a gun, whether it’s accessories or simply knowledge,” Mangelos said.

“Communication within and outside the industry is key. We’ll do well as a group if our retailers and ranges can effectively communicate the value of our retail and education opportunities to the new consumer base,” Jacob said.

Dealers say they will use their websites and social media channels, such as Facebook or Twitter, to announce promotions and new shipments.

“Our top priority is keeping our website as up-to-date as possible with our offerings,” Ingrao said. “We’ll continue to reach our customers on a weekly basis using our eFlyer, as well as using social media, such as Twitter. This will help us stay in touch with our customers and continue to offer them great products and service at competitive pricing.”

Ryan Burt, CEO/CFO at Calibers Shooting Sports Center in Albuquerque, N.M., plans to ensure his customers feel welcome in his store.

“We plan on creating a ‘new’ experience for the customer so it’s a positive one. We also are trying to attract younger customers,” he said.
Ingrao says he will continue to offer package deals and take advantage of manufacturer promotions.

“Rather than offering cash discounts, we found that ‘packages’ are more effective and help us maintain the margins we need. One great opportunity that has come from the slowdown in sales is the specials that suppliers are offering such as ‘Buy x and get x free.’ In some cases the ‘free goods’ represents a discount of up to 20 percent. We’ll increase our marketing efforts in 2015 even further by working with manufacturers to sponsor more sales events.”

Dealers also say they will look to manufacturers that support them with MAP programs and offering good margins.

“We don’t have the buying power of a big-box chain, so we rely heavily on allocations,” Stafford said. “Manufacturers could help by implementing strong MAP pricing policies and actually enforcing them. It seems like my job is to educate the consumer about a product so they can go home and price-shop us out of business.”

“Our priority will be to identify which manufacturers and companies will be the very best partners to do business with. If we find no MAP policy in place, or if we see a certain company’s product is being footballed online, then we’ll stop giving that company’s product retail space exposure and pursue alternatives. There are always options out there,” Sprague said.

Sprague says MAP is a “strong topic” among progressive dealers.

“Dealers that want to stay in the business will migrate to where the margin is — it’s simply survival and supporting those manufacturers that support us,” Sprague said.

Rauscher says he’ll carefully examine promotions and how he places orders.

“I’ll find out what promotions vendors will be doing: will they have promotion/advertising dollars for me to work with, what’s their read on the market and where their brand will be positioned,” he said. “I’m buying closer to my needs versus speculating for a large season. I’ll work with scheduling out orders best I can and all my POs will have cancel dates on them!”

By Jade Molde

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