Rainy Day Fund
Reinvesting 2020 Profits For The Long Haul
The shooting sports industry has never experienced a year quite like 2020. Faced with a global pandemic, ongoing riots across the country and an uncertain election, Americans are purchasing a record-breaking number of firearms, ammunition and shooting accessories.
While the industry continues to enjoy this boom, most experts agree the historical sales aren’t sustainable over time. Knowing an eventual slowdown is likely, how are gun stores and shooting ranges preparing? What are retailers doing to ensure the long-term success of their operations?
To find out, Shooting Industry spoke with Mark Abramson, president of Los Ranchos Gun Shop in Albuquerque, N.M., and Kevin McCunn, co-owner of McCunn Specialty Firearms in Massena, Iowa. We also sat down with Miles Hall, senior advisor at business-consulting group Hall-N-Hall in Edmond, Okla., to get his advice on long-term growth and sustainability.
How has business been for your store this year?
McCunn: We’re seeing a large increase in sales, classes, training and range use this year, even in our typically slow summer months. Guests are coming in from outside our normal trade area.
Abramson: Sales have been incredibly strong since March 12, 2020. It actually started with a larger-than-normal online sale. We held the order until we confirmed
“If your operation is a service-oriented one, you’ll not only do well, but the sport will grow. Plan now and pay attention or it will pass you by.”
Miles Hall, senior advisor Hall-N-Hall Consulting Edmond, Okla.
with the online customer it was real. He explained he anticipated a real threat in the community and wanted to be prepared. His concerns were shared in the marketplace. The shutdown of our economy was imminent and folks were genuinely concerned about their ability to protect themselves in their homes. The disruption in the marketplace became clear soon thereafter, as the number of guests buying in-store and online built quickly.
How do your 2020 sales compare to previous years?
Abramson: We are 80% over last year in terms of sales.
McCunn: Sales are up 19% over 2018, and 39% over 2019 from January 1 to August 31. We believe we’re past the Trump Slump; 2020 looks to be our best year since we opened the range in 2015.
What seems to be the primary driver for business now? Have COVID-19, civil unrest or uncertainty about the election played a significant role?
Abramson: COVID-19, coupled with being in a high-crime and under-policed metropolitan area, impacted people’s decision-making. People realized they were on their own and could not rely on anyone other than themselves to defend their home and family. As layoffs and forced shutdowns occurred, people moved their concern to actual purchases. We were deemed a non-essential business and ordered to cease operation other than fulfillment of online orders. As a result, all employees but one left during the shutdown, and sales were converted to online.
McCunn: Early sales were driven by stimulus money, followed by COVID-19 and protests across the country. The uncertainty of the November election and tight inventories has sent buyers to gun stores.
Are you investing any of the profits from 2020’s increased sales in a “rainy day” fund?
McCunn: We are currently buying all the firearms, ammunition and safes we can get. All of our distributors are telling us the same thing: This shortage will last until late winter and possibly longer if Biden is elected.
Abramson: We’ve eliminated our line of credit, and are developing reserves for larger purchases through our buy-group.
“With all the new buyers we’ve seen this year, we will turn them into shooters by offering more hands-on training and starting our Ladies’ Group as COVID allows.”
Kevin McCunn, co-owner McCunn Specialty Firearms Massena, Iowa
Do you have any plans to modernize your facility?
McCunn: Our facility was built in 2015, so no updates are needed. We are planning to build a 1,500 sq. ft. addition for gun safes this fall. We started selling safes in early 2020, and we see the need for more inventory but we are currently space-limited.
Abramson: We are planning to move within the next six to 12 months as our building and the surrounding area has been targeted for a mixed-used development. We anticipate expanding our space and product offerings as we grow.
Are you planning to develop or expand your e-commerce footprint?
Abramson: No. We took steps to increase our web presence, but firearms and ammunition are all allocated, a trend we anticipate will continue for the next year. Also, the customer experience on the website was not up to our standard. We were barraged with online sales and unable to develop a rapport with our visitors. We are using resale sites for new inventory that doesn’t sell in 30 days.
McCunn: Our biggest challenge is keeping our on-hand, new and used inventory up to date on our website because it changes so quickly. GunBroker sales have really taken off. We’re expecting to be a Top 100 Dealer.
Have you increased your marketing efforts to promote return visits? What marketing approaches are working best for your operation?
McCunn: Facebook works great to get our name out there, but it comes with some tough rules to play by. February 2020, we started to run ads on various streaming services. This is working well for us as we can pinpoint the desired areas to advertise. We do some local radio, which is probably a so-so return on investment. We do almost no print ads. When we opened in 2015, we had an hourly shooting rate for the range and any new gun purchase came with a token for a free hour of shooting time. Nov. 2019, we changed to a daily rate, so now a purchase gets the guest a free day on the range. We seem to be the only gun store offering it and our guests really enjoy the “free” time. We use these tokens to sweeten deals as needed.
Do you have a business plan for when the firearms market eventually returns to more normal levels?
Abramson: We are working with a consultant and ad agency to develop our plan and improve the consistency of our messaging across various media.
“We’ve eliminated our line of credit, and are developing reserves for larger purchases through our buy-group.”
Mark Abramson, president Los Ranchos Gun Shop Albuquerque, N.M.
McCunn: With all the new buyers we’ve seen this year, we will turn them into shooters by offering more hands-on training and starting our Ladies’ Group as COVID allows. We are planning to hold monthly events as well, either shooting or sales.
A Familiar Voice Weighs In
Miles Hall has been a fixture in the shooting sports industry for nearly 40 years. In 1981, Hall founded H&H Shooting Sports in Oklahoma City. Under his tutelage, H&H sold 16,000-plus firearms each year, resulting in more than $20 million in annual sales and earning the company “Top 10” dealer status with several major manufacturers.
Today, Hall works as a senior advisor for the business consulting group Hall-N-Hall, where he devotes his time to helping businesses around the country maximize their operations. Here are some strategic tips and words of wisdom he shared with Shooting Industry.
Should retailers and range operators be actively planning for an eventual return to a normal firearms market? How vital is it to plan now?
Hall: Business is about serving the needs of the guests in their area, so planning should be a standard part of the operation. I’ve seen lots of rushes in the 40+ years I have been around in the industry. This one, however, was all about new buyers — hundreds of thousands of them. Their needs will be different — more education and practicing — if my guess is right. If your operation is a service-oriented one, you’ll not only do well, but the sport will grow. I’m betting this growth will carry the industry for 50 years. Plan now and pay attention or it will pass you by.
What should that long-term business plan include?
Hall: First, you need a key strategy centering on the spirit, philosophy and culture you want. This is the single most important thing you can do. It’s the foundation everything else is built on. Secondly, you have to secure your supply chain. You can’t sell what you don’t have in stock! The relationships with all suppliers must be solid in order to have a flow of items. Finally, you have to work on your sales projections, expenses and cash flow.
Would you advise gun stores and ranges to put their 2020 profits in the bank? Or invest the additional funds in growing their business?
Hall: Yes, to the first for sure. Investing is a yes if the plans are in place and the debts are manageable. I knew of a dealer with almost a seven-figure cash buildup after one of the past panic episodes and they opted to not payoff long-term obligations they had been carrying on the books. Instead, they decided to expand. This eventually put them in a massive cash shortage. It was a bad decision to be sure. Planning and understanding your market with a clear mind will guide you to the right path.
Which will be more important for the long-term success of gun stores and ranges: modernizing/expanding their physical facilities? Or expanding their e-commerce efforts? Or a mix of both?
Hall: Actually, it is always about serving the needs of the guests in your area. Whatever helps you accomplish that goal and is planned out well is best. All of those areas are important, but each one may not be needed right now. Study and understand your guest base. They will lead you in the right direction. In our advising roles, we have found what is right for one dealer may yield nothing for another. It’s very important to objectively look at the big picture and to take all of these things into account when looking at the future of your store.
