Facing The Harsh Realities Of The Summer Slump

The summer sales slump is hitting particularly hard this year. The forecast of slower firearm sales during 2014 many in the industry predicted late last year has become a reality.

Compounding the impact of this year’s summer slowdown is its comparison to those of recent years. Summer firearm sales slumps have been fairly modest during the past four years. Thus, this year’s slowdown, which many consider a return to “normal,” is harsh — or at least, it seems that way.

In discussions with manufacturers and dealers, the dominant question is, “What is happening?” While there is no crystal ball here, there appears to be a perception that firearm sales would continue at last year’s pace — or even outpace 2013. That, by all indicators, is a mistake.

As discussed in this issue’s “U.S. Firearms Industry Today” report (page 38), the prevailing wisdom is to use 2012 sales numbers at the target for 2014. A hindrance to that approach is the ever-demanding goal to “beat last year’s sales.” That works, if “last year” was normal. It was not.

“Everyone believes last year wasn’t normal,” said Tom Taylor, Mossberg VP of sales and marketing, in our January 2014 report: “In Search Of ‘New Norm’ Strategy.”

“Going into 2014, our customers are very diverse in their planning. Some say they are setting 2012 as their new base — basically taking 2013 out of the equation. That isn’t all bad, because 2012 was a pretty good year,” Taylor said.

Yes, 2012 was a pretty good year. A bit of data history:

In 2011, firearm background checks increased 14 percent (NSSF-adjusted) over 2010. The 2011 business year was the first time NICS conducted 10 million background checks. Yes, I know, the number of background checks does not equal the number of firearms sales, but it is the most reliable indicator of marketplace activity.

In 2012, there was an impressive 28 percent (NSSF-adjusted) increase in background checks. This is the highest year-over-year increase in the history of NICS.

In comparison, in 2013, background checks increased 7 percent (NSSF-adjusted) over 2012. Yes, 2012 was a pretty good year. And, at least through May of this year, the number of background checks is higher than those of 2012. Yes, they are lower than 2013, but, again, 2013 wasn’t normal.

Margin Compression

Earlier this year, dealers were reporting that sales were down compared to 2013, but higher than 2012.
“After hearing from most of the dealers in the P-20 network, the March 2014 numbers are between 5 and 12 percent over 2012. Guest (customer) count is a bit higher than that, between 9 and 15 percent,” said Miles Hall, founder and president of H&H Shooting Sports Complex in Oklahoma City, Okla.
For April, Hall reported a “great slowing of sales.”

“That’s easy to understand when comparing sales to 2013 but many dealers state they were under 2012 for the month. Some notable exceptions were posted. Those dealers are utilizing media and the results are impressive. They’re not only above 2012, but meeting or slightly above 2013, which is no small feat,” Hall said.

In reviewing May sales, Hall reports dealers in the P-20 network are faced with margin compression.
“This is due to inventory being heavy for many, and dumping is becoming more frequent,” Hall said. “Many of the other dealers who have not yet seen this in their markets are keenly aware it is coming. Guest count varies around the country, but the guest is not buying as much product as in the past.”
Ammunition availability has improved, but the shortage of last year is still having an impact.

“Ranges (in May) are also slowing down due to lack of ammo. Training is also taking a hit for the same reason. Summers always have slowdowns but this seems to be outside that issue,” Hall said.

Now What?

Industry veterans will tell you, “We’ve been here before, and we worked ourselves out of it.” True. However, that’s little comfort to those who are facing the harsh realities of this year’s summer slump.
Those on the frontlines of sales recommend being aggressive in attracting customers, even when the temptation is to hold back those finite advertising/promotional dollars.

“On the H&H front, we started a rather strong media push and as a result May was just short of breaking into our Top 30 months ever,” Hall reports.

For those who depend on independent firearms dealers for a major portion of your sales, what are you doing to help them move your products? Yes, you manufacture top-quality products, but in today’s marketplace, that’s not enough. The most successful manufacturers — and distributors — help dealers sell those products. They’re aggressive in advertising, dealer and consumer promotions, in-store training and sales events, POP support and dealer incentives and rewards.

Independent firearm dealers are on the industry’s front lines; they own the vital retail real estate between your product and the consumer. Help these dealers sell more of your products to consumers, and they will, in turn, buy more when the slump is over.

The 2014 business year is proving to be even more “interesting” than predicted. It’s going to take plenty of stick-to-itiveness, with an extra dose of grit, to succeed during this business year.
By Russ Thurman

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