How Can Dealers Benefit From Offering High-End
By Jade Moldae
Regardless of your store’s location, you likely have clientele that will gravitate toward premium or high-end items. Luxury vehicles, expensive watches, designer handbags and feature-packed off-road vehicles represent just some of the purchases this consumer habitually makes. When it comes to the shooting sports, some of your customers are more likely to seek out premium options — often willing to spend more on top-of-the-line products to achieve their shooting or hunting objectives. Additionally, you’ll also have customers who want to upgrade their firearms.
For example, in the lead-up to the 2016 election dealers roundly reported modestly priced, entry-level MSRs sold like “hotcakes.” The market has since adjusted to a Trump presidency, providing dealers with fresh challenges in how they handle inventory.
“Anyone looking for the cheapest MSRs out there bought during the election cycle and subsequent holiday sell-off. This segment of the market has been satisfied for the moment,” observed Brandon Light, director of retail operations at the Thunderbird Firearms Academy in Wichita, Kan.
Perhaps today’s “normalized” market represents a perfect time for dealers to explore high-end options? According to Light, products in this category have been growing in popularity since the election.
“FN Tactical carbines, LWRCI DI rifles and Daniel Defense DDM4s have been the most consistent sellers and the most asked about by customers. Most shoppers in the market right now are looking for something more unique or feature-rich than the basic guns out there,” he added.
Do What Your Competitors Don’t
In today’s marketplace, customers are conditioned to variety. Light suggests a broadened mix of products, with both entry-level and premium price points, will keep a dealer’s options open and appease customers.
“Customers have come to expect a wide selection of products from shopping at big-box retailers. Limiting yourself to just the least expensive items is just that — limiting yourself. Know your clientele and cater to them, but always have a good, better, best option for the ones willing to spend more,” he shared.
David Ridley, VP of sales and marketing for LWRCI, explained there are a couple advantages for retailers who elect to target the high-end market.
“By selecting products deemed best in category for product innovation, features and performance, you’ve set your retail operation on a higher level — delivering more and better options for your customer while improving margins for your business,” he said. “With a broader selection, a dealer will do a better job of appealing to the high-end or aspirational customer.”
Look For “Step Up” Customers
While you may already have an established client base in the high-end segment of the market, there are also enthusiasts who will look to upgrade their current platform for competition shooting, home-defense, long-range, hunting or other applications. According to Brogan Miller, STI International sales manager, it’s only a matter of time before these customers seek out upscale options.
“Dealers and manufacturers shouldn’t forget the person moving up in product classes — i.e., from a polymer/striker-fired gun to semi-custom, and semi-custom to custom/hand-fit — because eventually they’ll purchase a premium firearm,” he said.
Ridley expressed a similar viewpoint.
“Research in this category has shown there is a natural ‘step up’ mentality for MSR owners. The average owner has 3–5 rifles in the platform, and is willing to invest in a high-end product. Dealers can expand sales by becoming a trusted, knowledgeable resource for customers,” he stated.
Catering to this category of customer opens the door for dealers to sell other big-ticket products.
“High-end products come with a lifestyle and increased level of quality. Often, customers that buy a premium pistol will generally purchase other high-quality brands so it’s wise to offer similar shotgun, rifle and knife brands,” Miller added.
Along the same lines, dealers with a bevy of options will get more sales.
“When it comes to high-end, the biggest requests we get in our store are for optics. People who purchase a quality rifle want an optic equal to the task. After that, quality MSR accessories are highly sought after. The guy you couldn’t upsell on a better MSR can come back looking for $200–$300 handguards or triggers,” Light said.
Dealers can expect strong margins if they successfully identify and nurture customers in the top end of the market.
“One of the advantages of stocking ‘high-end’ items is the margin. Margins tend to be very low for entry-level items. Dealers can make up to 20 percent on high-end MSRs,” Ridley shared.
It takes the sale of several lower-priced items to match the return of one premium product, Miller detailed.
“Dealers can generally expect 30 percent on the high end. They may see margins close to this on some lower-end products, but the dealer will need to sell a higher volume to realize the same dollar amount of selling one high-end product,” he said.
In most cases, high-end products are protected from market trends and are more stable. However Miller added they’re not completely isolated from outside events.
“These products are a nice option to boost a dealer’s bottom line but can be susceptible to market trends,” he said. “For example high-end customers in Texas and North Dakota are affected when commodity prices fluctuate, whereas the same type of customers from the Midwest are somewhat more protected.”
Education Is Key
Light, Miller and Ridley were all in agreement on this point: Being familiar with and able to confidently run through the selling points of a higher-priced item is crucial to a dealer’s success in the high-end category.
“I think you’d be surprised at who is willing to spend more on an item when the benefits are clearly and concisely explained,” Light said. “This takes a knowledgeable and competent sales force, but the benefits of upselling are invaluable to the dealer.”
“Product education is critical to selling high end,” Ridley shared. “The consumer just sees a price tag. It’s the dealer’s responsibility to educate the consumer on why the price is higher: more and better features, an innovative design, high performance and reliability, etc.”
Your employees should be well-versed on the finer points of selling these high-priced items, too.
“Dealers can expand sales in the high-end segment through education. Sales staff will sell products they’re knowledgeable and comfortable with — so if a person has increased proficiency with lower-end products, then he or she is more likely to sell that product over a high-end product,” Miller observed.
An educated sales force will be able to pick up on a customer’s preference and offer ready-made solutions.
“Here’s an easy example with selling an MSR: If a customer wants a bare-bones, basic setup but knows he’ll make two or three changes out of the box, a salesperson familiar with what certain upgrades cost can point the customer to another rifle that already has them. This can sway a buyer to spending more initially while increasing their satisfaction,” Light shared.
In selling high-end products, a thorough knowledge of premium benefits and
personalized customer service are two advantages independent dealers have over
big-box stores and online retailers. Photo by Howard Communications
It’s “Buckle Down Time”
When it comes to making a decision on whether or not to expand your inventory of high-end products, Miller encouraged retailers to evaluate their options carefully.
“My advice for the dealer is if they have a market to support high-end products, then they should stock them. But they should choose the brands that fit their demographics,” he said. “Some markets may support high-end polymer pistols, whereas 2011- or 1911-style pistols may be a better fit. Not all high-end brands are for all markets, so choose wisely.” Distributors or sales rep groups may have insights to help guide this decision as well.
Ridley underlined retailers should seek out companies with programs in place — like Minimum Transfer Price (MTP) and Minimum Advertised Price (MAP) — to shield retailers and distributors from “price wars.”
“Understanding price position is key and having the story to validate it makes all the difference in the world! Dealers should start looking at brands in the category that protects their margins and revenue — if our dealers aren’t successful, then we’re not successful,” Ridley stated.
While you examine your options in the high-end segment of the market and educate your sales staff, it’s also important to maintain a high level of customer service with value-added perks. The ability to enhance a customer’s “in-store experience” is an edge brick-and-mortar dealers consistently have over big-box and online retailers.
“It’s buckle down time for dealers. Make the most of the foot traffic you have and train your staff to tactfully upsell and get add-on sales. Services, like gun cleaning and sight installation, can keep your staff busy during slow times and generate revenue,” Light concluded.