Despite Recent Downturn, Handgun Market Shows Signs Of Recovery.
The explosion in handgun sales in recent years has been driven by a number of factors — such as the well-documented increases in concealed-carry customers, continuous political threats and the emergence of new, urban shooters. This growth is evidenced by the findings in ATF’s 2013 “Annual Firearms Manufacturing and Export Report,” the latest data available. For the first time, U.S. manufacturers produced over 5 million handguns, with 5,265,125 pistols and revolvers manufactured — an increase of 26.7 percent over 2012’s previous record mark of 4,155,240.
In the second half of 2014, the industry experienced an extended slowdown for the first time in years. Depending on the source, the handgun market has either recovered from 2014’s downturn or is still suffering from a slow market.
In an interview with Shooting Industry, Charles Brown, owner and president of MKS Supply, weighed in with his thoughts on the state of the handgun market today. MKS Supply is the exclusive marketer of Hi-Point and Inland Manufacturing, as well as the importer for Chiappa Firearms. Between these three manufacturers, nearly 100,000 handguns were made in 2013 — giving Brown unique insight into this market.
“The handgun market has recovered, with the entire market taking a big correction last summer that ran through November 2014. After that, the handgun market started recovering, slowly,” Brown said. “If you look at the number of firearms sold before August 2014 — they were unprecedented for the industry, and there had to be a correction coming.”
One area of the industry that has remained strong is the market for personal-defense, concealable handguns, Brown said.
“The defensive firearm and revolver market has been the least affected by the correction the market went through,” Brown said.
James Debney, S&W Holding Corp. president and CEO, had similar observations on the personal-defense market during a March 3 earnings conference call.
“Strong sales of our concealed carry, polymer pistols and revolvers reflect the consumer’s ongoing need and desire for concealed-carry firearms,” he said. “Smaller-frame revolvers are obviously doing very well.”
However, Mike Fifer, Ruger CEO, claims the handgun market “softened” for the first time in a few years.
“For the first time in many years, there was actually a softening of demand for handguns,” Fifer said during an earnings conference call on Feb. 26.
Springfield Armory 1911 Range Officer Champion
Challenges Facing Handgun Sales
According to Brown, one of the biggest challenges facing the handgun market is the availability of rimfire ammunition.
“Although most of the main ammunition calibers have made a recovery, there are still spotty ammunition shortages — mostly impacting rimfire calibers,” he said.
The lack of rimfire ammunition has also impacted sales, Fifer said.
“Availability and price are both very important, especially when you talk about rimfire products. And the market has been badly starved, but I recently heard from some executives at [Vista Outdoor] that they’ve invested many millions of dollars in new rimfire capacity. So hopefully that will improve the rimfire situation,” he said.
Another challenge facing manufacturers, as well as dealers, is how to appeal to non-traditional customers.
“The challenge everyone has is how to market to new purchasers — the non-traditional firearm buyers,” Brown said. “We need to disseminate positive information to these customers about the shooting sports.”
Facing decreased demand at the close of 2014, manufacturers attempted to boost sales through the introduction of new products. This has a positive effect on stirring consumer interest, Brown said.
“It’s important for manufacturers to roll out new products. You never hear someone ask ‘what’s old?’ — they always want to know ‘what’s new?’ — and new products help get the discussion going,” he said.
Smith & Wesson and Ruger — the top-two handgun manufacturers in the U.S. — asserted their commitments to new product development in each of their recent earnings conference calls.
“New products remain an important part of our strategy,” Debney said. “We expanded our product offering with several new models geared toward personal protection and recreational shooting.”
“We remain steadfast in our commitment to develop and introduce innovative new products in growth segments of our market. This is a key element of our strategy to drive demand,” Fifer said. “Our primary focus for investment [in 2015] will be new product development.”
Diamondback Firearms DB FS Nine
With the influx of new shooters in the industry, Brown highlights the importance of welcoming them into the shooting sports community. Programs like NSSF’s First Shots provide them a controlled, educational environment in which to be introduced to the sport.
“The industry has come a long way to marketing to new customers in the last five to 10 years, with the help of NSSF reaching ‘people on the perimeter’ to take that first step in the First Shots program,” he said. “If you get 10 to go shooting, four or five may like it and two or three may take up the sport. It’s important for us to be open and welcoming to new shooters.”
Dealers that offer handguns at a variety of price points will be able to appeal to more new customers. Brown said the market for entry-level handguns remains important.
“Entry-level lines, like those from Hi-Point, will get new customers started in the firearms game. These will allow someone who couldn’t afford an expensive handgun to have a 100 percent American-made handgun at a low-price point. There will always be a section in the market with these customers,” he said.
Emphasizing safety can go a long way in attracting new customers, Brown said.
“One thing that has sold very well for us is the Hi-Point Firearms’ Home Security Pack, it’s been very well received by dealers and new customers. All firearms manufacturers should offer a safety box to first-time gun buyers who don’t have a safe at home or may not be able to afford one,” he said.
The rise of “guntry clubs” has helped reached a new demographic of shooters, Brown said.
“These new indoor ranges aren’t like the old ones we’d go to 25 years ago. A lot of them offer comfortable surroundings and have better color. When these new shooters walk into a newer range, they see a lounge and a nicer environment. They’re catering to a new crowd for us to reach,” he said.
Ruger LCP Custom
Identify Niche Markets
Established handgun cartridges continue to have a strong sell-through rate, according to Brown.
“The 9mm cartridge is the most popular in our wheelhouse, and we’re seeing .45-caliber sales becoming a big driver in our business model,” Brown said. “But 9mm remains ‘King’ with us.”
In addition, Brown is seeing the growth of .40-caliber revolvers, notably with Chiappa’s Rhino.
“The Chiappa Rhino is a unique revolver in the marketplace; its design reduces recoil. It’s also been used in movies because it’s so unique, which has driven sales.”
The growth of the .380 ACP cartridge has created a niche market for recoil-sensitive customers in the form of pistol-caliber carbines, according to Brown.
“Pistol-caliber carbines are being welcomed by a lot of people that may not want the recoil of a .223-caliber rifle or shotgun,” he said. “The main reason they’re gaining in popularity is many consumers already have .380 ACP ammunition for their handguns and they may not want firearms in a lot of different calibers.”
This appeals to another niche market: preppers.
“Preppers are still out there and they like the idea of having a single cartridge for their handgun and rifle, which is leading to more sales,” he said.
Smith & Wesson Bodyguard
Back In Stride
Brown predicts the rest of 2015 will be a more “normal” selling year, allowing businesses to prepare for their 2016 planning — rather than trying to react to the demands of the market.
“We’re back to a normal year, which is kind of weird. But we’re looking forward to it because now we can plan. It makes it difficult for a manufacturer who sells 10 times what it makes to plan ahead. A lot of it is reacting to market demands,” Brown said. “It’s like running a race: You’re sprinting in the beginning, but then later you’re back in stride — for business it’s much easier to manage and plan once you’ve hit your stride.”
Along with a steady year, Brown sees certain markets rebounding before the turn of the year.
“I think certain markets, like the MSR market, will be strong again and get back to ‘normal’ — whatever that is. This will allow us to have a more manageable business model rather than feast or famine,” he said. “We’re going to look back at this year as a good year coming off a soft time in the market.”
By Jade Moldé
Click Here To View Shooting Industry May 2015 Issue Now!