Few segments of the broader outdoor industry seem to be as recession-proof as the tribe that attends the SHOT Show, held Jan. 19-22, 2010, in Las Vegas. Much like a diversified investment portfolio, that one segment is still outperforming, even when others may be lagging.
According to SHOT Show’s official blog (http://nssf.typepad.com/shotshow/): “Overall attendance was 58,444, only several hundred shy of the show’s all-time record set at the 2008 Las Vegas Show and more than 11,000 above last year’s show in Orlando. The show attracted an all-time high of 31,280 buyers, and the 1,804 media professionals attending established a new record.” It is worth noting that several in the SHOT marketplace view Orlando as more of a regional show, so an apples-to-apples comparison may not be fair. However, all agreed that going into this year’s SHOT show (www.shotshow.org), people had some doubts as to what they would find, since 2008 and 2009 were such huge years for shooting. And, like nervous investors, the street was looking for a correction.
The success of this market (SHOT, for those who don’t know, stands for “shooting, hunting, outdoor trade”) over the last few years can largely be attributed to the “Obama Bubble,” a phrase used within the industry to describe the spike in firearm and ammo sales after the 2008 presidential election. That movement buoyed the industry through 2008 and 2009, and was largely due to consumers’ response to fears that the new administration would enact legislation restricting gun ownership or ammo sales.
During the Obama Bubble, the Bureau of Alcohol, Tobacco & Firearms reported a 49 percent increase in background checks, which are performed when someone purchases a firearm. Many of those sales, as per the gun manufacturers that we spoke to, were attributed to “black guns,” a.k.a. assault style weapons. The term “black gun” can be quite broad, but basically refers to any firearm that is more of a functional tool, and less of an object of art -- therefore, eschewing fine hand engraving, gold inlays and exotic materials. The AR platform gun, or one that is based on the M-16 Military rifle, is the visual that most readily comes to mind. Sales of ammo that is fed into these guns -- like the 5.56 NATO round -- also skyrocketed, and there was a huge shortage of all ammo as manufacturers and raw material suppliers shifted production to keep up.
As with any market where one segment is posting great returns, there is usually a segment where investors are in capital preservation mode. For the last several years, this distinction has belonged to sporting arms -- those firearms for hunting purposes. As mentioned to SNEWS® at the 2009 SHOT Show, Kimber had a several month-long waiting period for black guns, but simply could not give away sporting arms.
While walking the aisles of SHOT 2010, and in talking to key people after the show, it appears that the bulls are running this market, and all segments are firing on at least a few cylinders. While the Obama Bubble is quickly losing air, the firearms that were sold during that period are still out there, and many have gone to non-traditional firearms buyers. These consumers still take their guns to the range, and still invest dollars in ammo, instructional courses, ammo magazines, gun cases, cleaning accessories and items that help them customize and squeeze the most performance out of AR platform guns.
While the Obama Bubble was more about tactical rifles, the market for concealed carry/personal, defense/home defense is starting to heat up, and it is expected to continue through 2010. Like tactical rifles, these guns are going to more non-traditional buyers. According to Stephanie Kerns, co-owner of Insights Training Center, an education-based firearms and self defense school that has courses nationwide, “We are seeing a very healthy upswing in course participation, with the vast majority of clients coming from responsible people in the mid- and upper levels of income. These new gun owners want to be educated in how to properly defend themselves. It is less about fear, and more about choices.”
As for the underlying motivation for these purchases, Kerns said, “When a client comes in, we like to know exactly what their motivations are, so besides being able to design curriculum, we have a great basis of understanding on what is driving sales in the larger marketplace. The number one motivation that we hear is, the economy, and budget cuts in law enforcement. We are hearing this from people who live in very upper-end neighborhoods. While their neighborhoods are largely the safest in their city, they see the cuts in law enforcement as creating an environment for an increase in crime and rather than be victims they want to have a choice.”
Education and training
“The second motivation, by far, is possible new legislation that would limit gun sales,” Kerns said. “Many of these new gun owners want to exercise that option to purchase before their right is taken away. It is interesting to note that many clients in our Basic Handgun Safety & Responsibility course say that if you told them six months ago that they’d be purchasing a firearm, they would have told you that you were crazy. And after taking the basic course, many have had such a good experience that they return for more advanced training.”
As Kerns pointed out, with concealed carry weapons (CCW), the sale does not end with the gun. Like a climber’s rack, this is a system that includes proper holsters, purses, bags or other devises to carry the weapon comfortably and safely, yet have it immediately accessible. Like tactical rifles, it also includes cases, at-home secure storage and gun cleaning accessories. And like most core outdoor sports, CCWs also require knowledge and training to use them properly. Successful retailers in this market have in-house ranges or partnerships with entities that offer training from a two-hour basic course to two-week long urban warfare courses more suited to law enforcement.
The sporting segment of the market is also experiencing new life. AR platform guns, long considered to be the cornerstone of the black gun market, are enjoying life as sporting arms for hunting. This is a natural evolution, since most modern sporting arms, from lever actions to the ubiquitous bolt action 30.06, have been spawned from military arms that members of the armed services returning from duty favored for recreational purposes. Part of the attraction of AR platform guns is the range of customization that is possible.
While more military-inspired arms in CCW and AR platform guns are seeing healthy growth, sales of more traditional hunting arms is flat to showing small increases. Several manufacturers that we spoke to said that there is life in air gun and .22 caliber sales, indicating that each round costs pennies to shoot, making a day at the range extremely economical. Mel Forbes, owner of New Ultra Light Arms, a manufacturer of lightweight, custom hunting rifles that start at $3,000, indicated that sales are steady, with 71 percent of his business from repeat buyers.
“Once we sell someone a gun, they’ll be back to us in within 12 months to order another one,” Forbes told SNEWS.
Location, location, location
If there was one huge black spot in SHOT 2010, it was the venue. The Sands Convention Center was packed, with seemingly every room, hall and ballroom occupied. More than once we heard attendees, wondering with map in hands, saying, “How the hell are we supposed to find anything here?” However, whining notwithstanding, most seemed to eventually find their way around.
SHOT Show, like Outdoor Retailer and other shows, is actually owned by a commercial entity and not the industry association. In SHOT’s case, the commercial trade show management is Reed Expositions, with proceeds benefitting the National Shooting Sports Foundation (NSSF). And like Outdoor Retailer, Reed has to work with dates for various venues around the country, some of which are booked 20 years out.
Dennis MacDonald, senior vice president Reed Expositions, said, “We had challenges with the venue this year, but the NSSF wanted to be in Vegas and the LVCC was booked. Attendance was up 25 percent from last year in Orlando, so I would say the decision to return to Vegas was the correct one. We continue to try to find room at the Las Vegas Convention Center (Mandalay Bay is too small) for future years; however, we will be at the Sands again in 2011. Now understanding the shortcomings of the Sands and placing a show the size of SHOT into it, I would hope we can deliver a better experience next year.”
Capitalizing on SHOT
As a specialty core outdoor retailer, how can you capitalize on this market? It is important to remember that gun shop customers are also your customers. They have disposable income, since firearms can range from $500 to well into six figures. They can also range from armed law enforcement officers to soccer moms. They shoot, ski, hike, hunt and camp, and yes, they need base layers, fleece, shells and other gear. Many of these customers are also the perfect base camp customer, and trend toward camping when the weather is much more inclement than the average core outdoor customer. This naturally forces the issue of more substantial tents, bags, ground insulation and camp furniture.
One way to play in this market is to form partnerships. Each tribe of hunters and shooting enthusiasts seems to have its own community. A good place to start might be with your state’s fish and game department, as new hunters need to go through hunter education courses. These courses provide opportunities for outdoor retailers to present clinics on layering and clothing, setting up camp, cooking and packing, while providing discounts to the young participants and to the instructors. Many states also conduct weekend-long seminars just for women in traditional outdoor skills that include hunting and fishing. A seminar on stove selection and backcountry cooking could be held right next to a venue on how to properly field dress a deer, while, nearby, other participants could be lining up at the archery range.
It is also important to note that shop management and employee attitude go a long way. A cold shoulder from a sales associate fielding questions from a customer about tents for a hunting camp will not win sales.
Mention firearms in the core outdoor community and the discussion can get very politically heated. Whatever your point of view, they are a part of our country’s Constitution, part of what enabled the United States to form as a country, and seem to foster more curiosity than contempt in the larger marketplace.
This was largely the case when I went on a private Hell’s Canyon trip this last summer. I let others know that my Sig 226 -- a black gun in semi-auto pistol form favored by NAVY Seals -- was going on the trip because an out-of-country guest wanted to shoot but did not have the opportunity in her home country. Others balked. The last night on the trip, we took a short hike out of camp with some cans from that day’s lunch. After a lesson on safe gun handling, we fired at the cans. Slowly, others from the trip started to appear. More safe gun handling lessons, more people shooting, more holes in the cans, and the attitude shifted to, “Hey, this is cool! Can I shoot again?”
With attendance roughly two to three times the size of Outdoor Retailer Summer Market, and with many vendors and retailers attending both shows, the shooting market can represent opportunities for both core outdoor retailers and suppliers. And opportunities to leverage those sales are plainly in sight if you just look beyond your doors.
Marty Grabijas, an outdoor industry veteran who formerly worked with SIA and Travel Chair, is the owner of Mother (www.mothertec.net), which makes hunting packs, duffels and coolers. He can be reached be emailing firstname.lastname@example.org.