Tactical Retailer recently spoke with Mark DeYoung, the CEO and board Chairman of Vista Outdoor about its market strategy. Many retailers would probably not know all of Vista’s 50 product brands that include various aspects of the outdoor industry ranging from firearms and shooting sports accessories to biking, camping and watersports. With brands including Champion, Uncle Mike’s, Hoppes, Bushnell, Federal, American Eagle, CCI, Blazer, Savage, Blackhawk, RCBS and Camelback, retailers have a unique opportunity to easily manage one vendor relationship delivering a huge assortment of products.
TR — Since the formation and IPO of Vista Outdoor, the company has been extremely focused on an integrated product cross-selling strategy. Can you elaborate?
DeYoung — Vista Outdoor has about 50 brands that deliver a large diversity to our portfolio and offer retailers a huge assortment of products from a single vendor that span the entire outdoor lifestyle beyond just firearms. One of our goals early on was to leverage that product diversity to help dealers improve margins and increase revenues.
TR — What can retailers expect from the product category cross-marketing strategy?
DeYoung — We are in a unique position to package many different products together such as rifles with optics, cleaning care and ammo, ammo with targets, backpacks with hydration, but more importantly we can optimize those pairings. We can package the ammo that shoots the best with a particular firearm, deliver a hydration system that fits into a pack better and provide shipping programs that allow dealers to make margin on products like steel targets, which previously had shipping costs too expensive to stock. We also have the product depth in many categories to offer good, better and best product options such as GunMate, Uncle Mike’s and Blackhawk holster options. Though all the brands are separately marketed, the benefit to the retailer is that they have one point of contact representative with a single common account representative across all brands who can speak to and support each unique brand advantage.
TR — How does Vista assure all the acquired brands do not lose their individuality and market value?
DeYoung — We have organized our brands in a very specific way to assure they maintain their own identities and continue to innovate individual brand marketing strategies and websites. We have also developed organizational “offer lanes” such as a Shooting Accessories Offer Lane that might have Champion, Hoppes, Outers, Uncle Mike’s and Primos, which could deliver a target, cleaning, sling and shooting stabilizing package that we might offer as a dealer package or as a retail-packaged kit. Regardless of how a brand is sold individually or as some type of package, we strive to preserve the individuality of each brand.
TR — What would you tell retailers are the biggest advantages of working with Vista?
DeYoung — Vista Outdoor is a stable company with the highest creditworthiness in the industry with over $3 billion in annual revenue. Retailers do not need to worry about suddenly not being able to get product from us — which is a possibility for some of the smaller manufacturers. We have a number of sales incentives that range from brand and cross-brand holiday, special event and stocking packages that can increase margins and sales for a retailer. We continue to stand behind all our products with an industry-leading warranty.
TR — One of the promotional trends that began to be heavily used by manufacturers was deeply discounted manufacturer direct to retail promotions. Is that something Vista will be offering?
DeYoung — To some degree, all manufacturers will offer these deep discount promotions from time to time. However, we are doing far less than other competing manufacturers because we are a diversified product-brand portfolio. That puts us in a situation where we do not need to overreact like other firearms manufacturers do when NIC checks begin trending down and there are double digit declines occurring on firearms sales. Vista purposefully diversified to prevent that type of sole reliance on firearm sales. Savage is a brand we are proud of and is very important to us, however it only represents about 10 percent of our total revenue.
TR — So retailers of Savage firearms are less likely to see eroding margins long term?
DeYoung — Exactly. By not continuously setting the pricing bar artificially low for Savage with one huge promotion after another, the street price and respective margins should be higher than other brands. Retailers can expect Savage sales prices across competitors to be similar, which preserves margin and the integrity of the brand. If you only sell by discounting deeper, it becomes a race to the bottom with margins of who has the lowest price. Extending these excessive dealer-direct discount promotions also impacts the distributors who are then cut out of larger retailer bulk purchases.
TR — Can you elaborate on Vista Outdoor’s diversified portfolio strategy?
DeYoung — We are unique in the shooting sports industry in that we have a product portfolio which is diversified outside of the shooting sports industry — a portfolio which also includes cross-sell and seasonal overlaps of eyewear, children’s products, fishing, paddle boards, camping, hiking and safety helmets, for example. This design was not by accident. Our customer analytics data indicates that the same shooting and hunting customers are fishing, hiking, biking, camping, have kids and enjoying some type of watersports and non-shooting activities or vice versa. Single category-focused companies do not have the reach into these overlap markets like Vista Outdoor to capitalize on the customer who may enjoy a wide variety of outdoor activities. People have described our strategy as a lifestyle brand portfolio of products.
TR — For retailers, how does this strategy help them?
DeYoung — Our strategy helps all sizes of retailers through a simplification of vendor relationships. The large retailer has the ability to fulfill, augment and expand across our product set. The smaller retailer can use our analytics data to understand which additional products or categories they might be successful with based on historical and current trends and they can do that through just one vendor.
TR — You have mentioned analytics and market overlaps. How does Vista tie these together for the retailer?
DeYoung — If a retailer is working with one company for firearms, and a lot of others for firearm accessories, ammo, targets, eyewear, hunting, camping and other categories, none of those companies will have an accurate understanding of how their product overlaps into other categories. Since we sell all those categories plus more, we have visibility into those sales from a sell-through perspective. We also are one of the very few companies to capture and analyze trend data from large retailer POS systems. This gives us a huge amount of insight into what is selling, what are natural consumer product pairings, what needs repackaging, repricing and extra marketing. We are in the unique position to definitively say that customers who buy X product also buy Y product, so maybe a retailer should consider adding those products. With a noted downturn in NIC checks, retailers now need to find other products to sell to keep making their sales goals.
TR — It was obvious at this year’s SHOT Show that the small AR-15 manufacturers are concerned about poor sales and are thinking of creative ideas like Cerakoting to keep customers buying. How can Vista help the AR-15 tactical retailer who is not selling into the hunting segment?
DeYoung — MSRs [Modern Sporting Rifles] have been an interesting curve to watch. As you noted, the small AR manufacturers will either adapt or go out of business. Tactical retailers are now noting that they need to expand the categories they carry beyond just tactical handguns, ARs and ammo. We are in a unique position to support both their core sales and help them evaluate new categories.
Vista is the leading supplier of MSR and AR platform ammo with brands like Fusion, American Eagle and Federal, so it made sense to evaluate Savage offering a MSR platform. We saw what was happening in the market, and were purposefully slow to market with our .223 and .308 MSR models focusing in on a niche solution. We are not attempting to go head to head with all the standard Mil-Spec AR-15s on the market. Our MSR has an upgraded nickel boron trigger, Blackhawk furniture, melonited components and upgraded 5R barrel, which we believe is a high value competitive offering of something different. The .308 MSR has many additional receiver design features including side charging. We knew our offering would have to be different, deliver a good value and competitive retail offering. Our MSR line delivers that and is backed by a legacy and warranty brand people trust. We supported that product line with a number of complimentary tactical products such as Hoppes Black cleaning products and a line of Blackhawk suppressors.
TR — Now that elections are complete, can you speak to Plan A or Plan B options on if Trump or Clinton was elected?
DeYoung — A lot of manufacturers tried to pack shelves with heavily discounted products in anticipation of the election going to the less gun-friendly candidate, but we did not. Instead, we had two flexible strategies with plenty of financial jumping off points built in. One of our focus areas regardless of the candidate was to invest into expanding our strained ammunition production capacity to more closely match market-driven, moving average sales increases. Our focus was to look for investment opportunities which would be less likely to fluctuate based on the election outcome. We know that retailers depend on us to make sound and wise decisions which will maximize their margins and help grow their business long term.
For more information, go to www.vistaoutdoor.com.