Cerakoting can add revenue, margin and differentiation to existing products all while giving the customer something unique. (Photo: Max Archer)
Many things were different at the 2017 and 2018 SHOT Shows: fewer beards and shooting competition shirts, more focus on product, and less anxiety about what the future of firearms would hold for the next four years.
The last two years also showcased many emerging trends and strategies designed to drive more revenue for retailers. These include Point of Sale (POS) and marketing systems, an explosion of Cerakote and coating services, special manufacturer and distributor inventory reduction promotions, and high margin integral tactical light and laser combos. Tactical Retailer explored these concepts further with a few experts with industry experience.
POS Retail Solutions
Now that the panicked buying rush is over, retailers are faced with the fact that they need to start hunting for and attracting customers while reducing overhead expenses all at the same time. Noticeably more retailer POS system solutions are being shown at SHOT than previous years, which can help solve this challenge.
“A large percentage of small dealers are still keeping track of sales manually on handwritten sales slips,” said Dan Stafford of Gun Shop Software. “When compared to electronic scan-to-check-out POS solutions, manual sales orders increase checkout time and ATF non-compliance, decrease the ability to control and track inventory day-to-day and drastically increase accounting and general business management demands.
‘If you are spending your time adding up receipts by hand and manually creating replenishment orders, your business is not focusing on the marketing and sales that drive revenue,” Stafford added. “Most POS system users can pay for the system in as little as two months through reduced management requirements alone, but features such as reduced ATF violations, scannable driver’s license information automatically added to customer database files and pre-populated ATF forms can have a huge additional impact on POS solution investment.”
Features vary, but most digital POS systems can offer a lot of automation for the small to mid-sized retailer to allow for product reorder point automation, increase of margin through price update controls, inventory check-in, product price labeling, near instantaneous inventory and accounting statements, simplified returns, accounting and tax preparation capabilities, special order management, website integration and even employee tracking and payroll. Most importantly, almost every electronic POS system also delivers the capability to capture and track customer purchases and use that information to market to existing customers all in one simple POS solution.
Some of the POS solutions at SHOT even featured direct distributor system integration and provided incredibly rich features including geo-mapping of sales data. These distributor integrated systems self-populate pricing cost and real-time distributor inventory levels. A few of those companies were on the floor showcasing a better, faster and more profitable way for retailers to do business including Gun StoreMaster, Gun Shop Software, Rapid POS Gun Shop, FFL Tools, Rapid Gun Systems, AcuSport Axis POS and Coloseum Software. Most POS software starts around $2,000 for a single terminal system.
Marketing and The Small Retailer
Once a retailer has established a good database of customers captured via their POS solution or even a simple pen and paper sign-up sheet, the retailer can start delivering periodic promotions to continue driving customers back to the store. The one-man shop FFL used regularly for review firearms is delivering outstanding one-to-one personalized marketing just via SMS text messages.
A larger retail shop with thousands of customers can do this same thing via bulk email and SMS providers, which generally can integrate with your POS system. A POS solution is the core customer database used to drive email, SMS text message and even postal direct mail marketing to bring customers into the store. Micro marketing programs to only a few hundred very targeted customers have shown to be incredibly effective — if you know the hundred or so customers who buy a specific caliber and brand of ammo, they might be interested in a great bulk purchase deal you found.
According to Tony Arnold, Chief Marketing Advisor for IBM, “Recent retail industry data indicates that email campaigns can deliver about $40 in revenue for every $1 spent. Regardless of company size, the key to any successful marketing program is a timely relevant customer message to drive in-store or online traffic. Ask the question: Would this offer get me excited if I had purchased these things, or would it seem annoyingly like non-relevant junk mail? Successful marketing could just be a call, text or email to the customer to let them know you thought they might be interested in a particular deal. A customer buyer database is key. In order to market to the customer, you must first know who they are, how to contact them and preferably track their buying habits in your store — then drive a relevant offer.
POS solution retailers were offering email marketing as an add-on service to their solutions. MailChimp and Constant Contact both offer stand-alone, easy integration and customer list uploads from nearly any POS system. Care should be taken to deliver a compelling marketing offer and avoid driving your customers nuts with emails every day or week is critical. As sales slow, your customer list and a little marketing will likely be the best investment you have ever made.
Specialized Coating For Competitive Differentiation
With literally everyone now offering their own AR-15, manufacturers were struggling to differentiate themselves from the competition. One manufacturer who wanted to remain anonymous had a prophetic statement: “Eventually all the really big companies like Vista, Ruger, and S&W will kill everyone on price in the budget rifle market, so there has to be a differentiator, and we believe adding select upgrades and custom Cerakoting on essentially the same rifle spec as the big guys can set us apart from a value perspective and keeps our products unique. They will never be able to offer limited run custom coating options at that scale, and our product delivers something different to our dealers.”
Jon Simons from SilencerHQ, an SOT dealer, has a different perspective as a dealer. “Everyone is selling the same products — sometimes in the same town. Our Cerakoting services bring the customer into the store at a minimum three times — once to talk about what they want, once to drop the firearm off and once to pick it up. Cerakoting delivers its own higher margin ROI for a retailer, but customers are usually buying while they are in the store also. It’s a double win for us.”
A few other retailers noted that they are offering in-store package discounts for firearms Cerakote services that deliver a unique offer that customers cannot shop between stores, and greatly improves margins for the dealer.
Cerakoting has become the de facto firearm coating standard in the industry, however there are a number of other options that still set AR-15s apart from every other black rifle. WMD offers NiBx coated base AR-15 builder chassis. According to Wynn Atterbury, CEO of WMD, “Customers love the builder chassis idea; all they have to add is the furniture for a working rifle and the dealers have a unique item the big box stores are not carrying.”
KG Industries Gun Kote owner Joe Fazio said firearm-related coatings are the fastest growing part of his business: “Many people find that our coating delivers the same look with lower overall cost and application process complexity than other coatings.”
The resounding message from coating manufacturers, dealers and retailers is that firearms coating services sells and gives the customer something different from every other black rifle on the market. If your retail business has not begun offering coating as a service, 2018 may be the year to offer your customers the wow factor that will keep them coming back.
Retailers Should Cautiously Look For The Big Deals
It should be no surprise that after coming off a buying frenzy high and into a perceived firearm-friendly presidency, that the industry as a whole may start to face a bit of an inventory glut. Several manufacturers and distributors noted during SHOT there may be some unbelievable distributor and manufacturer-direct deals over 2018.
“Manufacturers are offering a lot of dealer-direct ‘buy several and get one free programs to boost some slowing sales after the frenzy buying of the last election cycles,” said Davidson’s CEO, Bryan Tucker. “Essentially these deals are giving the retailer basically distributor price of those items.” The advice was to manage inventory tightly to have cash on hand to take advantage of these higher volume purchases, which could increase margins and assure the retailers are staying competitive with market prices.
Lasers And Bright Lights
It would be a safe bet to say there were more lasers and tactical lights at SHOT Show this year than in all of the middle east — everything from high-output, ultra-long range weapons lights to tiny integrated units, combo laser/tactical lights and a huge variety of hunting and predator long-range illuminators. Nearly every single manufacturer noted that higher-than-average margins on lighting and lasers were the number one reason dealers were expanding their inventory.
Crimson Trace, LaserLyte, LaserMax, SureFire and Umarex all were offering extremely unique, tactical lights, laser sighting and long-range illuminators. Historically, premium tier lasers and lighting deliver significantly higher margin than firearms for retailers and are usually MAP price protected. Mark Hanish, VP Sales & Marketing for Surefire, suggested, “Concentrate in-store inventory on universal weapons mount options and a selection of handheld tactical lights for the CCW customers, but promote a ship-to-store option for weapon-specific or more unique models. Most quality lighting and laser companies also have protected MAP pricing models, which guarantee margin.”