Firearm sales revival powers sporting goods - at discount stores - Product Movement Audit

Discount Store News, April 11, 1988 by Frank Katlin

Firearm Sales Revival Powers Sporting Goods

By Frank Katlin

Vice Chairman Maurice Sporting Goods

Very strong firearm sales and a resurgence of outdoor activities keyed a strong sporting goods year in 1987, and the outlook for 1988 is more of the same.

In a year that won't go down in retail record books, sporting goods as a category was one of mass merchandisers' three or four bright spots, posting modest but significant gains in virtually all product areas.

Merchandise Turn

Unseasonably mild weather throughout most of the country last February and March gave retailers an early boost, and may have provided many with an extra merchandise turn in 1987.

Even as the stock market rose, consumers exhibited uncertainty about the economy in general, and that may have led to augmented sporting goods sales. In addition, manufacturers maintained strong price-point positions, keeping the products very affordable. Of these issues, only consumer uncertainty seems to remain in 1988. But more on that topic later.

Convincing Comeback

After seven or eight consecutive lackluster years, firearms staged a convincing comeback. Two years of effort in cleaning up inventories paid off, as demand stepped up and a new wave of product moved through a clean pipeline. Promotionally priced products, like the Marlin 605 rifle with scope and the Remington 870 Express shotgun, led the way.

The Remington was the season's hottest product, its sales limited only by limited supply. The Remington shotgun will probably retain its popularity this year, but supplies will still be outstripped by demand -- production has not been increased and supplies will remain tight.

The fishing tackle market was, along with camping equipment, the area most affected by the terrific weather last spring.

But the improved sales reflected more than just a string of warm, sunny weekends. Mass merchandisers were stronger than ever in serving specialty markets.

Where once they were content to offer generic fishing equipment, many retailers have chosen to exploit lucrative regional specialties. Coastal retailers, for instance, have strengthened their saltwater combos, and sales of Johnson Crappie combos were very strong. The geographic approach also showed up in sharply focused terminal tackle assortments.

Another sales stimulant was the exploitation of the kid's market. Apart from attracting fishermen of the future to the sport, these promotional efforts racked up some significant sales for several chains. Ames, for instance, ran a very successful endcap promotion, and several other major discounters were highly promotional with beginners' combos.

The Zebco Snoopy/Mickey kits were the most obvious beneficiaries of this promotional blitz, but several lowcost kits turned in some impressive sales numbers as well.

Improving Products

Overall, manufacturers of fishing equipment continued to improve the cosmetics of their products as well as their "bells and whistles" quotient, which certainly helped sales. But it was the strong price stance that most appealed to casual fishermen. At anywhere from $12.99 to $21.99 for a solid rod and reel combo, fishing equipment remains one of the greatest bargains in the marketplace and the consumer seems to know it.

Despite the negation of many of the factors that made 1987 a strong year, 1988 looks to be very nearly as favorable for sporting goods sales.

Fishing and hunting are both in strong growth cycles (along with most outdoor activities) and even slumping areas like fitness equipment seem to have rallied. Even without the boost retailers got from last spring's mild weather, spring sales for 1988 should be strong.

Growth this year will be accomplished in the face of short supply, rising prices and an uncertain economy. As of May 1, in most cases (and June 1 in many others), prices in most product areas will increase 7 percent to 9 percent. For some manufacturers, this is their first mid-season price increase ever; for most, it's something they haven't done for years.

This will be on top of the annual price increases next fall, which will run between 5 percent and 8 percent. Taken together, the price hikes will total about 15 percent, the largest across-the-board raise ever in the category. Although many manufacturers have held off raising prices (or settled for very small increases), consumers will not be happy.

Most of the increase is due to fluctuating prices in the Orient and the weakness of the dollar against other currencies, and that situation is bound to get worse. Additionally, rising demand has created severe shortages in some areas, which in turn has boosted prices of imported goods further.

Despite a jump in price, sports equipment will remain a good value. Historically, manufacturers have hiked prices less often than was common in most other industries, and while a sudden jump may scare off some customers in the short term, the overall value of outdoor activities will bring them back.

Also, since the brunt of most of the increases will not be felt until 1989, the dampening effect on 1988 sales should be minor.