Prime your ammo & reloading sales: tough competition marks this segment of the market, but savvy dealers are making money!

Shooting Industry, Jan, 2003 by Charles E. Petty

Ammunition is a sizeable chunk of any gun shop's profit base. It, however, also causes a sizeable challenge for gun dealers. The ammunition field has grown so crowded and complex that merely keeping up with new stuff is a big job.

Within the last couple of years, we have seen an explosion of "short magnum" cartridges from Winchester and Remington. Then there's the roar caused by the tiny .17 Hornady Magnum Rimfire (HMR). We also have handgun ammunition from Taurus and North American Arms, and a bewildering array of premium ammunition, it seems, from everyone.

In addition, you can toss into this an abundance of different bullet weights and styles. Finally, add in the "super short" magnums from Winchester. We all know this opens the door for an array of new short, fat cartridges.

The Driving Force

While gun manufacturers usually drive ammo development, the reverse often is now true.

One historical example is the .40 S&W, which within just a couple of years, became a fixture in all semi-auto pistol lines. The development of the .17 HMR is a wonderful current example. Within a matter of months from its introduction, it seemed everyone had rifles chambered in the cartridge. Now, Taurus has a handgun chambered in the mini-magnum. Even more significant, Remington added the .17 HMR to its Premier ammunition offerings for 2003.

Winchester began a trend with its short, and now super short, magnums. Instead of wildcatters developing variations of short magnum cartridges, the factories are doing it.

Living With The Expanded Inventory

The great variety of choices for the consumer makes life complicated for dealers. Hyatt Gun Shop in Charlotte, N.C., is a 13,000-square-foot, full-line operation serving a diverse urban customer base. Owner Larry Hyatt estimates ammunition occupies about 15 percent of the shop's space.

"We have to have a box or two of almost everything," Hyatt said, who describes his inventory as "a mile wide and an inch deep."

Hyatt closely monitors the inventory, and places re-orders as needed instead of keeping a lot of boxes of slow movers.

"Deciding what to buy is a nightmare," Hyatt said.

According to Hyatt, and other dealers, the widespread development of "premium" ammunition has created a high level of brand loyalty among customers.

"They'll leave if we don't have exactly what they want," Hyatt said.

Decisions, Decisions

Twenty years ago, the biggest decision consumers made was deciding what color box to buy. Now, there are four distinct tiers of ammunition with competing brands in each.

Federal began the practice of loading "premium" ammunition in the late '70s, with the use of some Sierra bullets in rifle loads. Today, all of the major American ammunition makers have a top-end product in both handgun, rifle and shotgun ammunition.

The next is the "brand name" level. This really represents a company's "standard" product line. Even so, there is brand loyalty. A customer wanting a Remington's Core-Lokt bullet is not going to accept a Winchester Power-Point.

All this requires a different approach for gun dealers. In the past, when a customer didn't ask for a specific load, the clerk just grabbed a box of the right caliber. Not today. Very often, there's a brief question and answer exchange where the well-informed clerk determines the right ammo to meet the customer's needs.

The third tier -- generic ammo -- hasn't been around that long. Manufacturers developed it in an attempt to give customer a cost alternative and as a way to boost sales. Prices were going up, especially in handgun ammo. Many packages shrank from 50 to 20 rounds. The reduction allowed the cost-per-package to decrease, while the cost-per-round actually went up.

Generic ammo was easy to spot with its two-color packaging that held full-metal-jacketed bullets. Only recently has that changed with Winchester's introduction of its great-performing JHP bullets in their USA line of white box ammo.

The fourth tier is imported ammo, which can be subdivided into surplus and newly manufactured ammunition. Former Communist-bloc countries are providing lots of stuff. Wolf Ammunition is a major player.

This puts some real price pressure on domestic ammunition sales. Imported ammunition has also brought back to America something that had been largely forgotten: the corrosive primer. Corrosive-primed ammo can be a real bargain for the shooter and a profit builder for the seller. However, it's important to inform buyers of the cleaning precautions required when using these primers.

Meet The Challenge

For the dealer, the bottom line is increasing ammunition sales. Because of the number of complex offerings, dealers should put an experienced, knowledgeable shooter in charge of ammunition sales. This is not a position for a part-time, casual gun enthusiast.

In addition, know your customer base and what they're shooting. A hot-selling cartridge in the South may not grab a bit of attention in the Northeast.

Finally, stay informed of new offerings and what the gun magazines are reporting. I happen to know a bit about such reporting in GUNS and American Hand-gunner magazines. These are magazines your customers read and likely refer to when they enter your gun shop. Like every area of the gun business, knowing your stuff plays a big part in being successful.