April 17, 2019
From the Counter: Alaska Gun & Ammo
“From the Counter” is NSSF’s timely industry perspectives from firearm retailers across the country. Our goal is to identify and highlight innovative market strategies helping retailers compete more successfully. Lessons learned are drawn from an array of regions with diverse market economies in an era of political change. This month, I feature a retailer that sells as if it was back to the future in the ‘80s as an old-school, small-town gun shop in the heart of metro Fairbanks, Alaska.
Alaska Gun and Ammo, Fairbanks, Alaska
Located on the edge of downtown in old Fairbanks, this retailer stocks an average of 300 firearms consisting mostly of used rifles, handguns and shotguns, with about 70 new pistols. The store is in an old house built during the 1920s, with a display area on the first floor sprawled across four rooms totaling less than 1,000 square feet. The staff of three run the store seven days a week.
This humble building found an owner in the early ‘80s, when Master Sergeant Stephen K. Smith retired from the Army from nearby Fort Wainwright.
“I always wanted to own a gun shop, and retirement made it possible,” said Smith.
Those early 1980s were Alaska’s first significant oil economic downturn since World War II. Smith found land prices so cheap in Fairbanks he bought the poor-condition house on a credit card.
His first order of business was to inventory the guns he loved, as well as the guns that were popular in Alaska.
“I knew what would sell and what was in demand in this state. Even in the downturn days, business was brisk in my store. It still is today because of my relationships with the members of the Alaskan Armed Forces community. Fairbanks has two large military installations, one Army and one Air Force,” Smith said.
Transfers Ring the Register
Those strong relationships and long-established presence led Smith to develop transfers as a valued part of his business model.
“I know a lot of retailers don’t like transfers. But in this area, they’re a big deal, particularly with military personnel. We have men and women walk in wanting to retrieve guns from home to Alaska. Say they want one of their guns from home to hunt with. Many will also often look for replacements. Either circumstance works well for us,” Smith said.
Smith was quick to point out that military personnel are also transferred, making volume transactions lucrative. Soldiers arrive for just a year or two, and when they’re reassigned the need to ship the firearm arises once more.
“Of course, we have customers who purchase guns on the internet and need them transferred to complete the purchase, but most of the time we sell them something while they’re in the store. Frequently, we would have never seen them if we didn’t warmly accept transfers,” he said.
Smith acknowledged the internet has changed every aspect of the retail firearms industry. “There must be a physical destination for the completion of an internet firearms transaction, and for our industry, in our store, it works well,” he said.
All That Glitters Is — Used!
When asked where the best profit lies in his store, Smith noted that it isn’t with new pistol sales. “We do fine on pistols. We stock popular handguns commonly found in police work and home defense. All that said, used guns and estate collections are where the vast majority of profit is at in our store,” he said.
Consignments are another aspect in which Alaska Gun that differs from many other retailers. “When a customer comes in with a gun to sell, we keep the terms pretty simple. Together we’ll come to an agreement on the retail sale price. Then, I charge an additional 15 percent for the store’s cut,” Smith said. “Since it’s added to the ‘finish’ price, it works like a sales tax. It makes it easy on everyone. Once an agreement is reached, everyone knows where they stand. The trick is to come to a price that shows fair value, yet makes the gun turn quickly,” he said.
There are times when the seller wants too much for the firearm. In those cases, Smith simply waits until the customer can’t sell the gun. He stated the seller usually comes back to the store.
“I get it. No one wants to leave cash on the table. But the gun doesn’t belong on my shelf if it won’t sell,” said Smith.
Smith added that his business in used guns is successful in part because he has access to one of the best gunsmiths he has ever worked with to keep him on track and to prevent any unresolved problems.
“My gunsmith is unbelievable. I bought a Browning bolt-action that had been run over by a bulldozer, just for its parts. To be honest, I completely forgot about it. One day I walked into my gunsmith’s shop, and it was all back together. It looked exceptional. He’s an artist and loves his work. The fact is, we wouldn’t be the same shop without him,” Smith said.
- Alaska Gun and Ammo is the last of its kind in many parts of the country. It’s a welcoming gathering place for shooters, hunters, the military and city cops. There’s always coffee on, and everyone on both sides of the counter has a story that creates a sense of camaraderie and community. While it may not be as sophisticated in its inventory control and visual presentation, it is the kind of store that offers a friendly, caring home for customers often far from home. Many would look at this store and say “upgrade.” But Smith’s understanding of his unique community and his ability to reliably serve its needs has kept this store in business and turning a profit for more than 30 years — and that’s just as a much a mark of success as today’s well-appointed “destination” stores. Likewise, Smith’s approach to low overhead may be uncomfortable for some. However, when your overhead is under control and your customers are greeted by a warm personality at the door, you can move product.
- This shop found its niche and is dedicated to it. From used guns and estate purchases to consignment sales and transfers, this retailer makes a concerted effort to deal with his customers with accountability and transparency. Consignment strategies, in particular, are a fully realized profit center for this retailer, and Smith would be the first to tell you that market experience and an excellent gunsmith will keep the profits rolling in with such sales.
- Retailers throw the word “passion” around like yesterday’s newspaper. In this case, as with many successful retailers that have been featured in this column, this store loves its customers and loves the sport. This honest passion delivers a winning combo that translates into exceptional customer care — and that, without a doubt, has worked better in this rugged outpost than any flashy add-ons would.