March 9, 2016
Planning Ahead and Buying Long—A Conversation with Jason Hornady
If the good mood at SHOT Show and the attitude of everyone we talked to there are sound indicators—and we think they are—then 2016 should be an exceptional year for firearms retailers across the country. You all know the reasons why—the current political climate, upcoming elections, increased participation in the shooting sports and hunting, etc. So let’s talk about how to handle what’s anticipated to be a very, very busy year.
There have been banner years for our industry before, and there will be again. Many think we’re embarking on one now. But while much of this industry is anticipating a top sales season, how you handle such a busy time can make the difference between sinking or swimming in its aftermath. Smart retailers should be asking themselves a lot of questions right now: How do I pay my bills if my shelves go empty? What do I do if I can’t get the inventory I need? What happens in the aftermath of a top-selling year—how do I keep those people I sold all those firearms and accessories to coming back if and when sales normalize?
I’ll be covering ways to answer these questions and more in the weeks and months to come, but inventory management will be one of the keys to long-term success. I recently spoke with Jason Hornady, Vice President of Hornady Manufacturing, about what they’re doing to keep inventory levels appropriate to the times and retailers happy.
NSSF: Word on the street is that most are expecting sales to be brisk this year. What are you forecasting 2016?
Jason Hornady (JH): We’re looking for growth, but right now we’re going about business in a rather normal path for us, working through new products and promotions, etc. Sure, we’re keeping an eye on the political climate, but because we are positioned as a premium brand and don’t play in the price-point arena, we don’t usually see the big and unexpected spikes others do in reaction to things said in the debates and on the campaign trail.
NSSF: What advice would you give a retailer who is concerned about ensuring product delivery during the third and fourth quarters this year?
JH: We recommend our retailers buy long. In other words, we advise they go heavier on their inventory buys earlier in the year when the year looks to be as volatile as this one does. Bottom line, you can’t sell from an empty shelf, and there is potential to go 60, 90 even longer before restocking.
NSSF: Do you have any mechanisms like surge protection built in to your production processes?
JH: We’ve really been at what is pretty much top capacity for several years. That doesn’t mean we can’t or won’t expand, but what those on the outside need to understand is that kind of expansion isn’t instantaneous. Putting in new machines and getting them online takes time—even up to a year—and that means such physical expansion isn’t always a sound fix for a roller-coaster market. So, just as we advise our retailers to buy long, we’ve inventoried to back that advice. Our stocks are heavier up front now, that’s why we’re recommending our retailers should be doing the same. We’re putting our money where our mouth is.
NSSF: If demand exceeds production, what can you share about product allocations through Hornady?
JH: If I was running a firearms retail store, I’d make sure I had strong relationships with multiple vendors and distributors. You’ve got to “feel the love” from as many as you can, and you’ve got to talk to those partners frequently. We judge much of what we do by the purchase orders we see, so if you haven’t got it on paper, we can’t project accurately. And again, remember that 60-day, 90-day or even longer restocking period I talked about that some can expect to encounter later this year if they don’t stock up now? The reason for that is that the process of taking metal to finished product is long—our average is 90 to 120 days. So if I’m out, you’re out, and there isn’t a quick solution for that. As I often say, it’s easier to handle a cancelation than to handle a panic I’m-out-of order.
Now, that said, keep in mind that we don’t sell to Wal-Mart. That means we’re more devoted to our core retailers than some manufacturers that sell across a wider spectrum of enterprises, and that helps keep product on those core retailer shelves.
NSSF: Anything in particular out of your offerings that’s standing out more strongly than others?
JH: It appears to us that the handgun and concealed carry products are going to continue to be a hot item for us in 2016. Our handgun RFID safes are likewise growing. The only area that’s a little flat right now is the hunting genre, but it’s also February, so that can easily change.
NSSF: One of the things retailers need to consider is what happens if the political climate ends as one that bodes positively for firearms owners, sportsmen and hunters. If sales soften in the last quarters of 2016, what advice would you offer the retailers?
JH: I think sales softening because of the political climate is about as likely as I am of getting a pet unicorn for Christmas. However, you do have to acknowledge the possibility exists. If that happens and there ends up being some initial pain in the event of an election that’s positive for our industry, be prepared to amp up a post-election marketing push and capture more of the same audience that’s already in your store. They’re not going to stop shooting, so make sure they know you have the supplies they need, that you’re there for them through times good and bad.
My many thanks to Jason Hornady for his time. Sounds like everything’s in place for Hornady Manufacturing to have an excellent year, and that should translate to the retailers experiencing the same.