January 10, 2019
From the Counter: Mountain View Sports
“From the Counter” is the NSSF timely industry perspective from firearm retailers across the country. Our goal is to identify and highlight innovative market strategies and help 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, we’ll focus on an independent retailer in Anchorage, Alaska, and how this store is finding a competitive edge in the shadow of three large-box stores.
Mountain View Sports, Anchorage, Alaska
Founded in 1961, this metro Anchorage retailer survived one of the largest earthquakes ever recorded in the area, and faced the biggest shaker since in early December with little damage. It has also faced some of the most volatile economic changes in American business history, from the boom years of the pipeline to the faltering oil industry of the late 1980s. Today, this specialty fly shop and hunting store keeps an average of 60 firearms in stock, with one full-time and two part-time employees working the firearms counter. Located on the south side of Anchorage, it spans 4,000 square feet.
Evolving from a “Destination” Shop
By the 1990s, this shop had expanded multiple times to merge into a 12,000 square-foot facility. It specialized in outerwear, fly-fishing and a selective but highly profitable long gun and handgun business. Earning a reputation as a “destination” stop for many hunters and fishermen transitioning through Anchorage, the store was one of the largest general outdoor outfitters and gun counters in the state.
As the most recent decade of elections pushed firearms sales incrementally higher, this store watched as new trends emerged in the Anchorage markets. While the handgun and MSR market grew, the individuals behind Mountain View’s counter found that although selling “in the bubble” started out profitably, it could not sustain itself.
“First off, we never liked gouging our customers. Although the decade of high firearm sales was brisk, it wasn’t as hysterical in Alaska when compared to those in the Lower 48,” said John Staser, Store Manager and Firearms Buyer.
Another developing issue in the Anchorage market included the opening of the first Sportsman’s Warehouse.
“When Sportsman’s opened, we could feel our traffic reduce. Almost immediately, some of our clients became more price sensitive,” Staser said.
The local Sportsman’s franchise didn’t last long. It fell into bankruptcy and reorganization about four years ago.
During this time period, the handgun business stayed robust, but the profits remained lean.
“We never expected to have the same profitability in, say, a Glock as we would a high-grade rifle. But in recent years it has really gotten challenging. Like most retailers, we look to our manufacturers to be serious about MAP (manufacturers advertised pricing) and margins. That practice provides us with profit margins above 20 percent. In our soft-goods business, we commonly pull 40 percent,” he said.
Reevaluating Inventory and Profitability
Though Sportsman’s was on its way out, in 2014, a Cabela’s opened on the south side of town and a Bass Pro Shop opened on the north side. Mountain View began to reevaluate its inventory and reassess it against operational profitability.
Staser was clear about the impact of close to 300,000 square feet of competition in a town with a population of just 300,000. It was painful.
“Our store’s traffic diminished. We had to take a hard look at our costs, rent and, most importantly, what brands offered the highest profits. We quickly learned that it was the big-box store brands that were the hardest for us to compete with,” Staser said.
Staser commented that Mountain View Sports “near-supersized store” size was a disadvantage.
“If we had been a small store [during that time], the process of adapting to a change in inventory would have been far easier. However, we knew that this would take a larger reset,” he said.
Faced with larger competition to the north and south, Mountain View Sports took the path few retail businesses are willing to embrace: It downsized. The store went from a 12,000 square-foot footprint to one one-third the size — 4,000 — and took the further step of moving from its midtown location to the south side. This improved the capture rate of consumers heading to the Kenai Peninsula. The firearms department became truly lean and mean.
“We didn’t just reduce inventory. We became selective about every single SKU in the department. The guns had to provide a high-demand need from our clients, and they had to be more profitable,” Staser said.
“One of the brands that has been meeting that need is Montana Rifle. Although we could always use more product, they are a solid example of a manufacturer that wants us to be profitable with their firearms,” he said.
The store also has perfected the special order. It has gained great efficiencies by keeping samples of their best rifles and handguns in stock. Backed by a knowledgeable and well-trained staff this allows the customer to pick it up and feel it in their hands, but by keeping just “one on the shelf,” the store doesn’t need to stock a large section of multiple calibers.
“We have a staff that is extraordinary. Our customers have found out that they get impressive advice and the best service the store can provide. We have made a commitment to delivering expert advice in hunting, home defense and training,” said Staser.
“Even though we’re in Alaska, we can get a firearm quickly,” he continued. “This gives us the time to foster the client relationship and accompany the sale with the best accessories and optics. The store is always happy to do transfers. We continue to expand our used guns and consignment inventory. These two categories are where we commonly have a fair high-profit margin,” said Staser.
Lessons Learned from the Counter
This retailer faced a sink-or-swim circumstance in Alaska’s icy waters. Its ability to adapt and change has given it new longevity in one of the most competitive markets in North America.
- Taking a Hard Look at Your Business — Retailers often grouse about big-box competitors, yet few can claim statistics of 1,000 square feet of competition for every man women and child in their area, let alone their city. No retail business wants to downsize, but this retailer refused to blink. It understood it had to adapt or perish and embraced strategic planning to create greater efficiencies and maximize profitability.
- Attracting & Retaining the Right Staff — While staffing was always a priority, the store found that getting the right person at the counter could make a notable difference. Today, each sale is fostered carefully to meet the specific needs of the client.
- Prioritizing Vendors as Business Partners — Adopting strategies to tailor inventory for profit and demand sounds logical, but, as this retailer found out, it wasn’t being done. It changed that by identifying and stocking what its customers want, then continuing to fine-tune the process by pinpointing and partnering with manufacturers and suppliers willing to prioritize its goals.