Now that demand for guns is returning to “new normal” levels, smart marketing, product mix and margin management will be critical to long-term success as a retailer. While manufacturers, wholesalers and retailers look for ways to move inventory, it is a sure thing that price incentives and competition will drive margin of many products lower than you may want.
If making money is the objective, we all know that there are different ways to achieve that goal. One can adopt the Wal-Mart model and focus on low margin and high volume, using internal efficiencies to derive profits. At the other end of the spectrum is the high-price, low-volume business model. The implication of this model is that you have exclusive products and services, with a price point to match. Companies like Saks Fifth Avenue, Barrett Firearms and Sharper Image (back in the day) are examples that come to mind.
As a shooting industry retailer, you can certainly adopt a low-price, high-volume approach. The challenge is that by definition, you have to occupy the top one or two positions in terms of market share in order to succeed. Below that position, companies are not able to compete with those at the top getting favorable cost, shipping and marketing economies of scale.
In the discount chain store market, Target and Wal-Mart manage to make a pretty good living, but moving down the top 10 list, you’ll find companies like K-Mart struggling to stay alive. It’s no different when it comes to guns. A couple of volume players in each market can succeed with a high-volume, low-price model, but the rest will struggle.
So what to do?
Specialization is one approach. If you’re competing with volume players, you can choose product lines in which to build expertise, reputation and deep in-stock availability. An example mentioned in the October/November 2014 issue of Shooting Sports Retailer illustrates this concept. Neil Schachte, owner of Carolina Rod and Gun, chooses to specialize in medium- to high-quality optics. He stocks a wide variety of products from two or three manufacturers, so he has the right product available for his customers. When a big-box volume player moved into his area, his business increased 75 percent, because the volume stores simply couldn’t compete with his product depth in optics.
Developing unique or exclusive products is another way to help improve margin. What better retail scenario is there than finding or creating a product that no one else has, but that customers want? Demand and limited availability support sales prices and therefore margins. While uniqueness associated with high customer demand is admittedly a bit of a pipe dream, it’s possible to achieve some of those benefits. Let’s take a look at one way you can develop a unique product offering in your business — one that will help you make better margins.
Republic Forge: A Dealer-Friendly Custom Gun Maker
Like most entrepreneurial ventures, Republic Forge started with a dream. In this case, founder Benny Deal wanted to build top-notch 1911 pistols. Many companies build the venerable 1911, and fewer make premium versions of the gun. Fewer still infuse a strong patriotic element to design, manufacture and sales. In addition to making top-of-the-line pistols, Benny’s dream included the provision that his guns would be made by Americans for the Republic. Now the name Republic Forge makes sense, right?
Republic Forge takes the “made in America” part literally. It’s not much of a surprise to learn that the company is based in Perryville, Texas. What is surprising, however, is that the company went so far as to invest in its own forge to produce slides and frames in-house. Even among high-end pistol makers, that’s rare.
Parts are another topic of passion for founder Benny Deal.
“A lot of other ‘made in the USA’ guns are just that — assembled in the U.S.,” Deal says. “You’ll find parts in those guns made in Korea, Pakistan and the Philippines. I get why other companies do that; it’s just not our approach.”
Republic Forge uses only American-made parts. The company is solidly behind the concept of Americans making guns for Americans — from the smallest of parts all the way to the finished pistol.
As an homage to American craftsmanship, Republic Forge makes its pistols one at a time, start to finish, not by using an assembly-line approach. Experienced gunsmiths produce each pistol, hand-fitting each component as the gun comes together. At the end of the process, the company puts plenty of rounds through each gun to make sure that it’s up to snuff. They go so far as to include one of the targets in the retail packaging to demonstrate the pistol’s accuracy as it leaves the shop.
Republic Forge’s vice president of operations and master gunsmith is Jeff Meister. With more than 30 years experience building 1911s, he knows a thing or two. Jeff was a natural fit for Republic Forge, as his passion is building and customizing guns with hand tools only — no mills or high-tech machines. Also a graduate of Cylinder & Slide’s Custom 1911 and Match Grade Barrel Finish classes, Jeff has trained with the best in the business.
In the words of Jeff and Benny, “Republic Forge pistols are not built for beginners. They are built for shooters.”
Design Your Own Custom Pistol
The fact that Republic Forge pistols are handmade in America isn’t what creates the opportunity for retailers, however. The intentional design behind products and market is where the niche emerges. Republic’s business model, supported by the built-by-hand one-at-a-time process, is to let customers order their own 1911. While the company will build and stock “standard” configurations, the real value lies in customization.
Republic Forge offers eight starting platforms upon which a customer begins the customization process:
Republic: A 5-inch-barrel Government model with 25 line-per-inch front and back strap checkering, front and rear slide serrations and glare-reducing top-of-slide serration.
Predator: A 6-inch-barrel model with long slide, front and back strap checkering, rear slide serrations, top-of-slide serration and Texas star hammer. The Predator makes a great hunting pistol when chambered in 10mm.
Valiant: A 4.25-inch-barrel model with rear-only slide serrations, front and back strap checkering and slide top serration.
Defiant: A 3.5-inch compact carry model with options for front strap checkering or rough-knurled texture.
Stryker: Another 4.25-inch-barrel model, but with a Picatinny rail.
General: Like the Defiant, this model features a 3.5-inch barrel, but it is even more compact with a shorter grip.
Patriot: Also a 4.25-inch model, but unlike the Valiant, this one starts with front and rear slide serrations.
Raider: The Raider is similar to the basic Republic model with a full 5-inch barrel, but it includes a Picatinny rail for those who want to attach lights or lasers.
In October 2014, the company launched a new website that allows a customer or dealer to design his own custom 1911. Customers can choose their dream configuration of grips, slide, barrel, caliber, safety, sights, colors and more. The exciting part is that the website illustrates your gun as you build it. Want a full-size Government model with graphite black frame, Damascus slide, Bomar sights and Mammoth ivory grips? No problem. While you’re at it, get it chambered in 9mm or 10mm.
There is no practical limit to the number of possibilities with Republic’s customization options. While designing a few of my own dream guns, I counted 17 different options where I could specify my exact preferences. Building this website must have been a true nightmare, but it works and is addictive once you start working on your own design.
Deal makes an interesting observation about the website.
“We really built the website to support our dealer network,” he says. As of now, the company has about 50 dealers nationwide and plans to add another 50 in the coming year.
Unlike other custom gun makers, where delivery times can be measured in years, Republic is currently able to deliver most custom guns in about three months. While that timeframe might increase, avoiding endless waits on gun orders is a big priority for the company. Deal prefers to avoid situations where advance deposits are required for guns that might not be seen for one or more years. When a dealer orders a gun, it’s made, shipped, and only invoiced on delivery.
What’s In It For The dealer?
While a customer can certainly visit the Republic Forge website and configure his own pistol, the transaction can’t be completed without the involvement of an authorized Republic Forge dealer. Republic Forge will not accept an Internet order and ship to a random FFL dealer for a transfer fee. Building a high-end pistol is a process that requires experience and knowledge, and Republic wants its authorized dealers involved.
Interestingly, Republic Forge is finding that wealthy buyers are not their core market. While prices are similar, or a bit less, than that of other custom 1911 makers, serious shooters are finding a way to pay the price. “You’d think it’s really just wealthy people who buy our guns, but it’s not. It’s people who like and appreciate guns,” says Deal.
Once an authorized dealer relationship is finalized, the dealer can order customized guns from Republic Forge. The ideal sales scenario calls for a dealer to work directly with their customer to develop and order a custom 1911. Republic Forge builds the gun and ships it to the dealer for background check and customer delivery. As each gun is built to order, there is no need to stock a wide assortment of guns, and the dealer is paid the same sale margin without the need to keep expensive excess inventory of the product.
In the event a customer finds Republic Forge on his own and configures a custom gun, it will be delivered only through an authorized Republic Forge dealer. That dealer receives the same margin as if they had placed the original order.
Retail price of the guns varies widely with configuration options. Basic models might go as low as $2,500, while higher-end guns — for example, ones equipped with Damascus slides — can approach the $5,000 range. Dealer margins are generous — usually a multiple of that realized for popular commodity guns.
“Some of our dealers make more on one gun than a month’s worth of lower-cost volume pistols,” Deal adds.
Sales And Support Practices
There are a number of ways that a dealer can develop more unique offerings in their market using the Republic Forge approach. Certainly a retailer can promote itself as “the custom gun shop” and market the concept of “building your own gun the way you want it.”
Other dealers have taken customization capabilities a step further and have created their own localized pistols. In some cases, it’s local color and materials combinations like Texas Tan coating and Mammoth Ivory grips. In other cases, models might be optimized for hunting local game. The Predator long slide model has become especially popular in some areas — especially when chambered in 10mm. Can you say hog hunting?
Republic’s approach to development and support of its dealer partner network is also a very hands-on affair. Republic Forge has a direct sales force that’s on the road, visiting prospective dealers and supporting the existing channel.
The company doesn’t look for specific size of businesses when it seeks new dealer partners.
“Some of our dealers are very small, while others are very large,” Deal says. “What we look for more than anything is passion for quality guns and how a dealer interacts with their customers. If they have deep interactions with their customers, they’re going to be successful selling our guns.”
Training and support are also handled by Republic’s direct sales force. All members of the sales team can shoot very well, and many have professional shooting backgrounds of some sort — law enforcement, military or perhaps competition shooting.
Most dealers stock at least a couple of example guns so they can give prospective customers hands-on demonstrations.
“We encourage them to stock some models that move well,” Deal explains. “Our dealers need to show our guns to customers. We’re not a name that’s been around 50 years, so I would encourage the dealer to have them shoot the gun. If a customer holds one, they’re going to want one.”
While the Republic Forge dealer approach is one way to develop unique product lines and protect margins, the concept applies in other scenarios. The common element is finding products, expertise or services that set you apart from the stores down the street.
As Republic Forge founder Benny Deal explains when asked about his approach to dealer relationships, “It’s all about them making money.” Why compete on price alone when you can make yourself stand out from the pack?