Imagine running a large firearm company. Not just any company, but running the storied Smith and Wesson company. Could it get any better than that?
You are surrounded by firearm Engineers, new designs, interacting with the gun community, privy to what law enforcement departments are buying, new product development, attending SHOT Show, Distributor Shows, Dealer Shows, going to the range, and all-around living the dream.
Sounds great, right? Maybe not so much.
We always forget that the large public companies have to answer to the shareholders. Shareholders are a fickle bunch and they pay for performance. Especially when it comes to having their money go south.
When big companies aren’t making product and shipping guns, they aren’t making money. When they sit on inventory, it costs them money. So they have to keep machines running and shipping product. Cover the overhead!
The firearms category has softened a little bit as Trump won and we are in the summer slowdown. Or the “new normal” as some are calling it.
What do guns shops do?
If you lay off workers, you lose opportunity for the future. Sure, you fire a couple of folks you don’t like, but you have to keep the folks that make the place run. But you need to keep them busy and productive.
Start promoting to get rid of inventory. Watch what Ruger does with their wholesale “Buy 5 and Get 1 Free” promo to the retailer. Come out with your own “Buy 6 and Get 1 Free AND get 7 magazines free”. Blow out your inventory.
But you know you can’t do it forever, because now your products are discounted so heavily, who will ever pay full price? Heck, a consumer can buy a Shield for $200 after rebate, that’s tough to beat! Will a consumer ever pay $329 or more? Never.
Smith and Wesson folks aren’t dumb. They just launched the 2.0 for other handguns. Even though there is nothing new in there, they called it “new” It’s a bunch of marketing gobbledegook, and it works because it’s “new” And “new” sells.
So what to do about the S&W Shield in inventory? Dump inventory and prep for a “Shield 2.0”. Every Shield we buy and sell to a consumer will be obsolete or old by Thanksgiving time. Online gun sellers are already kicking them out the door cheap.
They will likely roll out the new sku just in time for Christmas. This has played out at various companies over the last 30 years in the industry. We see it time and time again.
And for those of you that are sucking up these obsolete pistols, you are getting what you paid for. A cheap inexpensive no-frills gun that you’ll regret owning within 6 months. Come and get them.
We don’t make much selling them either, we’d almost prefer you buy online so we can charge you the transfer fee. We make more that way as we don’t make much on S&W.
But it’s easy money for us and we know the new one is coming. Now you do too.
Signed ~ Industry Insider….