Gun Stores - what makes some very profitable?

S

Skans

New member
I'm looking for opinions on what makes some gun stores quite profitable and others marginally so. The really profitable gun stores actually seem to have less quality customer service than the smaller less profitable stores.

From my observations, the most profitable gun stores will have the following distinguishing factors:

1. Largest inventory of guns in a given area - this seems to be the most important factor.

2. Adequate number of sales people that are not pushy, but are readily available to show you what you want to see. These folks seek out customers to help rather than sit behind a counter waiting for the customers to ask for help.

3. The store has to have a shooting range.

4. Reasonable prices on the guns, not-obviously-overpriced accessories.

Any other thoughts?
 
What gets my money is a store that has fair to good prices or is at least willing to haggle or beat their competitions prices. A good selection of used guns especially ones not made anymore. I can get current production guns at any gun store. Also, a staff that is paying attention when a customer looks like they need help, is polite and profesional, and dosen't talk like their opinion is the only one that matters or a con artist.

There is a gun store that fits your description and they do seem to be very profitable. They have several large stores around the state. They also go to the larger gun shows around the state and take up 2 or 3 aisles with their inventory. The stores and gun show all operate as seperate companies and each has their own inventory to sell.

The used guns they tend to price fairly and they are very willing to haggle on price. The new guns are often way over priced and sometimes more than double wholesale but they will lower the price to beat their competition. They also often have good sale prices.
 
Local observations:


I never even seen a gun store with a shooting range. Never.

I've never seen a store with more than one salesman (the owner) and maybe a grease monkey and sometimes the token "hot chick", usually a daughter or wife.

Largest inventory, maybe, but around here that means do they have 12 versus the other guy having 8 handguns and maybe 25 long guns instead of 15.

Accessory prices, particularly in regards to reloading are always insane compared to online. Selections of things like holsters, lights, etc, usually amounts to the used/trade-in bin.

So, what makes the "very profitable" difference? I'm not sure I've ever seen a "very profitable" gun store. Frankly, knowing how people talk about my pizzeria, I doubt anybody besides the owner and his accountant really have any idea anyway.
 
When I see a gun store plowing profits back into capital improvements, that's a pretty good sign they are fairly profitable. It seems to me that "bigger is better" when it comes to gun stores in terms of profitability. Yes, there are some other factors that will make or break them, but I suppose my premise is size does matter in terms of profitability.

Now, in smaller communities, that formula could be completely different - I have no idea what distinguishes profitability from one store to the next.
 
Never involved in, nor do I know anything about the retail side. However on the gunsmithing side, I have a bit of experence.

I know a guy who was a good gunsmith, knew his stuff, but went broke. I knew another, who was good by not great, who was swamped and made good money.

The difference??

The first refused to deal with anything by guns. The second, realized there was also a nitch for small machine shop services. He took in the small jobs big machine shops turned down. He made a good living, and kept his gun shop going.

Give you a small example. I had a shop and got a gig with Firestone, dressing up flywheels on my milling machine. $25 bucks a piece, 15 minutes floor time to floor time.

Along the same lines someone wanted a screw for an old Winchester. Took me 45 minutes to get it made and I only charged him $2.00.
 
It depends on what they have besides guns and how much of that they sell.

Guns themselves aren't too profitable. Used guns can be, but even then you're mostly limited to what comes through the door in trade. A good ammo selection will help, since everybody needs ammo. Other supplies are also worthwhile- who wants to mail order just a cleaning brush? However, you have to remember that there's no shortage of people who buy nearly no accessories from the local shop. I'm generally able to get many of those things for about the same cost the shop would pay- even though I'm very loyal to my local shop, there's a large variety of things I get from sources like Midway or Brownells.

Ranges seem to be the real profit centers but they're also huge investments- it takes a long time to navigate the local politics and zoning, then to get everything put in. Once it's up and running, you have a lot more options available. The extra cash flow can be put back into inventory and other improvements, which in turn generate more flow. The trick is getting to that point.
 
IMO, the one most important thing is to sell stuff that has high profit margins, and sell high volume of low profit margins that gives cash turnover and revenue.

Smart buying is the one most important thing to do, once you have a store and business plan that is working.

I'd be more than happy to stand in a kiosk at the mall and sell .22 lr ammo all day at 10% markup, if I was selling a case or two an hour. OTOH, it doesn't matter how cheaply you aquired the 8" barreled .32 S&W H&R SA revolver, if your shop is located in duquesne, MO, and you get 5 people through your door every day.
 
If all you're doing is selling guns, you're not going to be making much money. You'll be expected to match, or come reasonably close, to internet wholesalers, so margin on new guns drops to ~10%. You can make some up on used guns, but it's not enough to thrive. You have to work in terms of volume, not margin.

(Even then, every other question is, "is that the best you can do?")

An on-site range can be a big source of profit, but the construction costs are huge, and it's a long-term investment.

The biggest two money-makers are accessories and services. Instruction and gunsmithing are not only traffic-builders, they can be decent sources of profit if you've got folks who can deliver them promptly and properly.

As with any other business, quality of employees and ongoing training makes a big difference.
 
I am into odd ball stuff.

I want a shop that will order speciality stuff without charging a 30 or 40 % mark up. Will give me a discount for cash.

Knowledgable, and able to advise me on areas which I am venturing into. If they don't know about the subject they are secure in themselves and will refer me to someone who does.

A compentent gun smith who knows his limitations and will prevent me from screwing up.

Dick Lupton in Smackover AR is the kind of guy I want to deal with. Cranky, Cantankerous and will help you in any way he can.

I asked him to modify the sights on a 1911. He refused, said it should be left intact and given honorable retirement. I did not change the sights but can't stop shooting my favorite pistol.
 
the key to any sucessfull business is volume, doesnt matter if your selling toilets or cleaning them. you have to find the sweet spot to take the volume from the competitors.
 
I've seen a few successful gun shops. Here are some running threads:

They understand the local market. Does the local market focus more on hunting or self-defense? No need to sell only black plastic guns in a rural area.

A range is an awesome thing but only if it is marketed correctly. For instance, if you rent a gun from them successful shop/ranges will put the rental and range fees towards the cost of a new gun if you buy it from them. Awesome and easy way to sell guns. Also if you have a range make sure you do events. One awesome gun shop around here holds Ladies Nights every Thursday. They shut down the range to women only (even women instructors) and close the blinds so males can't look in on their women shooting.

All of the best "sales" people I've met were actually just really passionate about guns. They were salesmen second, but they were definitely salesmen. But being passionate is a huge help.

Take what you read here with a grain of salt; If you are on this forum then you are probably very well versed in firearms. People who are well versed in anything don't like a salesperson shoveling opinions on them. But new shooters might want to hear "this gun is better than that gun and here's why" or "You might like this gun and here's why". One example of this might be "I don't like to recommend Glocks to new shooters because Glocks lack an external safety and new shooters haven't yet trained for trigger discipline." That doesn't mean you say "Glocks are crap" or "9mm is a woman round" (because the next question is going to be "then why do you sell them?"), but helpful pushes towards a preference can sometimes close a sale on a new shooter. Knowledge is key here, know the guns and how they differ. Never push a gun on a customer, the customer will chose the gun.

Selection is very key. And I do not mean "carry everything you can". No, carry what your customer base likes. This goes back to knowing the local market. If you can't carry it find a way to be able to order it.

Price is not so much of a big thing if you can add value. For instance, buy a gun get a free range membership for 3 months. Or buy a gun and get a free hour with an instructor. Obviously there are lines, but getting at least close to competitors prices will get most shops by. There are always those gun forum members that are only looking for the cheapest deal, so be willing to wheel and deal with those guys, but for the everyday Joe walking in, be willing to provide these offers. I'd even use it as a haggling tool; if someone complains about the price say "Man I wish I could sell it for cheaper, but what I can do is let you get some one-on-one training with an instructor if you buy it from us, I think they are free today We usually charge $50 an hour, but let me go see if they have a spot open for you". Of course you already know the instructor is open, but it makes it seem like a good deal :D. Or howabout buy a gun get 20% off a holster, things like that.
 
The answer here is the same with any profitable retail business. Customer turnover is the name of the game. Firearms are a comodity just like furniture or clothing - you have to sell volume to make money. Doing lots of handholding may give you life-long, loyal customers but it doesn't give the kind of turnover required to make good profit.
 
"this gun is better than that gun and here's why" or "You might like this gun and here's why". One example of this might be "I don't like to recommend Glocks to new shooters because Glocks lack an external safety and new shooters haven't yet trained for trigger discipline." That doesn't mean you say "Glocks are crap" or "9mm is a woman round"
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You just nailed one of the most important things to me about any sort of business.

If I'm ignorant, I want to learn facts, not just opinions. Tell me why you believe winchester is better than remington, or speer better than hornady.

I'm not interested in hearing opinions like "glocks are crap," even if I agree with it. It shows that the person handing out that opinion is a shallow thinker who thinks I'm an idiot, and that he thinks I'm foolish enough to take that declaration as hard cold fact, just because he said it was.
 
Three and four don't apply, although some of the prices aren't too bad. Huge selection and friendly staff do apply.

www.greentophuntfish.com

greentopteam.jpg
 
I understand that volume is the key to profitability. My observations has lead me to believe that, all things being equal, the shop that has the largest inventory is going to be the most profitable. Some of these gun shops are making some serious money. I don't get the impression at all that the larger ones are struggling in the least bit. I do think there's a "magic formula". I think being able to carry a large inventory is a big part of it. The right kind of sales/service I believe is also important. Who knows, maybe some day I might want to go into the gun business!:)
 
In my area (Chicagoland) we seem to have a lot of stores that hit on some of your points but none that hit on all (that I have found yet).

The one thing that pisses me off about my LGS/Range of choice is they refuse to haggle, they have a policy where you only get free range time on the day you buy the gun and wont even haggle you a range visit if you want to take your gun home, clean/lube it first then come back another day. They could care less that you buy guns and continue to buy guns from them and they have the BALLS to say they would be taking a "loss' on the gun if they did that, that line might work on someone who breaks rocks for a living but not on a salesman.



Their are two other stores locally that I currently go to that are good but miss out on some things. One has great CS but low invintory and cannot sell a lot of the stuff they have in stock because they have LEO distributer agreements, they also have no range. The other has good prices, good CS but low invintory and a not great range.

I recently found out about another LGS that sells SIG and supposidly has great CS, I am in the market so I am going to stop by there in the next few weeks.
 
I want a shop that will order speciality stuff without charging a 30 or 40 % mark up. Will give me a discount for cash.
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That store won't be in business long at that margin

A store has to make a PROFIT, they need to have inventory control and shrinkage procedures in place. They need to understand business accounting, taxes, payroll, marketing and everything related to ANY business, not just gun businesses FIRST. Then you go abut having friendly staff, who know something, an ample inventory, (or a way to get things in 2-3 days) and as mentioned, the aftermarket goodies that are needed and wanted- especially impulse-buy items
 
peetzakilla said:
I never even seen a gun store with a shooting range. Never.
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That must be a NY State thing. There are at least 3 that I can think of in the Seattle area and I know they are common in many other states.

As for what makes a gun store profitable, possibly nothing. Especially if all customers are like me. I troll for deals and don't pay full price for anything. The only stores I see thriving these days are store/range combos and stores that also stock beaucoup hunting/hiking/fishing/general outdoors gear.

In the nearest small town to my home (50 miles outside Seattle) there are two gunstores. One has been there for many years and stocks mostly hunting rifles and shotguns with some handguns. His ammo shelf is very well stocked but way overpriced. I've had conversations with the owner and he is very frank about the fact that he hasn't made a dime selling guns in years. He does ok on FFL transfers but his real profit center is the fishing gear and paintball stuff that occupies 2/3 of his store and the bikini espresso stand in the parking lot.

The other store is a new (months old) store that stocks exclusively tacticool stuff. They don't compete with internet prices so I don't expect them to be around long.

Neither of these stores has a range.
 
If you only shop based on price, NO gun shop will be your best friend - personally, establishing a rapport with the owner is worth a few extra bucks now and again - to ME - maybe not to you, but then I really believe in my sig line
 
Sometimes I wonder.

There's shop in Portland, Oregon that has the reputation of being the worst in the whole state, and probably the entire nation. A local gun website has a total of around 240 reviews/votes on the place, with over 87% of people giving this place a 1 out of 5 (the next largest block, some 7% reviewed it at 2/5). The guy who runs the place tells all sorts of bizarre lies, such as claiming major manufacturers use better materials and manufacturing processes on their guns for his store specifically compared to the exact same model of firearm sold at competing stores. He uses this bit of information to justify significantly higher prices than can be found at competing stores. This man berates and yells (yes, literally) at customers if they come asking for any product he doesn't like (Glock in particularly sends him into a rage, but most anything foreign-made/designed will usually do the trick), he will call customers idiots and all sorts of other nasty things. He is also not above going into political tirades or spouting racism either. This is no exaggeration.

So the place has bad prices, mediocre inventory, and the worst customer service one can imagine and somehow it's been able to remain open for DECADES! I just don't know what makes a place profitable. Does the 3% that actually like that store shell out enough to keep the place operational?
 
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