A Change in Focus

When discount pricing on handguns endangered the enterprise, these owners made a bold move

Sherwood Guns
When profits dipped on firearms, the store moved to increase its inventory of higher-margin accessories.Peter B. Mathiesen

In 2010, Sherwood Davis and his wife opened their first brick-and-mortar retail gun business. It was a 3,000-square-foot building with 12 parking spaces. The family had a remarkable run during its first four years, where the focus was all guns.

“We stocked firearms almost exclusively, with just a few accessories. The climate was highly volatile, as politics continued to move the barometer on firearm sales,” says owner Sherwood Davis.

When a local, newly constructed range experienced financial difficulties, Davis and his wife saw an opportunity to expand. “We had plans and were ready to build a range. This opportunity changed everything,” says Davis.

The new property was in the perfect location, and, at nearly 28,000 square feet, it boasted a sea of parking. Near the crossroads of Highway 231 and I-65, and next door to a mall, it also benefited from a well-traveled corridor.

The Davises purchased the property, modified the facility, improved the air-circulation system, lanes, and classroom, and made extensive retail improvements.

Today, this retailer stocks nearly 3,000 firearms and has a 12-lane indoor shooting range. Eleven full-time employees staff the enterprise. The inventory is a mix of firearms, featuring traditional hunting and defensive guns. The store also carries a significant stock of used firearms, and is open 9:00 a.m. to 6:00 p.m. Monday through Saturday.

Facing the Elephant in the Room

The new location allowed for expanded inventory. However, in just two years, price competition on handguns had become untenable. With increasing local retail pressure—the location was so prime, a Dick’s, Gander Mountain, Cabela’s, and Dunham’s all opened within a 2-mile radius of the store—Sherwood’s needed to change its profit structure.

“This is Kentucky. Our customers are used to discount pricing. We had to face the facts and come to grips with a lower profit margin. Today, on a new gun, it hovers around 10 percent. In 2010, it was around 20,” says Davis.

In turn, this changed the store’s focus to accessories, where the profit margins are notably higher. The first stop was holsters.

Sherwood Guns shooting range
Adding a range proved to be a wise move. The site came with ample parking, a big plus for the suburban location.Peter B. Mathiesen

“Our holster inventory is extensive. Many first-time customers visit us because our selection is so wide,” says Davis, noting that customer feedback is critical to the right inventory.

“I learn something every day talking to a customer,” he adds. One of those moments was when a customer asked for a left-handed holster. Even Davis had difficulty finding the right one.

“Today, we have a left-handed section. Now lefty shooters come in all the time. Although it’s not a game changer, it is something our competitors don’t have,” he says.

Mixing New & Used Handguns

Used-firearms sales are a priority for the shop. At the handgun case, used and new are mixed together by category and brand. Used guns wear a yellow sticker, new guns get blue. This allows a customer to see a new Glock right next to a used one.

“It creates an automatic interest in the used gun. If the guns were separated and we kept a used handgun at a different counter, the buyer may not ever see it,” says Davis.

The strategy is effective on three fronts. First, it shows the customer an immediate alternative. Second, it provides an immediate price comparison. And third, it demonstrates a wider selection.

At Sherwood’s, Davis and two of his salespeople buy the used guns. He mentors his employees to help them create a sense of trust and customer loyalty during these transactions. According to Davis, one of the best ways to do that is to get the seller to name a price, though typically the salesperson has formulated the used-gun value before discussing a number.

Sherwood Davis
Sherwood DavisPeter B. Mathiesen

“We ask what they want. Often, because we know what the number should be, we can say yes. Or at least close. This can really please the customer,” he says.

Certainly, there are times when the gap between the customer’s price and the store’s is too wide. Davis has a clear but subtle rule for when a deal can’t be achieved: Apologize and be sincere.

“If we can’t close the gap, even if it’s because the customer is being unreasonable, we are respectful when we say no. We politely explain why,” he says, adding that he’s witnessed other stores humiliate the customer during this kind of transaction. “We’re sensitive to the emotional investment the seller has in their gun. It may not work out this time, but it will make them feel welcome and willing to try again.”

Guarding Against Employee Poaching

With an array of competitors surrounding this store, the shop is a prime candidate for other retailers to poach talented Sherwood’s staff members.

“We’ve lost just a couple—it can happen. But if the employee has come to us for a job, we are far ahead of the game,” he says. Most of the store’s hires have come through word of mouth, and many staff members have also simply walked in the door and asked for a job. “Our range officer was the Bowling Green P.D. training supervisor. He’s the perfect fit for our range, and I knew it the second he walked in the door,” Davis says.

Another talented find was a former used-car seller: “This gentleman loves his job. He’s relieved to be selling a product that will not disappoint the buyer. He understands what it means to close a sale; while he is engaging and friendly, he’s a closer.”

Lessons Learned from the Counter

Adjusting Profit Targets: Markets change, customers change, and politics change. Count on it, and prepare for it. Most important, adapt to it. Sherwood’s modified its inventory to focus on higher-margin items like accessories, and in turn has provided area customers gear they want and need that the area chain retailers won’t supply.

Showing Respect: One of Davis’ strongest retail practices is working to keep opportunities open to the customer. When the store must say “no,” it’s done carefully and with respect. This approach engenders the buyer’s trust and creates strong customer loyalty.

Protecting Your Home Turf: When the wolves come to steal your employees, protect your company with competitive salaries and benefits. This retailer mentors and treats its employees like family, and that has talented people seeking employment rather than the store having to go out and find them.

From the Counter is NSSF’s industry perspective from firearms retailers across the country.