Why does everyone say the firearms market crashed

[Trigger Time]

Prices are down. Overall sales are probably strong for shops as long as they arent overpriced. How can I say this? There are new gun stores popping up all the time instead of stores closing.

 

[Brian's Surplus]

The market currently has too much supply and not enough demand. Sure, the number of background checks is up but there are places like Rural King and online gun stores that are selling guns so cheap that small business can't compete. Yes, more guns are being sold. The problem is that is is a small number of FFLs making the majority of sales and the margins are really low. A small gun store can't stay in business with only $5 or $10 profit per gun. Places like Rural King that buy literally semi truck loads of guns can get them cheaper and sell them at lower margins.
The overhead for a small business owner means that unless they are selling large quantities, they have to have more markup on each gun to stay in business. Most small gun stores probably have $3,000 to $5,000 in monthly overhead (this is just a guess based on my own experience) unless they own the building they are located in and don't have any employees. Setting up at a gun show with just 5 tables can cost between $400 to $1,500 depending on table cost, employees, hotel rates, distance traveled, etc. Many of the vendors that set up at shows actually have a job that they work at during the week and don't rely solely on gun shows for income.
Long story short, the firearms market hasn't necessarily crashed, but it sure can seem like it for small FFLs.

 

[Ingomike]

The market currently has too much supply and not enough demand. Sure, the number of background checks is up but there are places like Rural King and online gun stores that are selling guns so cheap that small business can't compete. Yes, more guns are being sold. The problem is that is is a small number of FFLs making the majority of sales and the margins are really low. A small gun store can't stay in business with only $5 or $10 profit per gun. Places like Rural King that buy literally semi truck loads of guns can get them cheaper and sell them at lower margins.
The overhead for a small business owner means that unless they are selling large quantities, they have to have more markup on each gun to stay in business. Most small gun stores probably have $3,000 to $5,000 in monthly overhead (this is just a guess based on my own experience) unless they own the building they are located in and don't have any employees. Setting up at a gun show with just 5 tables can cost between $400 to $1,500 depending on table cost, employees, hotel rates, distance traveled, etc. Many of the vendors that set up at shows actually have a job that they work at during the week and don't rely solely on gun shows for income.
Long story short, the firearms market hasn't necessarily crashed, but it sure can seem like it for small FFLs.

So right now it is a buyers market. We lived through the sellers market. If the small FFL's did not account for the change in the market they will likely fail. I agree it is sad but also a true function of a market.

Speaking of markets, I hope the .22 and other ammo hoarders loose their shirt...

 

[Sigblitz]

So right now it is a buyers market. We lived through the sellers market. If the small FFL's did not account for the change in the market they will likely fail. I agree it is sad but also a true function of a market.

Speaking of markets, I hope the .22 and other ammo hoarders loose their shirt...

People have a way of driving prices up when they're low, and driving them down when they're high.

The biggest changes are usually every 4 years.

 

[Lt Scott 14]

I shop at a LGS that is in a small town. Most of his customers come from around a 40-50 mile radius. His shop is small, he is a one man operation, and sometimes goes fishing or on vacation. A note in the door says "Be Back on ......."
I enjoy the fact he knows my name, talks a little about hunting, fishing, and target shooting. I gladly wait for his return from vacation, has pics, and customers understand. His margins are fair, no give away, but bigger and high dollar LGS are always 50-100$ higher on most handguns, shotguns, rifles. His place also has a few chairs for seasoned retirees to chat. He does business first, and chats later. Been shopping for over 20 years there, and hate to see him retire. One of a kind, for sure.
Hope you all find a LGS you like and stay his customer. Good luck.

 

[AdamP123]

Speaking of markets, I hope the .22 and other ammo hoarders loose their shirt...

Generally speaking, "hoarders" will be fine. It's the ones who paid $1,200 for 1,000 rounds of .223 and x39 back in 2012 and 2013 who regretted their purchases a few months later. However, if they paid that much for X amount of ammo, I highly doubt they were hoarding loads of it. Those were likely the people who had zero ammo before the ridiculous price climb and they, more than likely, only bought 1-2K in ammo.

Let's not forget the $100-$120 P-Mags. That was sort of fun and sad to watch.

 

[churchmouse]

Generally speaking, "hoarders" will be fine. It's the ones who paid $1,200 for 1,000 rounds of .223 and x39 back in 2012 and 2013 who regretted their purchases a few months later. However, if they paid that much for X amount of ammo, I highly doubt they were hoarding loads of it. Those were likely the people who had zero ammo before the ridiculous price climb and they, more than likely, only bought 1-2K in ammo.

Let's not forget the $100-$120 P-Mags. That was sort of fun and sad to watch.

As fate/luck/Karma would have it we had just completely re-stocked/over stocked or shelves with ammo and other essentials. I placed my last order right as Sandy Hook was breaking. We rode that storm out comfortably but as I said, Luck/Fate what ever was in our corner.

 

[Brian's Surplus]

It is definitely a buyers market, and has been since Trump was elected. I fully expect prices to rise as the next election draws closer. I have been telling my customers that now is the time to stock up, don't wait until the panic buying starts. Right now I'm selling 500 rounds of .22 LR Thunderbolt for $15.89 plus tax, but prices are already starting to rise. I just got word today that Remington is raising their price on my most recent order so when the ones on the shelf are gone, the next ones will be more expensive.
When supply runs out, I base my prices on replacement cost. It would be pretty stupid of me to sell merchandise for less than it costs for me to replace it. I don't like watching people spend too much, but it's kind of hard to feel sorry for them when I have been telling them for over a year to stock up while prices are low. We go through this same cycle every 4 years, it's not that difficult to predict...

 

[Trigger Time]

It is definitely a buyers market, and has been since Trump was elected. I fully expect prices to rise as the next election draws closer. I have been telling my customers that now is the time to stock up, don't wait until the panic buying starts. Right now I'm selling 500 rounds of .22 LR Thunderbolt for $15.89 plus tax, but prices are already starting to rise. I just got word today that Remington is raising their price on my most recent order so when the ones on the shelf are gone, the next ones will be more expensive.
When supply runs out, I base my prices on replacement cost. It would be pretty stupid of me to sell merchandise for less than it costs for me to replace it. I don't like watching people spend too much, but it's kind of hard to feel sorry for them when I have been telling them for over a year to stock up while prices are low. We go through this same cycle every 4 years, it's not that difficult to predict...

Bingo!
This is nothing new, this cycle i mean. We who are prepared know this and use the good times to our advantage. When Trump was elected I didnt look at it as a time to relax, I broke down the first 2 years that I knew we had congress into Buy Buy Buy sections. Different guns and ammo & accessories per month. I set a budget and followed it. I also got rid of certain things that no longer fit my long term plan. These next 2 years i had planned on possibly losing both houses of congress. We didnt so I have freebie time now if I needed it. But like mentioned above prices WILL start to steadily rise over the next 2 years. Pray for Trump again in 2020. That's it plain and simple. If a democrats gets the white house, go ahead and get ready for $50 to $100 pmags again before they ban them.
Never put off for tomorrow what you should have done yesterday. If there is any guns or ammo or accessories you want but have been putting off, buy it sooner than later

 

[way2good4u95]

Exactly what everyone else has mentioned, too much supply and not enough demand at the moment. So many new gun stores are popping up and dividing up the market and there is no panic buying right now. Just picked up a lightly used Bushmaster XM15-E2S for $400 from my LGS. Back during the gun scares, the same AR would go for $1200 or more. Profit margins are low for a lot of gun stores. Buy some ammo now before the election season gets hot and heavy. Same with any "high capacity" or semi-auto rifles you may be teetering on.

 

[Kirk Freeman]

Seems like everyone you talk to laments the collapse of the firearms market since the election. Dealer after dealer bemoans the slow down. This seemed to be true, especially as everyone was saying so. But I was doing some research for an appraisal I am doing and graphed out NICS checks from 2012 to 2019. For 2019 I calculated the average percentage of annual sales in the first three months from previous years and used that to annualize Q1 2019. The graph is below. Ignore the $, the numbers are the number of checks run.

So yeah, 2016 was a big blip up, but but the overall trend has been a steady uphill run. Thus I have to wonder, are things as bad as everyone seems to think?

Welcome to the Gun Culture. People like to yammer on in extremes, "the best", "the worst", "the most tactical", "awesome" blah blah blah.

Sales are down a bit from the 2016 spike and will spike again in 2020.

Buy them cheap, stack them deep. Ignore the teeth talk of the gun shop where the blind lead the sightless.

 

[Bennettjh]

I've never thought of it crashing, definitely slowing down a little. Buy now while things are readily available and fairly priced. A year from now, that probably won't be the case.

 

[Sniper 79]

It completely took a dump. Especially the AR market. I regret not selling more during the panic. Heck even brass isn't selling for what it was. I been scraping it.

On the other hand market if flooded with cheap guns and that's a good thing.

Many reasons as to why it crashed so hard.

 

[Disposable Heart]

$5 says the Nics numbers are up but sales are down because everyone is either buying cheaper guns that have flooded the market and are like nearly free after rebates (like Heritage Arms, Taurus G2, Sccy, etc...) and AR15 receivers (which don't have a ton of margin in them). The market is flooded with cheaply made sorta guns, but actual quality gun sales are down. Combine that with transfers: The internet has made local gun prices seem foolish. Why buy a used Smith 629 5" with no box and marks all over it for $900 at the local guy, when I can get one for $750 shipped plus $20-35 transfer? Transfers have tons of margin in them, but dealers won't report that as a sale or worse, try to prevent people from doing them.

The dealers that are gnashing their teeth are poor planners who were barely competitive during bull markets and won't survive the bear markets. They remind me of the general contractors or construction workers that blow their money on quads, ATVs, boats and motorcycles during the summer, then cry when they need cash in the fall, winter. Poor investments and lack of strategic planning on their part is their downfall. TONS of people got family loans or small business loans from banks to start the pop-up stores during 08 because banks didn't know better and saw only the rising numbers, not long term goals. They didn't know the gun industry has worse spikes than commodities, so they passed money out and these small business owners tried cashing in on the rise in sales. Panic ends, a slew of them go out of business. If a dealer is crying right now, they need to refocus their business, buy up as many lowers as they can and focus on volume, rather than margin.