Today’s Industry Insight is published with the permission of Southwick Associates.
By now, you probably heard that March 2020 background checks for firearms purchases, as represented by FBI NICS data, increased 80% compared to March 2019 – resulting in the highest month of NICS firearm checks in the history of the program. This dramatic increase, based on retailer accounts, can be attributed to social and economic uncertainty associated with COVID-19. Though we all wish COVID-19 never appeared, it must be stressed that firearm sales were already on a growth curve before the events of February and March ever began.
Needless to say, COVID-19 concerns rapidly spiked firearm sales in March. According to industry feedback, many of the sales were to first-time firearm buyers coming from the ranks of the estimated 24 million Americans known to be interested in buying their first-ever firearm, but have been hesitating to take that final step (see NSSF-Southwick Associates research for details). But the increase in firearm sales actually began in mid-2019.
We’ve all heard about the “Trump slump,” the nickname assigned to firearms industry’s declining sales trend that began right after the last Presidential election. Confident of few to no new Federal restrictions on firearm sales or ownership, consumers slowed their purchases and the hyper-sales seen from 2008 to 2016 eased. Firearm manufacturers, like most Americans, expected the Democrats to win and bet on continued high sales levels, expecting more second amendment challenges. With the surprise election results, the entire supply chain was caught with excess inventory which resulted in cuts to prices and margins.
But something changed before COVID-19 appeared. By June 2019, instead of seeing regular drops in NICS checks, sales began to increase. This is about the time the televised presidential debates began, being one possible sales driver. Other driver could include concern over the presidential impeachment proceedings, additional discounting resulting from excess inventory after several wholesalers closed shop but also possible continued increasing interest in recreational and self-protection use of firearms and more. Southwick Associates is researching these causes, and until then, actual reasons are speculative.
Regardless of the reasons behind the upward trend, we have experienced three consecutive quarters of firearm sales increases, as seen in NSSF-adjusted NICS checks. Usually, a recession is defined as a decline in national GDP for two consecutive quarters, so seeing growth in three consecutive quarters can be hailed as the end to recent declines and the beginning of a new phase. This increase is welcome by manufacturers and the remaining wholesalers, allowing them a chance to dig out from excess inventory and prepare the way for additional new products and better margins. Whether they are ‘in the black’ depends on the individual company.
Will the increase continue? Who knows.
We are confident that times have changed since mid-2019, even if COVID-19 never appeared. Though COVID-19 has rapidly accelerated this growth, we certainly don’t celebrate growth coming at the expense of people’s health and lives. The trend we were seeing prior to COVID-19’s appearance would have been preferred.
Regardless of the COVID-19 spike, we expect sales to continue at least until the upcoming Presidential election when all bets are off.
Stay tuned, Southwick Associates will continue to share as we learn more.
Southwick Associates is a market research and economics firm, specializing in the hunting, shooting, sportfishing, and outdoor recreation markets. For more than 30 years, Southwick Associates has established a proven reputation for delivering comprehensive insights and statistics assisting business and strategic decisions across the entire outdoor industry; from government agencies, industry associations and non-profit organizations, to affiliated businesses and manufacturers. Aside from custom primary market research, Southwick Associates also provides syndicated participation, media consumption, and equipment purchase tracking studies utilizing their proprietary sportsmen panels.
