Walmart is one of the largest sellers of guns and ammunition in the world. In the wake of Saturday’s horrific mass shooting at one of its stores in El Paso, Texas, gun control advocates are renewing calls for the retailer to stop selling weapons.
Beyond the politics of gun control and gun violence, ending the sale of guns could be a smart business decision for Walmart.
“It’s not a high-margin business,” said Burt Flickinger III, managing director of retail consultant Strategic Resources Group. “The number of people hunting and fishing has been declining significantly.”
Flickinger said Walmart is under pressure to find more room in its stores for toy sales in the wake of the Toys “R” Us closure last year. That business has been among the fastest-growing segments at Walmart, and it could grow further with more inventory, he said.
“Guns and ammo were important to Walmart in the 20th century, maybe the first decade of this one,” he said. “But it’s declining while other segments like toys and pets are growing. This is the biggest opportunity for the company in the last 25 years.”
It can be difficult for a retailer to drop a segment of its business, no matter the reason.
CVS (CVS) took a hit to sales when it stopped selling tobacco products, stating that selling tobacco was not consistent with its health care mission.
And Dick’s Sporting Goods (DKS) lost sales when it took a public stand against gun violence by pulling assault style weapons and stopping the sales of all weapons to those younger than 21. Dick’s made those decisions in the wake of the Parkland school shooting in February 2018.
Dick’s CEO Ed Stack has become a leader in national gun control efforts since the Parkland shooting. But Dick’s recent position on guns has created some backlash from gun enthusiasts, some of whom vowed to not buy any products at Dick’s going forward. Sales have taken a hit over the last year and a half because of weakness in hunting products.
In response, Dick’s pulled all guns and other hunting products out of a number of its stores: 10 stores late last year, and another 125 stores earlier this year. In the initial test of 10 stores without guns, it found overall sales improved from allocating the floor space to other products. Depending on the results from the other 125 stores, it may pull the hunting business from the chain altogether. A decision is expected later this year.
Dick’s made its decision to pull some guns in part because of its efforts to curb gun violence, but also because of declining sales in the sector overall.
“The hunt industry faces continuing headwinds,” Stack told investors three months ago.
At least for now, Walmart says it will continue to sell firearms and ammunition.
“At this time, our policies remain in place,” said spokesman Randy Hargrove. “We continue to be devastated by the loss of lives, and right now our focus is on supporting our associates, our customers and the El Paso community.”
Walmart does not sell all types of weapons. It stopped selling assault-style rifles in 2015. It only sells handguns in Alaska. And it won’t sell any weapon to a person younger than 21, a policy it put in place after the Parkland shooting last year.
The company does not break out how much revenue and profit it gets from the sales of guns and ammo. Two of its largest competitors, Target (TGT) and Amazon (AMZN), do not sell firearms. So Walmart, the nation’s largest retailer, is competing mostly against individual gun stores and some specialty sporting goods chains, not only Dick’s but also privately-held Cabela’s and Bass Pro Shops, which are owned by the same company.