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The army/navy market continues to yin and yang its way through both gentle progression and laid-back regression simultaneously, a pattern that is neither fish nor fowl in an industry which is often specifically about fish and fowl.
We've empaneled a small coterie of suppliers and retailers to mull over what it was, what it is, and what it's gonna be.
We've found the usual diversity of opinion, and so much of a given perspective seems related to area of product specialty or demographics or just plain old geography.
We thank our thoughtful and incisive panelists for this year's roundabout:
Martin Cohen (retailer) of Mickey's Army-Navy, Warren, Ohio;
Larry Gemma (retailer) of Mystic Army-Navy Stores, Mystic, Connecticut.
John Ottaviano (supplier) of Rothco, Ronkonkoma, New York;
Danny Fox (supplier), Fox Outdoor Products, Melrose Park, Illinois.
We asked five questions to both retailers and suppliers:
Q. How important is "Made In USA" these days?
Ottaviano: It still means something in areas of the country where industry is still heavily unionized. Other than that, it doesn't mean much to the American consumer anymore, nor even to the soldiers.
Gemma: About half my customers care about American-made products, but although we would prefer to sell American-made, we do well with imported goods. The only products that we really insist on made in USA are American flags and flag pins and patches.
Cohen: It's becoming more important for us. Our store is located in a part of the country that has seen a lot of manufacturing jobs go overseas. We look for American-made products that can compete on price and/or quality with imports. Recently, it seems that there is more of a backlash against imported products, especially Chinese-made.
Fox: It's not a factor for us since we're known as importers and distributors. Certainly, made in USA play a vital role in many categories in our trade. On a select basis, we still buy American government surplus where it fits into our product line and where it is demanded by our customers.
Q. How much of your business is still army/navy? How may that change looking ahead?
Fox: The viable army/navy stores in this country have had to diversify in order to survive. Tactical gear, law enforcement and security products are now more fundamental to the army/navy business. About 20 percent or less of our customer base have not diversified and can still be considered strictly old school army/navy stores. When we include our army/navy customer base that have added new categories and product lines, our army/navy business is up to about 75 percent.
Cohen: We have had to expand our offerings beyond army/navy, but the core of our business will always be identified as army/navy. We still carry enough surplus and military-related product so that our customers know that we are a reliable source of these goods.
Gemma: I would say about 80 percent of our merchandise is army/navy related, whether it's made here or overseas, or whether it's surplus or military styled. Most of the product that isn't purely army/navy is apparel-related, such as hats from Broner and other non-military wearables.
Ottaviano: I would say about 50 percent of our customer base is traditional army/navy. But we now include army/navy stores that have branched out into fashion and security products. If we include these modernized army/navy stores that have diversified, then our customer base is about 70 percent army/navy.
Q. How much is the Internet part of your business?
Fox: We have an institutional Web site that is an important component of our business. It provides an opportunity for our retailers to view most of our products. It's essentially our catalog online. We plan to implement a back end to the site, to enable retailers to order online. We will never operate an end-user Web site.
Cohen: It means a lot to us. We bought the domain name army-navy.com over 10 years ago in anticipation of how it would integrate into our business. The Internet is a different business paradigm than brick-and-mortar, however. It can be very price-sensitive and highly competitive.
Gemma: We would prefer our Internet sales to represent 25 percent of our business, but currently it's only at about 10 percent of annual sales. In previous years it has been higher, but the combination of increased online competition and the fact that some supplier companies are selling to the end user through their Web sites. When our suppliers sell direct, it really hurts us.
Ottaviano: The Internet has been the single greatest impact on our business in 55 years. Between our ability to reach out to our own customers, to finding new business, to creating new markets for our products throughout the world, the Internet has been and will continue to be huge. Already, over 25 percent of our business is being sold through the Internet.
Q. What is the biggest challenge your business is currently facing?
Ottaviano: Finding new customers, especially since the army/navy market is stagnant. We need to replace stores that are going out of business. We're going to the uniform and workwear industry, and to fashion retailers.
Gemma: Competing on the Internet is the biggest challenge. Finding new suppliers and new products and successfully introducing them to our customer base is something else that we need to improve. Finding innovative new ways of marketing is another imperative.
Cohen: Staying on top of trends, knowing what new products will work for us. We are always trying to stay fresh and relevant to our customers, and we know that our growth will come from expanding into new products that are a good fit for us. That, and dealing with a depressed local economy.
Fox: The administration of receivables, and the financial exposure and vulnerability. Given the economic difficulties and financial instabilities of our times, it is beoming harder to get paid. We spend too much time calling for money and reviewing credit histories. Every year we experience significant losses, even from businesses that had been steady payers for years.
Q. (For the retailers) What do your suppliers do well? What could they do better?
Gemma: Companies like Rothco offer tremendous customer service and incredibly fast order turnaround. We wish that more companies could modernize their ordering and shipping systems like Rothco has done.
Cohen: Suppliers who can turn orders around quickly, ship orders complete and on time are the best ones for us. Rothco is probably the best at getting merchandise to us quickly right now. We wish, though, that our suppliers could help us find new products that are not just the same old thing. Many suppliers need to expand their offerings to include trendier products that will help us attract new business.
Q. (For the suppliers) How can retailers grow their business?
Ottaviano: Diversification of clientele, of product and of marketing channels. Retailers have to reach out to customers outside of their traditional base, and especially to young people and females, and certainly to all ethnic and professional backgrounds. They have to be able to sell to as great a variety of customers as possible. Retailers must also be flexible to sell through many methods including the Internet, through outside salespeople and using other innovative methods. It's about finding ways to sell to more people than just those who walk through their front doors. Every retailer has to be very aware of all the retail that is going on in their geographical area. They should go to the Internet and to their local government organizations and collect demographic imformation.
Fox: Strongly consider the creation of a Web site. If it's done properly and managed with efficiency, a Web site can be a very, very important factor. It can add another one-third to the volume base of a retailer, with only an incremental increase in overhead. Retailers have to maintain an aggressive and creative approach to finding new customers and markets, at the same time capitalizing on their strengths and their core business. In this industry, both suppliers and retailers need to take the same steps to succeed in the long run. Retailers need to focus on products that are more profitable than many commodity products which return very little margin.
But wait, there's more — visit www.ansommag.com for an expanded edition of this article, including our panelists' thoughts on the future of government surplus goods.
author: BY MARK HAWVER