Are Knives Starting to Cool Off?

I didn’t get a chance to get a blog post up on Friday.  There was rain moving in for the weekend and this time of the year we have to start winding up some of the outside work while you can.  So, boats came out of the water, another round of leaves were cleaned up, etc.  The wet weather kept me inside over the weekend and gave me some time to look at sales for the year so far.  It was interesting and makes me wonder if the ‘collectible’ knives are starting to cool off a bit.

The first half of the year was absolutely fantastic for sales but I did see things start to slow up significantly in September.  While it’s not necessarily unusual to see things drop off for a few weeks or even a month, I like to try to understand if there’s a reason.  Sales patterns will change due to the holidays, prime vacation periods, economic upturns and downturns, exciting or boring product releases and so on.

Great Eastern has always affected my sales up or down to some degree based on what they release.  When they were on a roll with interesting new designs on a regular basis, as soon as most items went in the store they were sold out.  This past year, they increased the size of their runs and increased there focus on the SFO’s.   You can’t blame them as the SFO’s are a guaranteed sale for GEC and takes a lot of financial pressure off from the factory.  If they build 1500 knives and 900 are SFO’s, they’re absolutely guaranteed 60% of the production is sold covering the bulk total production costs before a single blade is cut.  Good business decision for a manufacturer.  IN spite of reducing the number of GEC’s I carried, my sales figures have been the strongest in 15+ years of online sales.

Queen has done a great job coming up with new knives and started using unique handle materials that have been well received.  They also started using more of the ‘modern’ steels giving people an opportunity to enjoy the benefits of a super steel in a traditional folder.  They played a big part of taking up the slack from GEC.

The Trestle Pine line has done better then I had hoped for and working with Sven Kinast at Messerdepot has moved me into wholesaling the line.  Sven, Julian Holzberger and Stefan Schmalhaus (among others) have posted some fabulous pictures of the Trestle Pine’s on Facebook which has really helped spread the word in Europe.  Many thanks!

Hess has been a steady selling line that can’t be beat for quality at the price.  It’s just a fine knife.  With Fall upon us sales will pick up there and stay firm until Christmas.

So in spite of this relatively positive news, why was September such a soft month for sales?   Why do I wonder if knife sales could be cooling? That led me to do some digging on the internet.

MAP pricing (Minimum Allowable Pricing) has been around for years, it’s typically affected franchise operations.  While it’s rarely prosecuted in the courts (I don’t ever recall a case), I’ve always considered it to be a ‘gentleman’s’ agreement between manufacturer and retailer to respect the minimum price that the retailer wanted their products advertised for sale.  What you sold the item for behind the scene was entirely up to you and there are a lot of ways to skin a cat.  Usually if a dealer got caught selling at a lower then MAP the manufacturer would ask you to cease and desist but there wasn’t much force of law to punish you.  The greatest risk is having the manufacturer refuse to sell products to you in the future (which I haven’t seen happen either!).

The point behind MAP is to protect the brand.  If a popular product gets discounted at every turn (which we see more and more with the internet and Amazon in particular), it can start a race to the bottom to see who can sell the most the cheapest.  Unfortunately, not only is it an effective way to chase off your retail competitor, but you can end up devaluing the perceived value of the sale item.

I personally saw this happen on a large scale when I had the B/M sporting goods store back in the early ’80’s with Remington firearms.  Remington tied in with Kmart and Walmart ending up in a major price war with the independent sporting goods dealers.  Over the course of less then a year the independents all but completely dropped the Remington lines in protest and Remington lost a lot of ground which they never fully recovered for years.  For a while consumers associated Remington a discount brand and we saw prices on the secondary market fall through the floor.  If someone came in our store with a used Remington shotgun, we wouldn’t consider taking it in on trade unless it could be had for a fraction of the discount price.  It was the same with virtually every other dealer.  Ultimately, Remington started going out and having group meetings with dealers to try and mend fences and come up with a new marketing strategy.  While there wasn’t MAP pricing involved, it was a great lesson in what can happen when deep discounting takes place and a handful of discounters end up controlling the market.

Great Eastern, Queen, Victorinox and scores of other knife manufacturers have MAP pricing on some if not all of their products.  Not that unusual.  What I found interesting was that a few weeks ago Victorinox sent out a fall promotion that they were suspending MAP policies on some of their knives.  Watching Ebay, there were a few dealers thumbing their noses at MAP policies of other mfgr’s and blatantly advertising/selling below MAP.  In a rather bizarre situation, I was asked to maintain MAP pricing while two other dealers were exempted.  But the BS detector went off when a dealer publicly announced they’re going around the MAP policies to reduce prices because it gives them too large a profit margin?????  I’m obviously on a different wholesale price schedule!

In the past few weeks I’ve had a couple of calls that people asked if I would either match lower prices on some of the MAP items or beat someone’s price.  I wouldn’t do it.  So far, I’m still abiding by what I feel is a gentleman’s agreement… so far.  There’s always been competition and price cutting, but it seems to be growing.

All of this tells me either the market is heating up with growing competition for a larger piece of  market  share through lower prices.  Or is everyone just competing for a larger share of a shrinking market? I really got interested after doing a little research on Ebay.

Since they came out, I’ve watched the prices of the TC Barlow skyrocket from an issue price under $100 to prices on the secondary market of $200-300 and even $400+ dollars.  (The TC’s have been the bellwether of current collectible knife $$.)  This was happening literally overnite.  I don’t think many of us really believed that was sustainable.  Now I’m wondering if we’ve finally seen them top out and start to retreat.

Pulling up Ebay “Sales” here’s some interesting numbers.  Figures weren’t available for the full month of August so all I can do is compare the full month of September against the final 13 days of August.  If you compare the last 13 days of August to the last 13 days of September, the drop in sales and prices is even more dramatic.

In the last 13 days of August, approximately 22 TC Barlows were sold totaling $5385 with an average sell price of $245.  Only 1 went for less then $200 and 3 were over $300.  Several sold at a “Best Offer” price which wasn’t available.

In the ENTIRE month of September, a total of just 31 TC Barlows were sold totaling $5573  with an average sell price of $180.  That’s roughly a 25% price drop from August.  None sold for over $300, just 6 were over $200 and 25 were under $200.  Again, “Best Offer” sales aren’t included.

A brief look at Worthpoint shows that some of the older GEC’s from 2006, 2007 have steadily increased in value and didn’t got through that hyper-inflationary secondary market.  But a fair number of the older, more collectible GEC’s have actually sold at what I’d consider to be pretty reasonable prices such as a Tidioute #73 Chocolate Bone that sold on Ebay just over a week ago NIB for $78.  Other then the highly desirable stags and a number of very limited handle options, some of the older knives are trading close to issue price in some cases.

So does this mean the sky is falling?  Hell, I don’t know.  I doubt it.  Time to exercise a bit of caution?  Probably.  What I do think is that we may be seeing some of the insane prices finally slowing down and maybe retreating to a more reasonable level for this specific item.  This absolutely isn’t an overall analysis of the entire collectible market but combined with the other issues I can’t help but wonder if maybe there’s a bit of softening starting to occur.

There’s a big batch of American Jacks coming through Great Eastern and it’s going to be interesting to see what the reaction is to all of the available options.  9 SFO’s, and 12 production knives.  While I’m not a huge fan of the spear blade, I think they’ll sell well as it was a popular pattern when it originally came out.  Let see what happens to the secondary market when the speculators put them on Ebay.

Maybe people are getting a bit more introspective and questioning the ‘why’ a pocket knife is worth so much.  I learned long ago that the anticipation can be 10 times more fun then the accumulation.



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