Tag Archives: Collecting

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.

 

 

Number Crunching and SAK’s are Coming!

This time of the year it’s too nice to be inside but not quite nice enough to start yard work.  So I start to get restless.  As a result, I start to take personal inventory and reassess my plans for the balance of the year.

My original plans for this year really focused on cutting back and possibly even slowly fazing out of the business and actually retiring.  I’m well beyond legal retirement age (as defined by Social Security) but just haven’t had a desire to quit.   Watching trends from recent years were starting to concern me, however.

GEC has always been the backbone of the business but in the last few years they’ve played a smaller role in overall sales.  It was interesting to see what’s happened with the line.  A little quick addition showed that in 2015 their production was pretty evenly split between regular production (approx 9900 knives) and SFO’s (approx. 10,000).   I haven’t seen 2016 production figures but I’ll be surprised if the SFO production doesn’t far exceed regular production.  Allocation of limited run knives means receiving fewer ‘hard to get’ pieces.  From what we’re seeing so far in 2017, in spite of what I’ve been told, I think it’s a fair bet that SFO’s will be the backbone of GEC sales going forward.  Not good trends for a non-SFO dealer like TSA Knives or any dealer for that matter.

Another factor that’s been concerning is watching the prices collectors are willing to pay for some of the recently produced collectibles head into the stratosphere. We’ve all watched the Barlows that were produced by the thousands increase in price from the $70 range upwards of $400 in months.  Another couple hundred and you can buy a Randall!  When you can buy a high end knife like a Sebenza with an S35V blade for less, I scratch my head trying to understand.  In the last 3 months, I’ve tracked 4 older GEC’s that I sold get resold within weeks on Ebay for 3-4 times the original sales price.  No hard feelings on my part, but I question if that’s sustainable.  That type of price inflation isn’t reflected equally across the ‘collectible’ knife market.  What this can result in is a collapse of the market.  Sincerely hope that doesn’t happen for a lot reasons!

It’s almost as though there are two groups of traditional folding knife collectors that are clearly defined.  There’s a group of individuals that collect knives for the fun and interest of collecting.  They might favor higher quality knives, older production knives, historically accurate reproductions or interesting designs.  Then there’s a group that track whatever’s hot, call it the soup du jour.  The first group is willing to pay for ‘quality’ and even pay a premium (within limits) for highly desirable pieces based on rarity.  The second group buys and sells as though the knives are a rare commodity with absolutely no downside on the market.  Almost a bit reminiscent of the dotcom days in the stock market.  Buy it now, you can’t lose.  I made most of my income for an extended period of time day trading in the 90’s.  Trust me, what goes irrationally up will come down catastrophically.

Right now there’s a ton of disposable income spread among the collectors.  Some of that money is being generated from older collections bringing in sales multiples of 3 or 4 times original price.  Some is being generated from flipping the latest trendy knife.  Somebody’s gonna get burned.

In spite of these negatives, business has been good.  In fact, last year was one of the best years I’ve had for sales.  Then, the first quarter of this year came in as the best first quarter I’ve ever had.   I’ve purposely stayed away from the SFO’s and while I missed cashing in on the phase, I’m alright with that.  This week I took some time to try and understand what’s going on.

In a nutshell, last year I was able to buy several large collections at what I considered to be reasonable prices.  The Trestle Pine Knives did much better then I anticipated and contributed significantly to overall sales.  Queen/Schatt & Morgan sales started increasing and last year was the best I’ve had with that line.  When you add these components together, it means what was lost on one side was more then made up on the other.  All is not lost.

For the time being I anticipate the balance of the year I’m going to explore other growth opportunities.  There is a new Trestle Pine Knife coming out in May and I hope at least one or two more this year.  We should see more of the automatics and regular production items from Queen in the coming months.  Hess knives continue to fill a niche for me.  And most recently, I’ve decided to add Swiss Army Knives to the inventory.

I placed an opening order with Swiss Army this week and should see them arrive in the next couple of weeks.  I’m testing the waters with around 20 different models and am anxious to see how they’re received.  It’s  a knife I’ve had either in my pocket, desk drawer, truck or pack for years.  Actually, the tweezer (as I recently told Dave) is the most frequently used ‘tool’ on the knife for me.  They make a great first knife for the younger generation and are an affordable option for an EDC.

So for the foreseeable future, I’m going to enjoy the business.  I’ll stay open to new knives and products that offer a good value.  As ‘affordable’ collections present themselves, I’ll buy them accordingly.  We’re almost a third of the way through the year and right now, it’s looking good!!!   For those folks paying north of $3, 4 or $500 for a $70 knife, I sincerely wish you all the best.

 

 

 

Weekly Update 5.27.16 Memorial Day Weekend

Hard to believe it’s Memorial Day Weekend already, isn’t it?  I’ll never believe how fast spring and summer slip by.

I’m marking this Memorial Day by sending off a check to the Wounded Warrior Project with monies generated from the sales of the GEC buttons.  Some time back I set them up in the store with the proceeds from their sales going to the WWP.  It’s been a good way to keep a little stream of revenue coming in for the Wounded Warriors and thanks to all of you that have purchased a set.  Since the first of the year, you’ve made it possible to donate almost $500.  Give yourselves a pat on the back!

The Schatt & Morgan Granddaddy Barlows went out about as quick as they came in.  I think as of this writing there’s one left.  It’s a great knife, well done and for the lucky people that got one, a very limited production series.

Elk
Elk

It’s been fun seeing all the new knives coming out of Queen this year.  The variety coming through in runs of  20 or 30 pieces keeps it interesting as well.  I hope they keep using more of the high end blade steels.  Taking a time proven pattern and upgrading it with modern high-tech steel draws me like a moth to the flame.

Which brings to mind a gratifying comment I got this week about the Trestle Pine Knives.  A long time customer called this week on another matter but had to tell me he couldn’t believe how well his Portage held an edge.  Like most of us, he’s carried a 1095 or 440 steel blade for years and the Portage was his first exposure to 154CM.  I had another friend comment on their appreciation of the fact that Queen seems to be using more of the ATS34 and 154CM instead of the 420 which has been a mainstay for years.  For the collectors, it doesn’t make much difference, but for the remaining few of us that need a good knife, we’re craving more!!!!

With spring in full swing and camping season getting underway, more and more people are getting outside.  As a result, I’ve seen sales of the fixed blades increase.  I added a few more Hess’ last nite but even with those, my Hess inventory currently has a number of holes in it I’ll have to fill.   I’ve gotten nothing but positive feedback from Hess customers and with good reason.  For the price, there’s just nothing out there to compare.

Caper Cocobolo
Caper Cocobolo

So far, it’s been a fabulous year for knife sales.  The biggest problem is acquiring adequate inventory.  I’ve been lucky to be able to pick up a couple of small collections but it’s not keeping up with demand.  Even though I don’t handle any of the SFO’s from GEC, it appears most are selling out before the knives are delivered.  Pre-booking on the new regular run releases has been incredible.

While the current collector focus seems to have shifted from older knives to new, I’d say the appetite for ‘new’ collectibles is at an all time high and growing.  I can’t begin to imagine how many thousand Barlows have been sold in just the last 18 months.  Watching the secondary market pricing, it’ll be interesting to see how long the current trend lasts.  This trend seems to be you buy 2 or 3 identical knives, sell 1 or 2 at hyper inflated prices recovering your ‘investment’,  keep one for your collection and move on to the next iteration almost like a Ponzi scheme.  Not being a collector, it’s been fascinating to watch.

Never collect purely on speculation of future financial gains.  Collect ‘it’ because you like ‘it’, whatever ‘it’ might be, knives, guns, art, coins, etc.  If the value goes up, great.  If the value goes down, you can still enjoy it.  Collecting and investing aren’t always synonymous.

Take the time to give thanks and remembrance this weekend to those who have gone on before us.  Enjoy the company of friends and family.  Have a safe and happy Memorial Day Weekend!!