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.