Walmart to Stop Selling Handgun Ammunition: Small Risk, Big Statement

September 4, 2019by Samantha Masunaga and James F. Peltz
A woman touches a cross at a makeshift memorial for victims outside Walmart, near the scene of a mass shooting which left at least 22 people dead, on August 6, 2019, in El Paso, Texas. Walmart Inc. announced on Tuesday, Sept. 3, 2019m, it will phase out sales of ammunition for handguns and short-barrel rifles. (Mario Tama/Getty Images/TNS) **FOR USE WITH THIS STORY ONLY**

Walmart Inc. will phase out sales of ammunition for handguns and short-barrel rifles, eliminating a small chunk of its sales to make a big political statement.

The decision, announced Tuesday, also shows the growing power of shoppers who want companies’ social and political stances to align with their own.

Walmart is a major player in the $2 billion U.S. ammunition market: Its approximately 20% share means it sells roughly $400 million of ammunition a year. Chief Executive Doug McMillon predicted its market share would drop to between 6% and 9% after the changes. The Bentonville, Ark., company does not break out sales figures for firearms and ammunition.

Considering that Walmart pulled in $514 billion in revenue in its latest fiscal year, analysts said its decision probably won’t hurt its bottom line. Failing to take a stand, especially after a mass shooting in one of its stores, could have been a much bigger problem, said Gene Del Vecchio, an adjunct professor of marketing at the University of Southern California Marshall School of Business.

Companies “have to make sure they’re alert to social issues because that, in fact, may have a dramatic impact on whether they remain profitable,” he said. “The strategy is always to make sure that you continue to please most of your customers, even though you may be alienating some of your customers. That’s the delicate balance that many companies are in today.”

In a letter to employees dated Tuesday, McMillon said Walmart would also discontinue handgun sales in Alaska — the last state in which Walmart sold that type of firearm — and is “respectfully requesting” customers not openly carry guns in Walmart or Sam’s Club stores unless they are law enforcement officers. He also called on Congress to “strengthen background checks and to remove weapons from those who have been determined to pose an imminent danger.”

“In a complex situation lacking a simple solution, we are trying to take constructive steps to reduce the risk that events like these will happen again,” McMillon wrote. “The status quo is unacceptable.”

The company’s announcement comes about a month after 22 people were killed in a mass shooting at a Walmart store in El Paso, Texas. Days after that attack, Walmart took down displays depicting violent video games and movies and faced outcry for continuing to sell guns.

The month of deliberation signals that the company has been “very carefully weighing the pros and cons” of taking these steps, said Garrett Nelson, an analyst with CFRA Research. Walmart said it would continue to sell long-barrel deer rifles and shotguns, as well as “much” of the ammunition for those guns, as well as hunting and sporting accessories and apparel.

“The more significant impact could be a backlash from consumers if they look at this as an issue and stop shopping there” not only for ammunition but also for other merchandise, Nelson said. “Any time a company inserts itself into these types of issues, they risk a backlash.”

The National Rifle Association called Walmart’s decision “shameful,” saying in a statement that “lines at Walmart will soon be replaced by lines at other retailers who are more supportive of America’s fundamental freedoms.”

“Walmart’s actions today will not make us any safer,” the NRA said. “Rather than place the blame on the criminal, Walmart has chosen to victimize law-abiding Americans.”

Sales of the ammunition Walmart has shunned are likely to shift to sporting-goods chains such as Bass Pro Shops, Bass’ Cabela’s subsidiary, Dick’s Sporting Goods and thousands of small retailers of firearms and ammunition. The multibillion-dollar gun manufacturing and retail sectors are highly fragmented. On the retail side, “most specialty gun and ammunition stores are small, independent operators serving a local geographic area” and there are more than 11,000 such stores, research firm IBISWorld said in a recent report.

Walmart has been heading in this direction for a while. The company largely stopped selling handguns in the 1990s, then quit selling assault-style rifles four years ago and raised the age limit to purchase a gun or ammunition to 21, among other gun control sales measures.

“They’re taking a very measured, I think, logical stance,” Del Veccio said. “Doing a bit at a time, in order that the decisions are not jarring to the population at large.”

Walmart is not alone in that approach.

Dick’s Sporting Goods ended sales of assault-style weapons at its Dick’s stores after the 2012 mass shooting at Sandy Hook Elementary School in Connecticut.

In March 2018, after the shooting at Marjory Stoneman Douglas High School in Florida that killed 17 people, Dick’s CEO Edward Stack took things further. The company stopped selling any guns to customers under 21 at its 800 Dick’s stores and 35 Field & Stream outlets and stopped selling assault-style weapons at the Field & Stream stores as well. “We need to take a stand,” Stack said at the time in an interview with the Los Angeles Times. Stack is a gun owner who is among the most outspoken private-sector advocates for changes in gun laws.

Walmart and retailer Kroger Co. followed Dick’s lead in banning sales to customers under 21.

This year, Stack wrote in Dick’s 2018 annual report that the chain’s sales last year slipped 1.7% from 2017, partly because “our firearms policy changes have contributed to a continuing decline in our hunt business.” He also noted “weak customer demand for firearms and other hunting merchandise across the industry.”

Stack said that Dick’s curbs were “the right decision” and that “we would still make the same choice today.” And despite the sales drop, Dick’s also reported record-high earnings per share for the year.

“Part of what explains what we’ve been seeing, both after Parkland and with the Walmart case now, is that more people who are in favor of things like greater gun control, who want companies to take steps to limit access to guns and ammunition … are actually more focused on these issues,” said Brian Berkey, assistant professor in the department of legal studies and business ethics at the University of Pennsylvania. “Because of that, companies are feeling the need to respond in a way that they haven’t in the past.”

Even more than Dick’s, Walmart “has the financial size and stability, and the customer base, to be able to make a move like this and discontinue these products” without suffering severe sales damage, said Wendy Patrick, a business ethics lecturer at San Diego State University. She also discounted the likelihood of a harsh backlash because customers know Walmart “suffered a horrendous one-two punch in July and August.” Less than a week before the El Paso shooting, two Walmart employees were shot and killed by a co-worker in a Southaven, Miss., store.

“Walmart understands that even if they suffer a short-term loss or even a backlash, what they are gaining in community support might make up that difference for their shareholders,” she said.

Walmart’s stock edged up 38 cents Tuesday to $114.64 a share.

Corporate stances on social issues have cropped up more as consumers increasingly expect the brands they like to align with their own values.

Last September, athletic apparel manufacturer Nike Inc. featured Colin Kaepernick in a “Just Do It” ad. The former San Francisco 49ers quarterback had become a lightning rod after he began kneeling during the pregame national anthem to protest police shootings of black men.

In 2017, outdoor apparel company Patagonia sued the Trump administration after the administration said it would reduce the size of the Bears Ears National Monument.

“The thing about Walmart is it’s so prominent and so large and so much a piece of our lives that they had to make a decision,” Del Vecchio said. “The bigger you are, the bigger the spotlight.”

———

©2019 Los Angeles Times

Visit the Los Angeles Times at www.latimes.com

Distributed by Tribune Content Agency, LLC.

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