Cabela’s: A Case Study in Destination Retailing
Denise T. Ogden, Pennsylvania State University – Lehigh Valley
J.R. “Doc” Ogden, Kutztown University of Pennsylvania
ABSTRACT
Cabela’s is a retailer whose tagline is the World’s Foremost Outfitter. According
to the website it is the “world's largest direct marketer, and a leading specialty
retailer, of hunting, fishing, camping and related outdoor merchandise”
(cabelas.com). This category killer has built a reputation for selection of
products, service and value. This paper examines the strategy and tactics that
have made Cabela’s, a destination retailer and a top tourist attraction.
INTRODUCTION
In today’s competitive retail environment, one way to differentiate a retailer is to be
unique. Thus a goal for many retail establishments is to become a destination retailer – one in
which consumers will make a significant effort to patronize. This destination retailer could have
a physical location, a website or a catalog. This article will examine one of the most successful
destination retailers, Cabela’s.
Cabela’s tagline is the World’s Foremost Outfitter. According to the website it is the
“world's largest direct marketer, and a leading specialty retailer, of hunting, fishing, camping and
related outdoor merchandise” (cabelas.com). This category killer has built a reputation for
selection of products, service and value. This paper examines the strategy and tactics that have
made Cabela’s, a destination retailer and a top tourist attraction.
BACKGROUND
Cabela’s was established in 1961 when the founder, Dick Cabela, tried unsuccessfully to
sell fishing flies in a local newspaper. He re-worked the wording in the advertisement and ran it
in outdoor magazines. Soon the orders began pouring in. Dick and his wife Mary originally ran
the business out of their kitchen. In 1963 catalog operations were started.
In 2006, the company grew to a circulation of 135 million catalogs with 86 titles.
Eventually the business required larger facilities as it acquired more products and catalog titles.
The current headquarters is in Sidney, Nebraska.
In 1987 the company opened its first retail location in Kearney, Nebraska and in 1988 the
online store was launched. In 2004, the company became publicly traded. Along with the multichannel offerings, Cabela’s has a loyalty program through the Cabela’s CLUB Visa Credit card.
In 2006, 20.3% of their sales were generated through their customers’ use of the CLUB card
(Cabela’s 2006 annual report).
Currently there are 26 locations in 19 states with seven stores under construction. One of
the stores under construction is in Canada and expected to open in Montreal in 2008. Cabela’s
stores employed 11,700 people in 2006 (Hoovers, 2007) of which 6,300 were full time
employees. The employees are not unionized (Cabela’s 2006 annual report).
In 2006 the company reported 2.06 billion in total revenue, an increase of 14.6% from the
previous year. Gross profit was about $85.8 million, representing a gross profit margin of
41.6%. The retailer has been profitable each year since its opening. The direct business
(catalog, Internet) represented 57% of their total revenue.
Stores range in size from 35,000 to 247,000 square feet. They classify any store over
15,000 square feet as a “large-format destination store”. In addition to targeting the tough to
reach dad, Cabela’s destination retail store appeals to families from a variety of backgrounds.
TOURIST ATTRACTION
One of the reasons that Cabela’s is a destination retailer is because it has been successful
in attracting people. Millions of people visit a destination store in a given year. Their largeformat stores have become top tourist attractions in their respective states. In some states such as
Texas (Cabela’s vs. The Alamo…, 2006) and Michigan (Smith, 2007), the store is the top tourist
attraction. In other states such as Kansas and Minnesota, the retail store is one of the top tourist
attractions (Hoovers 2007). There were 35 million shoppers that visited a Cabela’s store in
2006. Some people travel as much as 250 miles to visit a store (Nolan, 2007).
The average visitor spends three and one-half to four hours in a store (LeRoy, 2006).
Because of the tourist destination status, many state visitors’ centers are considering locating
visitor centers near or on the same site as Cabela’s stores (Wilson, 2007; Cabela’s to Build…,
2007). The tourism theme is so strong that Hoovers company describes the store as “a hunter’s
and fisherman’s Disneyland”.
The presence of Cabela’s means that the surrounding economy will grow with
restaurants, hotels, housing and entertainment. Cabela’s has turned many underutilized areas
into major tourist spots. Unlike the Wal-Mart experience, many communities have seen retail
sales double or triple after Cabela’s opened (Schneck, 2003).
STORE DESIGN AND MERCHANDISE MIX
At the front of each store is a bronze statue depicting an animal or other representation of
wild life. Each store has a different statue which invites people to collect pictures of the different
sculptures. Cabela’s large-format stores look like lodges. In the middle of each store is
Conservation Mountain, an artificial mountain which features hundreds of stuffed wildlife
animals in their natural habitat. Through the store there are additional museum-quality dioramas
depicting wildlife. Stores typically have a giant freshwater aquarium stocked with native fish.
Some stores have an indoor archery and/or firing range.
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Each store has a deli that features wild game and local favorites. The gun library features
rare guns. Recognizing the length of time spent in the store can be tiresome, Cabela’s has sofas
or other seating placed throughout the store (Parsons-Wraith, 2007).
The category killer carries a wide and deep assortment of products separated into five
general categories: hunting equipment, fishing and marine equipment, camping equipment,
clothing and footwear and gifts and home furnishings. The stores are roomy and designed to
manage the flow of customer traffic. There are many areas where customers can test equipment
before the purchase, thus reducing returns and increasing satisfaction. They have also designed
the stores to allow the company to keep remodeling costs low (Cabela’s 2006 annual report).
In addition to other products, Cabela’s carries company branded merchandise.
Representing about 37% of total merchandise revenue in 2006, these products generate higher
gross profit margins in comparison the other merchandise (Cabela’s annual report).
SITE LOCATION
Cabela’s has a strong site location strategy and looks for certain criteria when deciding
whether to open a store. According to their website, there must be a minimum of 22 acres of
land, the store must have interstate access and visibility, and an existing or funded Interstate
interchange. In addition, a community development incentive package is required. These
subsidies are a part of the company’s strategic growth plan and are often in the millions of
dollars (LeRoy, 2006). In recent years the company has received negative press and citizen
resistance to the incentive packages required for a Cabela’s store to locate in a given community.
The company recognizes that an inability to obtain economic development packages could lead
to decreased revenues and delays in building future stores. A decrease in the ability to obtain
incentives would require changes to their destination retail store strategy (Cabela’s 2006 annual
report).
Cabela’s management prefers a location with one million people within a 30 mile radius
and to be within 20 miles of a metropolitan area. In addition to stand-alone stores, the company
will consider a location in an existing retail development or an existing store with a minimum of
85,000 square feet.
Cabela’s often chooses rural, underdeveloped or underutilized sites which provide the
promise of economic growth in a particular area (LeRoy, 2006). Another factor considered is the
number of Cabela’s catalog orders for an area and the number of fishing/hunting license holders
in concentric mileage-based circles around a prospective location (Giddens, 2004).
MARKETING
Cabela’s marketing is a key to their success. Over the years they have developed a strong
brand name that is synonymous with quality and service. Their direct marketing via catalogs and
the Internet have allowed them to build a customer database that is leveraged for marketing
purposes. In addition to traditional integrated marketing communications, the company engages
in many community activities, designed around the outdoor theme, to build goodwill.
Instead of just a retail store, Cabela’s has been successful in creating a retail experience.
According to Gilmore and Pine (2002), to create demand in a competitive environment,
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companies must understand that “The experience IS the marketing” [italics and emphasis in
original]. A retail experience catches people’s attention and money. Creating an experience is
not the same as experiential marketing which is making promotions more experiential.
Marketing experiences mean customers create memories through experiences that are created by
the retail atmosphere (Gilmore and Pine, 2002). A retailer can increase a positive affective
experience because consumer emotions are significantly and positively induced by
environmental stimuli (Donovan and Rossiter, 1982).
Cabela’s does a remarkable job of creating experiences. By creating destination retail
stores that carry museum-quality exhibits, families have an activity that they can do together,
while spending money. Entertainment is important to the shopping experience because it creates
a fun atmosphere, which affects store patronage (Talpade and Hayes, 1997; Sit et al, 2003).
Ritzer (1993) defined McDonaldization as “the process by which the principles of the
fast-food restaurant are coming to dominate more and more sectors of American society as well
as the rest of the world” (p. 3). Byman (1999) builds on Ritzer’s (1993) concept of
McDonaldization and contends that principles of Disney theme parks are becoming more
common in society. He calls this the “Disneyization of Society”.
The four components of Disneyizaiton are theming, dedifferentiation of consumption,
merchandising and emotional labor. Depending on the discussion, Disneyization can be seen in
both positive and negative lights. We believe that Disneyization concepts seen in Cabela’s is a
positive application.
Theming refers to building a retail format around a theme.
Dedifferentiation of consumption is defined as a “general trend whereby the forms of
consumption associated with different institutional spheres become interlocked with each other
and increasingly difficult to distinguish” (p. 33). The Merchandizing component is defined as
“promotion of goods in the form of or bearing copyright images and logos, including such
products made under license (p. 26). Emotional labor is “the act of expressing socially desirable
emotions during service transactions” (Ashorth and Humphrey, 1993 as cited by Bryman, 1999).
These components can be seen in Cabela’s strategy. The outdoor theme has always been
important to Cabela’s strategy because it serves to define and differentiate its offerings. The
theme also attracts families and becomes a destination where both adults and children are
entertained. The theme also builds consistency in the multi-channel offerings.
Cabela’s strategy has elements of the dedifferentiation of consumption component. This
means that there is a blurring of different types of consumption. This is the case with Cabela’s
when some consider their destination stores a tourist attraction instead of a retail store. There is
a blurring of catalog, retail, tourism, museum and education when you enter a Cabela’s retailer.
This is the strategy behind a mega-store. A retailer tries to fulfill a variety of needs so that it will
attract more people and these people will stay longer and spend more money. Cabela’s has been
successful in enticing the average Cabela’s shopper to spend hours in the store.
In terms of promoting branded merchandise, Cabela’s has been successful on several
fronts. First, they have their own branded merchandise which accounted for 37% of all
merchandise sales in 2006. Second they have a loyalty program that brings in additional
revenue, the Cabela’s CLUB Visa card. In addition there are television programs sponsored by
Cabela’s and a Cabela’s magazine. The brand is so strong that we would not be surprised if
Cabela’s started other branded concepts, such as wild game restaurants, not affiliated with an
existing store.
Last, emotional labor is a component of many service sectors and a part of retailing. The
customer service experience depends a great deal on how they are treated by retail employees.
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Cabela’s is an employee-centric company. Every employee at Cabela’s goes through training
and there are certified degree-granting programs available to all employees. Cabela’s hires
people who are experienced in the outdoors. It is the employees that conduct customer training
seminars on many areas. It is believed that emotional labor plays a factor for employees at
Cabela’s but it is known if it is detrimental. With high marks for customer service, Cabela’s is
doing something right regarding employee training.
CONCLUSION
There are many aspects that have contributed to Cabela’s becoming one of the top
destination retailers in the United States. First, the company built its brick and mortar stores on
the reputation of their already established direct marketing operation. Thus the brand name was
well established before the first physical store was built. Second, Cabela’s has built partnerships
with the people in the cities in which they are located. The incentive packages have helped the
company to build an infrastructure that supports the destination store format.
Cabela’s ability to create experiences is the third main reasons so many millions of
people flock to a store in a given year. The “wow” factor that one feels while in a store
contributes to the excitement of shopping and to the store’s bottom line. Positive word of mouth,
customer satisfaction and the product selection contribute to the draw and allure of the store.
In summary, Cabela’s is successful in exceeding customers’ wants and needs while
fulfilling the company’s objectives which is the basis for the marketing concept. Many retailers
can learn valuable lessons by studying Cabela’s.
REFERENCES
Cablea’s 2006 Annual Report.
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Giddens, D. (2004). Hunting for business. Dallas Business Journal, 27(52), 33.
Gilmore, J. H. and Pine J. B. (2002). The experience is the marketing. Stategic Horizons LLP,
Aurora, OH.
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LeRoy, G. (2006). Not very sporting: Outdoor sporting good retail subsidy scam. Multinational
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