Retailing Today: Cabela’s shoots for smaller stores

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Publish Date: August 10, 2014

Cabela’s opened an 110,000-square-foot store in its Sidney, Neb., hometown 20 years ago, a site that hunting-and-fishing enthusiasts were happy to drive even hundreds of miles to visit. Back then the idea of an outdoor-sports-oriented superstore that featured aquariums, taxidermy and even a man-made mountain was so unique — and so profitable — that Cabela’s took to replicating the format across the country, usually on the outskirts of cities. Then, five years ago, the company brought in Remington Arms Co. head Thomas Millner as president and CEO. He oversaw three significant changes with regard to store layout and expansion: New stores would henceforth be smaller, new sites would be located at the center of retail development, and new expansions would be quicker.

The old superstores measured between 125,000 and 250,000 square feet. The new-generation stores range from 40,000 to 125,000 square feet. “If you picked the right location for a superstore, [they’d be] phenomenal,” said Millner. “But the challenge is, if you don’t pick the right location, if the store is a little too far out of town, then that’s an awful lot of capital that doesn’t perform. We are a public company, and capital performance is important.” Millner also thinks that the next generation of stores should be located, not in the middle of nowhere, where development is often driven by locality incentive monies, but alongside first-class retailers, such as Nordstrom or Costco. “The reason retailers co-exist is that it is good for everyone — there is more foot traffic,” said Millner. “If we give good service and have a really interesting environment — with interactive taxidermy, a mountain and an aquarium — we’re good.”

The scent of mountain pine wafts through these second-generation stores. They still boast Cabela’s traditional “entertainment value,” though the taxidermy has been moved off the walls and onto the buildings’ vertical posts — mountain lions now “leap” over the gondolas and aisles, and bears climb the trees that surround a center column. Cabela’s even has its own taxidermy buyer and has in fact become the go-to place for estate sales wishing to get rid of mounted animals. There is “no shortage of taxidermy out there,” according to Millner.

“The first new-generation stores were immensely successful, and we started doing more and more of them,” said Millner. As for the smaller stores, they were “way more productive than our bigger stores in terms of profit and sales per square foot.”

All individual Cabela’s stores are profitable, and the company has never closed a store. Since Millner’s arrival, the company has opened nearly 30 new stores, almost all of which are near other retailers in major shopping centers. As of midyear, Cabela’s units number nearly 60, and the company’s new chief seems determined to pursue a strategy of tightly disciplined expansion. “We are a patient grower, much like a Costco,” Millner said. “We only build 13 or 14 stores a year. We don’t want to overbuild.” — Steve Bergsman 

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