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Print Catalogs Go Digital as Cabela's Embarks on Omni-Channel Journey
By Adam Blair
Cabela's is leaving something behind as it begins its journey to become a truly omni-channel retailer: its paper catalogs. The retailer's initial steps will focus on a print-to-digital transformation, tests of targeted shipping offers and new mobile and digital efforts for the holiday season, according to CEO Thomas Millner.
"Late last year, we began to develop a multi-year approach to reverse the four-year downtrend in our Direct segment and transform our 51-year-old legacy catalog business into an omni-channel enterprise supporting transformation for digital, e-commerce and mobile, while optimizing the customer experience with our growing retail footprint," said Millner during a recent conference call discussing Cabela's Q2 financial results.
Those results, which were positive overall, provide some of the rationale behind Cabela's decision to move away from printed catalogs: their sales are dragging compared to other elements of the retailer's Direct business, which includes online and mobile. Direct revenues for Q2 declined by 0.7% during the quarter that ended June 30 "due to stronger growth in Internet sales and reduced declines in call center sales," according to a company statement.
Despite the decline, these quarterly results represent the channel's best revenue performance for the past two years. In addition, Internet sales already represent "a very sizeable piece of the Direct business, way north of half," according to Cabela's CFO Ralph Castner.
Total quarterly revenue for the company was $627.3 million, an 11.6% increase over the same period last year, and comp store sales climbed 4.7%.
Store performance was aided by Cabela's use of price optimization software. "One of the things that really helped us in the quarter was the managing of markdowns," said Millner. "We finished the quarter and now we're transitioning to fall merchandise as clean as we've ever been. Carryovers of inventories from spring and summer to fall are going to be as low as we can remember."
Brick-and-mortar stores are definitely a part of Cabela's omni-channel strategy. The retailer opened one of its next-generation stores, which are smaller than the traditional Cabela's stores that can feature indoor waterfalls and shooting galleries, in May in Saskatoon, Saskatchewan, the retailer's third store in Canada. Cabela's plans to open two more next-generation stores in the U.S. this year, in Rogers, AR and Charleston, WV.
The first Cabela's Outpost store, even smaller than the next-generation model at 40,000 square feet, will open in Union Gap, WA in October. "Looking forward to 2013, we expect to open six domestic next-generation stores and two Outpost stores," said Millner. In 2014, the retailer is planning its first location in Alaska, a next-generation store in Anchorage.
Eventually, Cabela's projects that it could operate as many as 20 stores in Canada and 150 to 200 in the U.S., including both Outpost and next-generation stores, according to CFO Castner. Having more stores, even if they have smaller physical footprints, is also part of the retailer's omni-channel strategy.
"I think what's going to be really interesting as we go to places where we don't have stores, like Anchorage, is to see if there's actually a lift in the Direct business in Alaska because our visual footprint is elevated," said Millner. "We're in the market and we're more top of mind because customers will drive by our store."
For related content: Why Cabela's Has Emerged as the Top Omni-Channel Retailer
Cabela's New Outpost Stores Designed for Frequent Change
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