Bass Pro Shops

Tom Dougherty, CEO – Stealing Share

29 November 2016

Is Bass Pro Shops buying Cabela’s a good idea?

Earlier this week, Bass Pro Shops announced it is acquiring Cabela’s for about $5.5 billion. The acquisition will double its number of stores.

Bass Pro Shops

Does Bass Pro Shops really need to buy Cabela’s?

From an operational perspective, this completely makes sense. Bass Pro Shops has a great reputation in outdoors sports and recreation, particularly in fishing and boating. Cabela’s, on the other hand, has focused on hunting and fishing. While both brands offerings overlap, Cabela’s can help Bass Pro Shops fill in some gaps in product offerings and vice versa. (Assuming, of course, that Cabela’s is not swallowed up by Bass Pro Shops.)

The problems facing Bass Pro Shops.

However, there could be a problem. While on the surface, the two brands might seem to share a common customer interest and, with that, their customers may even share common values and purchase drivers.

But it may not be as simple as that. Does being owned by Bass Pro Shops reduce the focus that Cabela’s has on shooting sports, for example? I doubt that there is much difference in the type of customer. I can only hope that both brands leverage their strengths to the betterment of the other. But a merger of two rivals can often have some unintended consequences.

The most interesting and potentially problematic part of this acquisition is the tremendous amount of real estate that Bass Pro Shops is getting. It will get 85 more stores with about 19,000 employees. Geographically, there is some overlap, especially in the east. Some stores will have to be considered for closure.

And this is the root of the potential problem.

The retail segment is struggling. Sales are declining and more and more retailers are scaling back. It is a very risky business proposition to make a $5.5 billion investment in a business on the decline. While Bass Pro Shops would likely argue that its locations are destinations, the reality is that it is not immune to the changing buying habits of today’s consumer. We may be writing about how Bass Pro Shops is closing stores to maintain its profitability, if the downward trend continues for brick and mortar stores.

Bass Pro Shops is a privately held company and does not divulge its sales numbers. But Cabela’s does and, like many of the big box retailers, it has reported either declines in same store sales or, as in its most recent filing, a reduction in profits due to massive discounting. All is not rosy in outdoor sporting either.

Bigger is not always better, especially in the current retail environment. A year or so from now, this acquisition may a $5.5 billion mistake.

See more posts in the following related categories: Bass Pro Shops Cabelas Retail

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