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.
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.
Too much customer service Tom Dougherty, CEO - Stealing Share 21 June 2018 Too much customer service is a real thing I’ve said this before, but I gotta say it again. Too much customer service drives me bat-shit crazy. Not surprisingly, Best Buy kills me with this....
Dow Jones ousts GE Tom Dougherty, CEO - Stealing Share 20 June 2018 Dow Jones kicks out GE. Now what? In 1896, the stock market adds GE as one of Dow Industrial Average’s first companies. As of June 26th of this year, it will no longer be part of the DJIA. I typically...
Tim Cook is leading the way Tom Dougherty, CEO - Stealing Share 19 June 2018 Apple CEO Tim Cook Tim Cook. Apple Act 2. Like everyone else, I worried about Apple’s succession plan. I was a died-in-the-wool member of the Steve Jobs cult. I was not sure what to make of...