The Cabela’s factor: Store made major impact on Mitchell

By Dan Daly, Journal staff | Sunday, April 01, 2007

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MITCHELL -- By any measure, Everson Gunsmithing is the polar opposite of Cabela’s.

It’s a one-man shop on the north edge of Mitchell. Rod Everson, owner and operator, likes it that way. His idea of quality control is to stay small, hire no help and do all of the work himself.

Cabela’s, the national hunting-and-fishing retailer, has a giant store on the other side of town, next to Interstate 90’s bustling Exit 332.

Everson couldn’t be happier. Cabela’s doesn’t do gunsmithing, at least not in Mitchell. So when an out-of-state hunter needs gun work, Cabela’s often sends him to Everson. And these days, there are a lot of hunters in Mitchell.

“It’s absolutely increased my traffic,” Everson said, gesturing toward a rack full of guns awaiting repair. He chuckled, and added, “I don’t know if it’s as good for me personally, as far behind as I am.”

Ken Blaalid of Leader Sporting Goods is less sanguine about the big retailer’s 2000 move to Mitchell. It’s been a challenge for his business, but he has managed to stay competitive.

“Cabela’s brings people to town, and we get a chance to do business with them,” Blaalid said. Leader gets some referrals from Cabela’s, and sometimes, he sends people to them.

Leader Sporting Goods began as a hardware store in 1917. Today, it sells firearms, ammunition, fishing equipment and other outdoor gear. The shop also does gun repairs and other services.

Blaalid and his wife have owned the business since 1990. In 2001, they responded to Cabela’s by moving their shop to a higher-profile location on East Havens Avenue.

Leader Sporting Goods has seen an increase in business every year since, except for 2006, Blaalid said. In fact, Mitchell as a whole saw a decrease in taxable sales last year, its first in at least a decade.

However, Blaalid also cautioned that mass merchandisers such as Cabela’s have an impact that goes well beyond sporting goods. Clothing stores, shoe stores, restaurants and other businesses will also be competing with Cabela’s.

Rapid City merchants will soon see for themselves. Sidney, Neb.,-based Cabela’s announced last week that it will open an 80,000-square-foot store in Rapid City in 2008.

What was its impact on Mitchell? Most local officials said it has been a good addition to this retail center 60 miles west of Sioux Falls.

Incentives

Like most markets where Cabela’s sets up shop, the city of Mitchell offered financial incentives to bring the store to town.

Although Rapid City isn’t yet saying exactly what it has offered, Mitchell’s story could show what might be on the table.

The city of Mitchell’s primary incentive was a $5 million sales-tax revenue bond, city finance officer Marilyn Wilson said. The bond paid for the public museum portion of the Cabela’s building. In other words, Cabela’s aquariums and wildlife displays and part of the parking lot are considered a public facility much like the Corn Palace.

The bonds that built this museum are being repaid with the second penny of municipal sales tax collected at the Cabela’s store. The bond was sold to Cabela’s.

In other words, for 15 years, Cabela’s gets to keep half of its municipal sales tax collections to repay part of the cost of building the store in 2000.

In addition, Wilson said the city received a $500,000 federal grant to help extend city infrastructure to the area.

Was it worth it? Wilson noted that the city’s sales-tax revenue increased nearly 18 percent in 2000, the year Cabela’s came to town.

According to figures from the state Department of Revenue, Mitchell’s taxable sales rose 23 percent to $360 million between 1999, before Cabela’s, and 2001, its first full year of operation.

“Anytime a business opens in Mitchell, it’s a good thing,” Mayor Lou Sebert said last week.

Was there fear among local merchants that Cabela’s would hurt them? Sebert said there was probably less fear than with Wal-Mart or with ShopKo before that.

Sebert, retired from manufacturing, said he well knows the challenges faced by small businesses against big competitors. “The small guy just doesn’t have the buying power (of the big firms), and that’s one of the sins of the world,” he said.

However, small businesses can compete, he said, but they have to work harder to stay in the game. And in places like Mitchell, a regional retail hub, they have a fighting chance, Sebert said. It’s South Dakota’s small towns that are hit hardest by national retail chains.

The neighborhood

If Cabela’s wasn’t in Mitchell, Jason Bradley wouldn’t be in Mitchell. He opened his Culver’s restaurant franchise in February 2001. His was the first of several businesses that have sprung up around Cabela’s since it opened in 2000.

A new Wal-Mart Supercenter followed a short time later. Today, Cabela’s stands amid a retail constellation that includes Wal-Mart, Menard’s, Tractor Supply Co., restaurants, motels, convenience stores, strip malls and other businesses.

On Monday, the Mitchell Planning Commission approved plans for a new Holiday Inn Express near Exit 332, according to City Planner Neil Putnam. Meanwhile plans are under way for a convention center at Exit 332.

“Depending on the time of year, it’s a major draw for us,” Bradley said. “It’s why I came here.”

The big store pulls people off the interstate who would otherwise keep going. For others, Cabela’s is the reason they came to Mitchell.

Bradley said his restaurant is very busy on the Thursday and Friday before opening weekend of pheasant hunting season. Hunters are rolling in and stocking up.

Economic player

Putnam said there’s no question that Cabela’s played a big role in pulling Mitchell’s growth to the south. The area around the store was already within the city limits when Cabela’s bought it, but other parcels to the south and east have been since been annexed.

But he emphasized that Exit 332’s gain is not the only growth area in Mitchell. Avera Queen of Peace Hospital has seen several expansions. The new McGovern Library was dedicated on the campus of Dakota Wesleyan University. Minneapolis-based Verifications Inc. opened a call center in Mitchell.

And the city has a flourishing manufacturing base. Trail King, Toshiba, Twin City Fan & Blower and other manufacturing firms have plants in Mitchell.

As much as anything, Putnam believes, Cabela’s has helped spur confidence in the city’s economy. “It really serves as a symbol that Mitchell is a good place to invest,” he said.

Tourism

Pam England, head of the Mitchell Convention & Visitors Bureau, said she sees a lot of “1” license plates from Minnehaha County in Mitchell since the Cabela’s opened. That’s good to see for a retail city that must compete with its larger neighbor to the east. And revenue from the city’s so-called bed, booze and board tax has increased every year but one since Cabela’s opened.

In the minds of civic leaders, the downtown Corn Palace is still Mitchell’s most important tourism asset. The CVB is across the street from the Corn Palace.

And all of the concrete streetlight bases are adorned with bas-relief ear corn. Many of the downtown businesses sport some type of corn logo out front.

“We’re all about corn here,” one CVB staffer said with a laugh.

But some believe Cabela’s might in fact be a bigger draw.

Asked which brings more people to town, Culver’s Bradley, who serves on the CVB board, smiles. “I can’t answer that. … Hopefully, they both bring people here.”

Contact Dan Daly at 394-8421 or dan.daly@rapidcityjournal.com