Cabela's watches Rapid City prototype

Next generation store is smaller, more efficient, CEO says

By Jeremy Fugleberg, Journal staff | Monday, November 03, 2008

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Cabela's leaders are closely watching the performance of their new Rapid City location, a prototype of the outfitter's "next generation" in store design.

The Rapid City location is the flagship for a size and a layout Cabela's leaders say is smaller, more flexible and efficient. The smaller stores also cost less to build, an important point as the economy stumbles.

"We will closely monitor the performance of this new prototype and expect to roll out similar-sized stores in the years ahead," said Dennis Highby, Cabela's president and chief executive, in the company's quarterly statement issued last week.

The new store format includes sales floor layouts that emphasize camping, gifts, footwear and apparel. Along with low construction costs, the company hopes the new store design will prove more attractive to both regular customers and general outdoors enthusiasts who shop at Cabela's less frequently, said David Cumberland, an analyst with Milwaukee-based financial services firm Robert W. Baird, in a 2007 report about the company.

The company's second next-generation store is set to open next year in Billings, Mont. The 80,000-square-foot store is the same size as the Rapid City location. Cabela's stores range in size from 35,000 to 247,000 square feet. Most are 125,000 square feet or larger.

The retailer's plan to build the Billings location is a sign that the Rapid City store design has proven itself cheap to build and efficient in layout and stocking, said Cabela's spokesman John Castillo.

"If it wasn't working, we wouldn't move forward with it," he said.

Company executives have slowed the pace of construction with an eye to an economic downturn. While the outdoors retailer dove into a building spree in recent years, 2007 saw only two new stores and 2009 will bring an additional two locations: The Billings site and a large store in East Rutherford, N.J.

The Rapid City store's comparatively small size is one of customers' most common complaints, said Mary Bollock, manager of the store.

"They come in here expecting to find everything in the catalog, and we're not that big store," she said.

Bollock, a native South Dakotan, is a nine-year Cabela's veteran who has worked at locations both large and small.

She says customers commonly compare the Rapid City store to the 85,000-square-foot Mitchell store, which opened in 2000 and complain that the Rapid City location feels smaller. Bollock said the Rapid City store design has 10 percent more selling space than the Mitchell location.

She says it was wise to build a smaller location in Rapid City, but she would be the first to push for a larger building if store traffic climbs.

"Although we are a destination place, we still have to be an efficiently running business, and that's what Rapid City wants us to be," she said. "We wouldn't be that if we built a 250,000-square-foot building, if we said to heck with dead spaces and to heck with payroll. I think they did a great job. Do I think it could be bigger? Absolutely."

Castillo rejected any concerns that Rapid City is serving as something of a guinea pig for the store's design.

"We're not one to blindly or randomly throw darts," he said. "We would not implement these processes unless we had done extensive studies to see tangible hard evidence of cost savings and efficiencies."

With store expansion critical to continued growth and revenue at the company, it's clear Cabela's believes the Rapid City design is a critical step.

"You will be hearing more about our next generation store format in years to come," Cabela's told its shareholders in the company's 2007 annual report.

Contact Jeremy Fugleberg at 394-8421 or jeremy.fugleberg@rapidcityjournal.com

Comparing Cabela's

2009 -- East Rutherford, NJ 175,000 square feet

2009 -- Billings, Mont. 80,000 square feet

2008 -- Rapid City 80,000 square feet

2008 -- Scarborough, Maine 125,000 square feet

2007 -- Reno, Nev.  150,000 square feet

2007 -- Lacey, Wash.   185,000 square feet

2000 -- Mitchell  85,000 square feet