If you haven’t yet heard, Bass Pro Shops is eyeing a Cabela’s acquisition. But what would that mean to consumers of products for the great outdoors?
As reported last month by Reuters, a Bass Pro Shops acquisition of Cabela’s is quite likely in the works with the help of Goldman Sachs Group Inc.
Citing unnamed sources, the Reuters report says Goldman Sachs will give Bass Pro the financing needed to make the acquisition a reality.
Both companies have remained mum on the possible deal over the past month. The acquisition could have significant implications for both consumers and competing retailers in the hunt/fish and camping markets.
$8 Billion Mega-Retailer?
Cabela’s and Bass Pro Shops are already among the largest retailers of outdoors products in the United States. With revenues of $4.2 billion in 2015, Bass Pro Shops is already No. 98 among America’s Largest Private Companies.
If it were to acquire Cabela’s, which did $4 billion in sales in 2015 itself, the conglomerate would largely overshadow all other outdoors retailers on the continent.
For comparison, REI did about $2.2 billion in sales in 2015, only a quarter the business of the combined Big Two.
The potential buying power and cost savings of combining the largest hunting and fishing retailers in the United States is staggering. And in an era of struggling brick-and-mortar business, the synergistic advantages of a single behemoth outlet could push profits of both entities.
Founded in 1961 by Dick Cabela, Cabela’s has about 80 stores in 36 U.S. states and nine in Canada. Its catalog and online business contributes to about 24 percent of its sales, according to the Reuter’s report.
But like other brick-and-mortar businesses, the company may have been struggling in recent years. According to a Forbes project in February 2015, Cabela’s was ranked as number one “Most Troubled Retail Store” in the country behind doomed Radio Shack.
Other retailers dabbling in the outdoors space have also shown vulnerability, with Sports Authority shuttering all its stores this month. GearJunkie reported Eastern Mountain Sports was headed for bankruptcy, and it filed for Chapter 11 protection in April. Some of this comes from a highly competitive market in the era of online retail.
Cabela’s has also been exploring selling its credit card business separately and received expressions of interest from other potential buyers, Reuters reported.
A merger of the two brands could lead to more efficient business practices and better sustainability as online sales continue to whittle away at the brick-and-mortar model.
What would this mean for consumers and makers of outdoor gear?
Both brands are already well established through a long history, with Bass Pro dominating sales across the South. The Nebraska-based retailer has remained bullish in tough times, opening seven stores in 2014. Cabela’s announced three new stores in 2014.
Acquiring the Cabela’s name would be a huge move for Bass Pro Shops, but it would seem logical to maintain both brands. Over time, we’d expect to see in-house brands, like Bass Pro’s RedHead line of gear and Cabela’s branded products, to cross-pollinate but maintain distinct identities.
For consumers, we expect little would change, at least for the short term. These brands are too ingrained in the public conscious to be scrapped, and each has its loyal followers.
Our biggest concern would be that smaller shops would face even stiffer competition when meeting the buying power of such a large conglomerate.
Cabela’s buying power would also likely be significant for independent gear brands that rely on large yearly buy-ins. A single buyer could make or break a year for many outdoors brands, particularly with few alternative markets for many hunt and fish products.
The acquisition remains to be seen, but for the outdoors world, it’s not one to take lightly. If it happens, chances are most of your future hunt and fish purchases will come from a single mega-outlet, likely still with a gabled roof and herds of stuffed animals inside.