Q&A: Great Outdoors
Cabela’s President and CEO Thomas Millner says customer service — and memorable stores — are key to success in the outfitter business.
Ben Hoffmann
People drive for miles to visit a Cabela’s Inc. (CAB) store, according to president and CEO Thomas “Tommy” Millner, who joined the company a year ago. “We have a cult following,” he says of the outdoor-supply specialty retailer, whose stores feature museum-quality animal displays, as well as classes and events on everything from fly fishing to camp cooking.
Cabela’s, headquartered in Sidney, Neb., got its start 49 years ago at the kitchen table of Dick and Mary Cabela, who created a catalogue for hunters, campers and fishers. Today, the company says, it mails 130 million catalogues a year, runs the most trafficked Website in the sports and recreation industry, and operates 30 stores averaging 155,000 square feet.
The “cult following,” says Millner, has lifted Cabela’s revenues to $2.6 billion last year from a reported $947 million in 2000. This spring, he says, the company will open a new store in Grand Junction, Colo., then add four more stores in the U.S. and Canada in 2011. Hunting and related equipment account for a reported 41 percent of sales followed by clothing and footwear, camping equipment, fishing gear and furnishings.
An avid bird hunter who grew up in Newport News, Va., Millner, 56, graduated with a degree in Greek and ancient Hebrew from Randolph-Macon College. Before joining Cabela’s last April, he had been CEO of Remington Arms Co. from April 1999 to March 2009 and its president from May 1994 to May 2007. Previously he had spent more than 16 years in the furniture industry, and he remains a director of Stanley Furniture Co. At their home near Cabela’s headquarters, Millner and his wife raise prize-winning briards (French sheepdogs).
How has the economic downturn affected Cabela’s?
The consumer has clearly been under stress, but Cabela’s has been somewhat immune. Our customers tend to spend a fairly consistent amount with us year to year. Our same-store sales were up 3.5 percent last year after many outdoors enthusiasts became fearful of more regulation in the gun and ammunition business. That rise was driven by unprecedented sales of guns and ammunition, a category that grew to 15 percent of total sales, up from 7.5 percent in 2008.
How do you keep customers coming back?
Our legendary service permeates this enterprise. Recently we got an e-mail from a customer who was upset about not receiving the kind of service we talk about. I called him. He was absolutely shocked. It sounds corny, given that we’re running a $2.6 billion enterprise, but we take every phone call and letter seriously. To this day, Jim [Cabela, a co-founder and a current vice chairman] reads every single consumer suggestion card, complaint or applause card.
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Tommy’s Tips
What is your strategy for attracting new customers?
We created four family personas that represent who we do business with. The Hunt family, for example, is our core customer. They are in their mid-forties to mid-fifties, they have high incomes and high net worth, and hunting, fishing and camping define their lifestyle. Another persona is retired, still loves the outdoors but enjoys it passively. They’re not climbing mountains — they’re going fishing.
We measure our company’s health by whether we’re growing our number of customers and by how much they spend. Last year our customer multichannel base grew 10 percent. We accomplished this because of sophisticated customer touch strategies that are refined based on what you buy, how you buy and everything we know about you.
How does the Internet continue to change the catalogue business?
Catalogues are shrinking in size for most direct marketers because of the Web. Years ago catalogues were 600 pages. Now they’re becoming vehicles that drive customers online. We’re trying to prompt customers to go to cabelas.com to read customer reviews and check out other products. In August the entire Website will be overhauled with easier navigation and much more interactivity. It’s a multimillion-dollar investment that’s been under way for the past few years. But catalogues will never go away.
What is the strategy behind Cabela’s bank and credit-card operations?
In the early 1990s, the company believed it could create enormous loyalty by owning a bank. Over the last 15 years, our bank has become the glue that sticks consumers to our brand. Last year our customers earned $120 million in points redeemable at Cabela’s. Nearly 30 percent of our business comes from our 2 million credit-card holders. Last year, we grew our cardholder base nearly 10 percent, a sure sign of the program’s health.
What’s your store strategy?
Our average size is 155,000 square feet. New stores will be roughly 80,000, 100,000 or 125,000 square feet. Our strategy is to have stores in those formats so we can get economies of scale as we develop them. Our new store in Grand Junction, Colo. fits that vision: It will be 75,000 feet.
People hunt, fish and camp all over the world, and our brand is global. We do business in more than 125 countries through our catalogue and Website, but only in the U.S. and Canada do we have retail stores. The international market is intriguing, but we haven’t come to any conclusions on whether or when we could expand.
What are the elements of a successful succession plan?
Our board will tell you that we had one of the smoothest transitions they had ever seen. Cabela’s former CEO Dennis Highby and I have enormous respect for each other, personally and professionally. Helping Dennis transition out was, for me, as important as having him help me continue his legacy. The fact that I knew the outdoor business really well came in handy, and Dennis understood that. I wasn’t a guy who dropped in and didn’t know about the business.
