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Cautiously Optimistic About the Bass Pro Shops & Cabela’s Merger

On Monday, Bass Pro Shops announced it had bought out its longtime competitor Cabela’s with a $5.5 billion buyout. Here’s more about it from Wall Street Journal:

The companies are pioneers of a concept now-coveted by retailers of all stripes: stores that double as both shopping centers and entertainment destinations. Both Cabela’s and Bass Pro Shops have earned cult followings for their oversize outposts filled with hunting, fishing, and outdoors gear, as well as ornate taxidermy and fishing exhibits.

The deal would create a national chain with more than 180 locations, roughly 40,000 workers and control of more than 20% of the $50 billion U.S. hunting, camping, and fishing market, according to Stifel analyst Jim Duffy. Cabela’s posted revenue of $4 billion last year. Bass Pro Shops founder John Morris, 68 years old, will serve as chief executive of the combined company, and its majority owner, the companies said.

All across social media, this move has been met by mixed reception. Many outdoor enthusiasts partial to Cabela’s railed against Bass Pro for impending drastic changes set to come. Others welcomed the merger enthusiastically (myself included). Those citing their opposition to the merger especially cited anti-trust issues. Here are some responses I received on my Facebook page:

Gander Mountain is the next biggest in this outdoor/hunting/fishing market with spillover into your REI’s and Orvises (outdoor and fishing specific respectively). Academy’s Sports and Outdoors, Dicks, Walmart, et al in major markets cover enough of the market to serve as major players, though they are not specific to the industries exclusively. Should be no conflict. Furthermore, smaller than big city markets are filled to the brim with firearms dealers, tackle supply shops, etc., to keep the market flush with competition and the online market for all of the above is huge and growing.”

“See 351 U.S. 377. But in this case, there are enough substitutes that if Bass Pro/Cabela’s tries to increase their prices by even 5%, people can just go to Dick’s, Walmart, Gander Mountain, or Amazon (like Blake said) and buy the same goods. The experience at Walmart or on Amazon clearly isn’t the same, but more regional places like Gander Mountain or places like Dick’s are good substitutes for that even.”

“It is my understanding that Bass Pro was really only interested in Cabela’s credit card division. Don’t think they are interested in their brick and mortar store locations. Cabela’s has always been better for hunting gear. Their house brand is far better than BPS. But BPS dominates the scene for everything else. What’s NOT being talked about is the huge impact this will have on conservation contributions. Cabela’s and BPS are both huge contributors to conservation in this country, glad to see them teaming up.”

Sales have been down for both companies. People are less prone to shop in brick and mortar, especially with services now like Amazon. It will be interesting to watch how they beef up their services and marketing techniques. I’m actually planning a trip to Bass Pro this friday to get last minute necessities, since bow hunting season is almost in full swing!”

“The purchase of Cabela’s by Bass Pro is unfortunate. I find that the Cabela’s brands are higher quality and typically have better warranties. Both of them make up a large marketshare in the outdoor world and retail. I think this will corner the market and force consumers to bend to the judgement of “professionals” regarding prices and product lines, etc. I’m most worried about store closures, job loss, warranty changes for products already purchased, and what this will mean for the Cabela’s brand as a whole.”

As someone who enjoys visiting both stores, I’m perhaps more optimistic about the merger than others. I generally go to Bass Pro Shops for fishing needs, since I haven’t wet my feet in hunting just yet. There has been no mention of store closures or lay-offs yet, so it’s wise to not rush to judgment. If this merger results in more stores opening, we should welcome this.

Here are some positive things that will likely result from this historic merger:

Conservation efforts will be stronger 

Cabela’s and Bass Pro Shops are two of the country’s leaders in conservation with respect to fishing and hunting. That’s an undeniable fact. With this merger, their conservation efforts will be bolstered–not diminished. This is one of the net positives that will come out of this merger. More exposure for fishing and hunting is ALWAYS a win.

They can compensate each other’s shortcomings

The Cabela’s brand is far more personalized and less corporate than Bass Pro Shops, but Bass Pro Shops has far greater visibility. Bass Pro is said to have higher prices, while Cabela’s prices are far more reasonable. Bass Pro caters to anglers while Cabela’s caters to hunters. Both brands are household names in the outdoor sporting industry. Structurally and design-wise, both stores are quite similar–albeit with their slight differences.  With this merger, they can perhaps work in concert with one another to remedy shortcomings and make their merchandize more amenable (and affordable) to customers without diminishing either brand.

They can work together to draw in new, returning, or disaffected customers

With the onslaught of competitors like Gander Mountain and even Amazon.com, Bass Pro Shops and Cabela’s could work together to strategize how to compete and sustain their respective brands going forward. Market forces should welcome competition from stores other than Bass Pro Shops and Cabela’s. Yet, these household brands will be forced to adapt in order to keep pace with alternative outlets for outdoor gear and equipment. They will learn to further coexist with competition.

The Bass Pro Shops-Cabela’s merger may sting at first, but once it comes to fruition, a lot of positive things may come as a result. Let’s be cautiously optimistic about the Bass Pro Shops-Cabala’s merger.

 

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