Cabela's 2005 Annual Report Download - page 17

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Business Strategy
Our business strategy emphasizes the following key components:
Continue to open new destination retail stores. We have grown our destination retail store base from four
stores in 1998 to 14 in 2005, representing nearly 2.1 million square feet of retail space. We currently plan to open
five large-format destination retail stores in 2006, all of which have been announced. Through our extensive
customer database and analysis of historical sales data generated by our direct business, we are able to identify
geographic areas with a high concentration of customers that represent potential new markets for our destination
retail stores. We believe that there are many additional markets throughout North America that could potentially
support one of our large-format destination retail stores. Additionally, we believe that smaller-format destination
retail stores could provide further opportunities for future expansion. Our stores require large capital investments.
We are actively seeking ways to improve their operating efficiencies, layout and customer friendly design to
increase our average customer transaction and improve our return on investment.
Expand our direct business. We plan to expand our direct business through several initiatives regarding
existing and new customers. We will seek to increase the amount each customer spends on our merchandise
through the continued introduction of new catalog titles and the development and introduction of new products.
We have taken advantage of web-based technologies such as targeted promotional e-mails, on-line shopping
engines and Internet affiliate programs to increase sales. We also are improving our customer relationship
management system, which we expect will allow us to better manage our customer relationships and more
effectively tailor our marketing programs. We will use our expanding retail business to capitalize on additional
customer purchase history and information.
Improve our operating efficiencies. As we continue to grow our business through opening new destination
retail stores and building our direct business, we are focused on improving our operating efficiencies by
optimizing and investing in our management information systems and distribution and logistics capabilities. We
also are analyzing our catalog costs and inventory turns and concentrating on our sales training. In addition, we
are developing a new store opening team that will help us reduce the pre-opening costs we incur when we open
new stores.
Expand the reach of our brand and target market through complementary opportunities. We focus on
increasing consumer awareness of our company and maintaining and developing our outdoor lifestyle image by
using consistent branding in all of our distribution channels. We also will seek to continue to effectively broaden
the application of our brand through: opportunistic acquisitions of complementary businesses; internal
development of relevant businesses and product categories; and continued involvement and sponsorship of
sporting and hunting events. We will continue to leverage our brand recognition in selected areas through
corporate relationships and alliances. We intend to increase the penetration of our Cabela’s Club VISA credit
card among our customer base through low cost target marketing and solicitations at our destination retail stores,
which we believe, based upon historical results, will reinforce our customer loyalty and retention and thereby
increase revenue and net income.
Direct Business
Our direct business uses catalogs and the Internet as marketing tools to generate sales orders via the Internet,
telephone and mail. Our direct business generated $1,037.8 million in revenue in fiscal 2005, representing
approximately 62.6% of our total revenue from our direct and retail businesses for fiscal 2005. See Note 20 to
our consolidated financial statements and our “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” for additional financial information regarding our direct business.
We have been marketing our products through our print catalog distributions to our customers and potential
customers for over 44 years. We believe that our catalog distributions have been one of the primary drivers of the
growth of our goodwill and brand name recognition and serve as an important marketing tool for our destination
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