Cabela's 2006 Annual Report Download - page 8

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4
We have been marketing our products through our print catalog distributions to our customers and potential
customers for over 45 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
retail stores. In fiscal 2006, we mailed more than 135 million catalogs with 86 separate titles to all 50 states and to
more than 170 countries. Our general catalogs range from 300 to 1,450 pages and our specialty catalogs range from
30 to 240 pages. Our specialty catalogs offer products focused on one outdoor activity, such as fly fishing, archery
or waterfowl.
We use the customer database generated by our direct business to ensure that customers receive catalogs
matching their merchandise preferences, to identify new customers and to cross-sell merchandise to existing
customers. The costs of providing our catalogs continue to increase as postage and printing prices increase. We
utilize our marketing knowledge base to determine optimal circulation strategies to decrease our catalog costs while
continuing to grow our business.
We also market our products through our website which has a number of features, including product information
and ordering capabilities and general information on the outdoor lifestyle. This cost-effective medium is designed to
offer a convenient, highly visual, user-friendly and secure online shopping option for new and existing customers. In
addition to the ability to order the same products available in our catalogs, our website gives customers the ability to
purchase gift certificates, research outdoor activities, purchase rare and highly specialized merchandise, and choose
from other services we provide. The number of visits to our website increased by 32.1% in fiscal 2006 compared
to fiscal 2005. Our website was the most visited sports and fitness website in fiscal 2006 according to Hitwise
Incorporated, an online measurement company.
Many of our customers read and browse our catalogs, but order products through our website. Based on our
customer surveys, we believe that our customers wish to continue to receive catalogs even though they purchase
merchandise and services through our website. Accordingly, we remain committed to marketing our products
through our catalog distributions and view our catalogs and the Internet as a unified selling and marketing tool.
We have acquired selected other businesses that comprise a part of our direct business which we believe are
an extension of our core competencies. These businesses include Dunn’s, which offers hunting-dog equipment and
high-end hunting accessories, Van Dyke’s Restorers, which offers home restoration products, Van Dyke’s Taxidermy,
which offers taxidermy supplies, Antique Home and Hardware, which offers home decorating items, Wild Wings,
which offers wildlife prints and other collectibles, and the Ducks Unlimited catalog, which offers waterfowl products.
In 1996, we acquired the assets of the Gander Mountain direct business and integrated them into our business.
Retail Business
We currently operate 18 destination retail stores in twelve states. Our retail operations generated $820.3 million
in revenue in fiscal 2006 representing 43.0% of our total revenue from our direct and retail businesses. See Note 17
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 retail business.
Store Format and Atmosphere. We have developed a destination retail store concept that is designed to appeal
to the entire family and draw customers from a broad geographic and demographic range. Our destination retail
stores range in size from 35,000 to 247,000 square feet and our large-format destination retail stores are 150,000
square feet or larger. Our large-format destination retail stores have been recognized in some states as one of
the top tourist attractions, often attracting the construction and development of hotels, restaurants and other retail
establishments in areas adjacent to these stores. The large size of our destination retail stores allows us to offer a
broad selection of products, helps to provide us with flexibility to respond to seasonal needs and merchandise trends
and enables us to manage the flow of customer traffic.
Our large-format destination retail stores are designed to simulate an outdoor lifestyle environment by including
numerous amenities and interactive areas so that customers can test our products before making a purchase decision.
These attributes differentiate our destination retail stores making them appeal to entire families and we believe
increase the average shopping time customers spend in our stores. The design, durability and style of our destination
retail stores also allow us to keep our remodeling costs low.