Cabela's 2010 Annual Report Download - page 42

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32
Fiscal 2010 Achievements and Update to Our 2012 Vision
Cabela’s 2012 Vision is to become the best multi-channel outdoor retail company in the world. While the
business environment in which we operated in 2010 continued to be challenging, we believe our multi-channel
model and our strong brand name provides us with opportunities for growth and profitability. Over our history,
we have established name recognition and a quality brand that is renowned and respected in the outdoor industry.
Throughout our multi-channel business, our strategy is to continue our focus on our customers by providing
legendary customer service, quality, and selection.
In 2010, management emphasized a greater focus on improving retail productivity, mitigating bad debt risk
in our credit card business, and concentrating on a return on capital discipline. We have six strategic initiatives we
are focusing on to achieve our 2012 Vision and deliver value to our customers, giving us sustainable, competitive
advantages:
• Focus on Core Customers: Combine our outdoor expertise, product knowledge, and understanding
of core customers to drive customer loyalty. Improve customer experiences – every customer, every
interaction, every day. Our goal is to use the product expertise we have developed over the years,
along with a focused understanding of our core customers, to improve customer loyalty, enhance brand
awareness, and offer the best possible assortment of products in every merchandise category.
As we focus on our core customers, we are targeting marketing efforts that are directed to different
customer interests by improving our modeling methodologies. We are also using historic sales
information to select and size markets while focusing on areas with large concentrations of core
customers.
We offer our customers integrated opportunities to access and use our retail store, Internet, and catalog
channels. Our in-store pick-up program allows customers to order products through our catalogs,
Internet site, and store kiosks and have them delivered to the retail store of their choice without incurring
shipping costs, thereby helping to increase foot traffic in our stores. Conversely, our expanding retail
stores introduce customers to our Internet and catalog channels. We are capitalizing on our multi-channel
model by building on the strengths of each channel, primarily through improvements in our merchandise
planning system. This system, along with our replenishment system, allows us to identify the correct
product mix in each of our retail stores, and also helps maintain the proper inventory levels to satisfy
customer demand in both our Retail and Direct business channels, and to improve our distribution
efficiencies.
• Improve Merchandise Performance: Improve margins and minimize unproductive inventory by
focusing on vendors, assortment planning, and inventory management. Optimizing merchandise
performance allows us to maximize margins, which will require detailed preseason planning, as well
as in-season monitoring of sales and management of inventory. We must work with vendors to manage
inventory levels, negotiate the best prices on everything we buy, and ensure each vendor is delivering all
products and services as expected.
We are concentrating efforts in detailed pre-season planning, as well as in-season monitoring of sales and
management of inventory. We worked with vendors to negotiate the best prices on products and to manage
inventory levels, as well as to ensure vendors deliver all products and services as expected. We reduced
unproductive inventory levels during the first half of fiscal 2010 and increased product assortment heading
into the fourth quarter of fiscal 2010. Our merchandise gross margin as a percentage of merchandising
revenue increased 50 basis points to 35.1% in 2010 compared to 34.6% in 2009. This increase was due to
better inventory management, which reduced the need to mark down product, improvements in vendor
collaboration, and advancements in price optimization to ensure we are pricing correctly in the marketplace.
• Retail Profitability: Improve retail profitability and predictability by concentrating on sales,
advertising, and costs while providing excellent customer experiences. Our goal is to identify the best
practices that produce the best results and apply those findings to all stores. We have to execute on the
balance that allows us to deliver the best possible selection of products and expected level of customer
service in each store while managing labor, advertising, and other store costs.