Ask @RetailPhil: What Can We Expect From the Bass Pro Shops and Cabela’s Merger?

Another day, another major acquisition with the power to shake up the industry in more ways than one. At a time when the sports industry is undergoing a significant change, there’ll be, no doubt, lots of talk regarding the acquisition of Cabela’s by Bass Pro Shops.

More specifically, folks want to know what kind of deals were struck and at what value. Many interesting things will result from this $5.5 billion transaction, and they can be separated into two main camps – the obvious and the not-so-obvious.

The obvious

Bass Pro Shops and Cabela’s boast a combined store count of 180 locations across Canada and the United States. By comparison, REI has just 136 stores in the United States. The new Bass Pro Shop/Cabela’s duo now has a considerable advantage over their most significant competitor.

The not-so-obvious

Certain perks can be expected whenever real estate is exchanged in an acquisition. For example, since Cabela’s and Bass Pro Shops were once competitors, many stores will need to be closed due to being too close to each other, geographically speaking. Selling these stores is sure to net a significant amount of revenue.

Cabela’s is the world’s largest direct marketer of hunting, fishing, camping, and related outdoor merchandise. For Bass Pro Shops, not only did they double their physical store count, but much like Walmart’s purchase of Jet.com, Bass Pro Shops has now gained a best-in-class direct marketer with an entirely new sales stream.

What’s in it for…the banks?

The consortium that bought Cabela’s includes the eighth largest bank in the United States, Capital One. Part of the condition of the purchase was that Cabela’s would sell their credit division to Capital One as part of a 10-year relationship agreement between Capital One and Bass Pro Shops. 62% of Capital One’s revenue in 2015 came from credit cards. This new partnership means Capital One will acquire Cabela’s customers and continue to expand their biggest revenue stream.

Of course, there are always negatives to such deals – we’ll have to wait and see about employment casualties, and how the store closures affect their respective communities. The sports market has been growing slowly at 1.7% annually, so consolidation may provide more stability for less players in the market. Overall, this is a great deal for Bass Pro Shops, Cabela’s, investors and consumers.

RetailPhil

RetailPhil

As the Retail Industry Manager at Hubba, Phil is responsible for uncovering both emerging trends and insights that may impact businesses engaged in commerce. With 20 years of experience under his belt, Phil helps brands and retailers adapt to the the new realities of retail and the next generation of commerce. Phil is a frequent speaker at industry events in Canada and the US, across multiple verticals, and is a featured writer in trade publications such Retail TouchPoints, Pet Product News, BikeBiz, and more.
RetailPhil