Cabela's 2005 Annual Report Download - page 22

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Taiwan and Japan. During fiscal 2005, no single vendor represented greater than 10% of total purchases. In order
to exert greater control over product quality, we test products prior to the time the product is shipped to us. In
fiscal 2005, we established an international foreign subsidiary located in Hong Kong, China. We have one
employee who lives and works in Hong Kong overseeing our quality control check points for merchandise
shipped from Asia.
Inventory Control. Our inventory control team is comprised of approximately 91 people with an average of
seven years of experience working for us. These individuals are responsible for initial inventory planning and
allocation decisions. These decisions are made by assessing historical revenue, performance of our direct and
retail businesses and the anticipated economic outlook. Our inventory control group is equipped with distribution
center and inventory management systems and is able to effectively assess revenue trends, customer demand and
current inventory positions and allocate items appropriately. We also are able to utilize our popular Bargain Cave
as a means to sell discontinued and returned merchandise. Our merchandise and inventory control teams work
together to make decisions regarding appropriate purchasing levels and the proper flow of merchandise. We
believe this joint effort helps us to maximize the effectiveness of our merchandising team and effectively manage
our inventory levels.
Marketing
Our marketing strategy focuses on using our multi-channel retail model to build the strength and recognition of
our brand by communicating our wide and distinctive offering of quality products to our customers and potential
customers in a cost effective manner. Our largest marketing effort consists of distributing over 121 million catalogs
annually in order to attract customers to our direct and retail businesses. We have also established our website to
market our products to customers and potential customers who shop via the Internet. We use both our catalogs and
our website to cross-market our destination retail stores. Our marketing strategy is designed to convey our outdoor
lifestyle image, enhance our brand and emphasize our position in our target markets.
In addition to the use of our catalogs and our website, we also use a combination of promotional events,
traditional advertising and media programs as marketing tools. We sponsor numerous fishing tournaments,
engage in promotional activities related to Professional Bull Riding, or “PBR,” and NASCAR events, as well as
sponsoring Pheasants Forever, the National Wild Turkey Federation, Ducks Unlimited and the Rocky Mountain
Elk Foundation.
Competition
We compete in a number of large and highly fragmented and intensely competitive markets, including the
outdoor recreation and casual apparel and footwear markets. The outdoor recreation market is comprised of
several categories including hunting, fishing and wildlife watching, and we believe it crosses over a wide range
of geographic and demographic segments.
We compete directly or indirectly with other broad-line merchants, large-format sporting goods stores and
chains, mass merchandisers, warehouse clubs, discount stores and department stores, small specialty retailers and
catalog and Internet-based retailers.
Many of our competitors have a larger number of stores and some of them have greater market presence,
name recognition, and financial, distribution, marketing and other resources than we have. We believe that we
compete effectively with our competitors on the basis of our wide and distinctive merchandise selection and the
superior customer service associated with the Cabela’s brand, as well as our commitment to understanding and
providing merchandise that is relevant to our targeted customer base. We cater to the outdoor enthusiast and the
casual customer, and believe we have an appealing store environment. We also believe that our multi-channel
retail model enhances our ability to compete by allowing our customers to choose the most convenient sales
channel. This model also allows us to reach a broader audience in existing and new markets and to continue to
build on our nationally recognized Cabela’s brand.
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