Cabela's 2012 Annual Report Download - page 42

32
Achievements on our 2012 Vision follow:
• Focus on Core Customers: Improve customer experiences – every customer, every interaction, every
day. 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 omni-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. In addition, free shipping offered to our Cabela’s CLUB Visa customers, which started
in the last half of June 2012 and continued through the last six months of 2012, resulted in increased
merchandise sales, greater order frequency, and increases in the number of new Visa cardholder accounts.
We intend to concentrate more resources behind these efforts to help drive improvements to the customer
shopping experience even more quickly.
• Improve Merchandise Performance: Improve margins and minimize unproductive inventory
by focusing on vendor performance, assortment planning, and inventory management. Optimizing
merchandise performance allows us to maximize margins, which requires detailed preseason planning, as
well as in-season monitoring of sales and management of inventory.
Our efforts continue in detailed pre-season planning, in-season monitoring of sales, and management of
inventory to focus product assortment on our core customer base. We also continue to work 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. As a result, our merchandise gross margin as a percentage
of merchandise revenue increased 70 basis points to 36.3% in 2012 compared to 35.6% in 2011. This
increase was primarily attributable to improved in-season and pre-season merchandise inventory
planning, improvements in vendor collaboration, an ongoing focus of private label products, and
improvements in price optimization to ensure we are pricing correctly in the marketplace. The increase
in our merchandise gross profit as a percentage of merchandise sales was partially offset by an adverse
product mix shift due to increased sales of firearms and ammunition, which carry a lower margin.
• Retail Profitability: Improve retail profitability by concentrating on sales, advertising, and costs
while providing excellent customer experiences. Identify the best practices that produce the best results
and apply those findings to all of our retail 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.
We have improved our retail store merchandising processes, information technology systems, and
distribution and logistics capabilities. We have also improved our visual merchandising within the stores
and coordinated merchandise at our stores by adding more regional product assortments. To enhance
customer service at our retail stores, we have increased our staff of outfitters and have continued our
management training and mentoring programs for our retail store managers.