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Cabela's new megastore is loaded for bear

By JIM McCARTNEY

Sporting goods stores are becoming so big in the Twin Cities these days, some even have indoor mountains. This sporting store scene is emblematic of a rapid growth in this retail sector across the country.

Seattle-based REI last fall opened in a 67,000-square-foot flagship store in Bloomington, Minn. It boasts a 55-foot mountain -- which can be seen from outside the store through a wall of glass -- and a climate-controlled hiking path with a babbling brook.

Indianapolis-based Galyan's Trading Co. topped that this spring by opening an 80,000-square-foot store in the Twin Cities not far from the REI megastore. The store, its third in the area, features a rock-climbing wall and a two-story high glass facade.

But outdoing both, Cabela's, which claims to be the "largest fishing, hunting and outdoor gear retail store in the Midwest," opened in April in Owatonna, Minn. The Sidney, Neb.-based sporting goods mail order firm opened a 150,000-square-foot store with a fishing pond outside, on 40 acres.

Studies show consumers in the Upper Midwest are among the most active outdoors sporting enthusiasts in the country, despite the region's cold weather.

"You've got a very good market for outdoors sporting goods in the Twin Cities," said Sid Doolittle, a Chicago-based retail analyst. "It's a special breed of customer who goes to those stores. There's not a lot of them, but they spend a lot of money."

Twin Cities customers spent $680 million on outdoor sporting goods last year, the fifth highest amount of the top 25 metropolitan areas, according to Market Statistics, a New York-based consumer research firm.

Certainly there are plenty of rich pastures outside the Twin Cities. Holiday Cos., Bloomington, Minn., plans to turn its newly acquired Gander Mountain into a national chain, expanding it from 21 stores to about 45 stores in the next three to five years. Most of the new stores will open in the eastern Midwest. Last fall, the company hired Steven Watson, a former top executive at Dayton Hudson Corp., to execute that plan. The Limited, Columbus, Ohio, acquired Galyan's in 1995 as its latest growth vehicle.

Interestingly, the national sales figures don't reveal the lure of this retail segment. While more are participating in sports, sales have actually gone down, according to the National Sporting Goods Association, of Mount Prospect, Ill. The association reports that while camping equipment sales were up 3% in 1997, hunting equipment sales dropped 10%, and fishing equipment declined 4%.

Nevertheless, prospects for the outdoor sporting goods niche remain strong, said Mike Scott, a retail expert with Bloomington, Minn.-based brokerage United Properties. "People have more and more leisure time, and they will spend more and more money on themselves and their recreation."

CABELA'S

Cabela's store in Owatonna is the mail-order firm's third and largest store, about twice the size of its Sidney, Neb. location. The store's centerpiece is a 41-foot-high mountain with displays of North American wild game, in habitats ranging from Minnesota woodland to Alaskan tundra. Each habitat is accompanied with the appropriate sound effects, including gobbling turkeys and howling wolves. Two dioramas depict African wildlife scenes as well. The store's fishing section includes informational fishing kiosks featuring interactive touchscreen displays, as well as three aquariums stocked with native Minnesota fish.

The store has a travel agency geared for hunting and fishing trips; a 150-seat restaurant; a live bait shop; an interactive firearms training center; a laser-archery training system; and a room devoted to antique, custom and collectible firearms.

The store expects to draw from a five-state region, and will likely catch the eyes of many motorists passing by on the busy interstate it faces. Cabela's also expects to draw stops from tour buses on their way to the Twin Cities or to northern Minnesota.

"Our core business is in front of us," said Al Dorn, the store's retail merchandising manager, referring to the 23,000 vehicles that pass by the 150,000-square-foot store every day. "We want to catch people on their trips up north to go fishing."

Based on its study of the area, and the fact it draws 1 million customers a year to its remote Sidney, Neb. unit, Cabela's expects to attract from 2 million to 3 million customers a year to the store.

REI

Seattle-based Recreational Equipment Inc.'s (REI) new flagship store gives the impression of having everything from sunscreen to parkas -- not to mention a snow-making machine for an outdoor test track for cross-country skis during the winter.

"Our Seattle store has a rain room so you can try on rain gear, turn on a valve, and get rained on," said Jerry Chevassus, REI's retail director. The sporting goods store thought about doing the Minnesota equivalent -- a "cold room" -- but realized that people could just walk outside to try out the gear.

REI, the nation's largest consumer co-op with 49 stores and 1.4 million members, got into the game in a big way in 1996, opening a $30 million flagship store in Seattle that has come to rival the Space Needle and Pike Place Market as a tourist attraction.

The Bloomington store, which will replace a smaller nearby site, has a cafe, a multimedia seminar room, a test track for mountain bikes and even an art gallery.

"It's a chance to educate people about what we've got even before they buy," said REI spokesman Patrick Campion, during a recent tour of the site.

GALYAN'S AND GANDER MOUNTAIN

With their strong emphasis on hunting and fishing-related items, Galyan's and Gander Mountain would seem to be extremely similar. But differences do exist.

Galyan's stores not only are two to three times larger than the typical Gander Mountain store, they also have a broader assortment of sporting goods, including running shoes and hockey equipment. The chain, which has only 11 stores so far, touts its expert sales people and has targeted the upper end of the market.

Galyan's is in the early stages of a national expansion. Three of its stores are in the Twin Cities.

Meanwhile, Holiday believes it can do what Gander Mountain failed to do as a publicly-held company -- go national. Gander Mountain ran into financial troubles largely related to its mail-order division, and ended up essentially being liquidated in bankruptcy court and bought by Holiday, Mr. Doolittle said.

Holiday, which also owns a chain of Holiday Station store fuel and convenience stores, has declared Gander Mountain to be its "growth vehicle." Most of the new stores will be opened in the eastern Midwest.

Twenty-five Holiday stores have been converted to Gander Mountain. But Gander Mountain will not add any new stores this year, except for the April 19th conversion of four Holiday Sports in the Twin Cities to Gander Mountains. But next year the chain will add four or five new stores, and it may well double in size within five years, adding stores mostly in such states as Ohio, Pennsylvania, New York and Indiana.

Holiday must have some pretty aggressive growth plans to attract a retail executive of Mr. Watson's caliber, Mr. Doolittle said; Mr. Watson was president of Dayton Hudson as well as the top officer at its department store division until March 1996.

"He's definitely a heavyweight, and many people will probably think this is a lesser job than he should have," Mr. Doolittle said. "He probably could have commanded a lot of different jobs in the industry."

But Mr. Watson said he likes Gander Mountain's prospects, and the flexibility and quickness inherent in a smaller company. He argued that none of Gander Mountain's competitors offer the same combination of good service, huge selection and convenient locations.

Mr. Watson's main priority since joining Gander Mountain in November has been to prepare it for a rapid expansion. That means hiring the right management team, building a central warehouse, reviewing the vendor supply chain, and establishing a strong inventory control system.

"We need to do everything behind the scenes to handle hundreds of stores rather than 25," Mr. Watson said.