Cabela's pulls in shoppers, other merchants, observers say

Jan Falstad

May 10, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- Rapid City, S.D., Mayor Alan Hanks said the Cabela's store that opened there last August has lived up to its promise of luring in shoppers from up to 200 miles away and bringing other businesses to town.

"I'll tell you what, you go out there any weekend of fishing season and the parking lot is full," Hanks said. "We don't have access to their sales numbers, but we've been very impressed because there are always people in Cabela's."

Even with the economic downturn in 2008, this Black Hills city of 60,000 saw hotel and motel occupancy increase, Hanks said. Two new hotels and a Tractor Supply Co. (NASDAQ:TSCO) store are being built nearby, and Dakota RV opened up across the street from Cabela's.

Post Falls, in the Idaho panhandle, has just one manufacturing anchor, Buck Knives. But after Cabela's built a 125,000-square-foot superstore that opened in November 2007, the town of 25,000 began shedding its image as a bedroom community for neighboring Coeur d'Alene, Idaho, and Spokane, Wash.

"It really has increased the number of people in our town. The first year, they had more than 1 million visitors," said City Administrator Eric Keck.

The store attracts Canadian shoppers as well. But since the California developer, Foursquare Properties Inc., hasn't yet built another exit off Interstate 90, Keck said, out-of-town people have some difficulty getting to Cabela's.

Under the deal negotiated in Post Falls, Foursquare will use private funding to build the I-90 exit and then will be paid back out of sales taxes from the development up to a maximum of $30 million.

Wal-Mart (NYSE:WMT) has purchased land near Cabela's and intends on building a superstore there starting in August. And Lowe's (NYSE:LOW) intends to build there, too.

Cabela's often builds in small cities, and it built on a cornfield in Mitchell, S.D. The Nebraska retailer goes where it gets the best deal. That's what happened in Utah. As Salt Lake City growth spills southward down the valley along I-15, Cabela's chose Lehi, a town of 25,000, for its sole Utah store, rather than the larger cities of Provo or Orem farther south.

Lehi city officials were unavailable for comment, but Steve Densley, president and chief executive of the Provo Orem Chamber of Commerce, said the store draws travelers.

"It's absolutely been a great boost. There are so darn many people who drop off the freeway and shop," he said. "You see licenses from all over the place."

Densley said he doesn't know what incentives Lehi offered Cabela's, but he said they were substantial.

"I heard that they made Cabela's a very good deal to come into Lehi. I don't know if they've even told their citizens what it was," Densley said.

According to Daily Clips, an online business publication, Cabela's generally receives 30 percent of its development costs from state and local governments.

Four years after Cabela's opened in Lehi, other stores are planning to come to the site, he said, and there is talk of building a professional basketball arena.

Arguably the biggest development rush based on one Cabela's store is in Wheeling, W.Va. The town of 30,000 sits in Ohio County in the panhandle that juts north between Ohio and Pennsylvania.

A decade ago, the region was suffering from a loss of steel manufacturing jobs and a tough retail climate. So, Ohio Commission Chairman Randy Wharton said the county development authority paid $450,000 to buy 471 acres at an abandoned coal mine dump. In these rolling hills, dirt must be moved to create flat ground, so only about half of that land is suitable for construction.

Cabela's built a 175,000-square-foot store that opened in August 2004, plus a 500,000-square-foot distribution warehouse. A couple of years later, Cabela's doubled its warehouse space. Two West Virginia governors have supported the development, using state funds to build an access road and an interchange.

"It was well worth it. You can literally hit and spit to Interstate 70 and all the truck traffic," Wharton said.

Five years after Cabela's opened, at least 23 retailers, 16 restaurants, a 14-screen theater complex, a bank and an incoming AT&T (NYSE:SBT) (NYSE:T) call center have been built, Wharton said. Another 19 tenants will locate in the development by the end of this year, he said, including five auto dealers who are relocating.

The outdoors retailer hasn't hurt local business in Wheeling, Wharton said, mostly because "unfortunately, there were very few of them left."

In addition to driving a hard pre-construction bargain, he said that Cabela's has hired a national company to determine if its stores are paying too much in property taxes.

However, Ohio County, W.Va., declined a request to reduce the retailer's property tax bill.

The Highlands has been a boon to the bank account of the Ohio County Development Authority, which had zero equity five years ago and now is $88 million to the good, Wharton said.

"They treat their employees good and they treat their communities good," he said. "You guys are going to be thrilled to death to be in business with Cabela's."

Rapid City, S.D., gave Cabela's 30 acres of land, and local government set up a tax increment finance district similar to what the city of Billings did for the retailer. After Rapid City's City Council rejected Cabela's request for lower property taxes, the retailer appealed to Pennington County.

The county's Board of Equalization recently agreed that the building should be called "good quality" instead of "excellent quality." That change lowered Cabela's tax assessment for the 80,000-square-foot building and 10 acres of land by $3.5 million to $9.6 million.

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