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Date: January 16, 2007
To: Interested parties
From: David
Ewald
Re: Cabela’s store research
"Study
of Cabela’s Traffic Patterns Exposes Distortion in Estimated Number
of Visitors"
Summary
Based
on results of a pilot study conducted November 4, 2006, estimates by Cabela’s
of visitors to its 17 open stores are likely grossly exaggerated. Similarly,
their public statements regarding the number of out-of-state tourists
were mainly unsubstantiated by the study. In the few states where the
number of out-of-state visitors was high compared to the rest of the stores,
it can be attributable to the store being located on or near the border
with one or more states. As Cabela’s continues its rapid expansion
to "100 or more" stores (public statements), policy makers should
question where these out-of-state visitors will come from in order to
meet Cabela’s rosy projections of tax revenue and tourist dollars.
Background
Cabela’s,
a Nebraska-based direct marketer and specialty retailer of hunting, camping,
fishing and related outdoor merchandise, has been actively pursuing government
subsidies in order to build its stores throughout the nation. Cabela’s
has claimed that additional development will be generated where the stores
locate. However, the additional economic development is unproven and most
of the time tourism numbers are self reported and are unsubstantiated.
Ewald Consulting was engaged by Oppidan Investment Company to conduct
a pilot study of the Saturday traffic patterns of all Cabela’s stores
open in the Fall of 2006 to determine whether there is validity to Cabela’s
(and those of their state and local government and other supporters’)
claims that they attract 4 million to 6 million or more ‘tourists’
per year at each location.
Study Locations (All open Cabela’s stores on November 4, 2006)
Boise,
ID
Buda, TX
Dundee, MI
East Grand Forks, MN
Fort Worth, TX
Glendale, AZ
Hamburg, PA
Kansas City, KS
Kearney, NE
Lehi, UT
Mitchell, SD
Owatonna, MN
Prairie du Chien, WI
Richfield, WI
Rogers, MN
Sidney, NE
Wheeling, WV
Study Methodology
The data collection took place on Saturday, November
4 during the period which was identified as the busiest time of the shopping
day (11:00 a.m. to 3:00 p.m.). Three individuals were assigned to each
Cabela’s store in the study locations. They counted the number of
cars and number of people entering Cabela’s parking lots during the
study period. The individuals also recorded the state identified on license
plates of each car entering the lot. The data was analyzed to calculate
an estimate of Cabela’s visitors each year. Saturday is the busiest
day of the week for shopping at stores in this industry.
Table 1. Summary of customers with in-state or out-of-state license plates
Location / Percent In-state / Percent "tourists"
/ Percent instate or immed adjoin
Boise,
ID 93.5% 6.5% 97.1%
Buda, TX 96.7% 3.3% 97.8%
Dundee, MI 68.8% 31.2% 94.3%
East Grand Forks, MN 61.9% 38.1% 95.9%
Fort Worth, TX 85.9% 14.1% 90.4%
Glendale, AZ 95.5% 4.5% 97.2%
Hamburg, PA 89.0% 11.0% 93.4%
Kansas City, KS 50.9% 49.1% 93.0%
Kearny, NE 84.9% 15.1% 92.8%
Lehi, UT 84.2% 15.8% 93.1%
Mitchell, SD 73.2% 26.8% 81.4%
Owatonna, MN 85.4% 14.6% 91.9%
Prairie du Chien, WI 59.3% 40.7% 91.7%
Richfield, WI 97.5% 2.5% 99.4%
Rogers, MN 89.8% 10.2% 94.4%
Sidney, NE 38.2% 61.8% 76.9%
Wheeling, WV 38.6% 61.4% 92.2%
Average 76.1% 23.9% 92.5%
Table
2: Projected Visitors by location
Store
Location
Boise,
ID 1,548,819
Buda, TX 1,785,984
Dundee, MI 2,079,581
East Grand Forks, MN 540,676
Fort Worth, TX 1,311,654
Glendale, AZ 2,466,214
Hamburg, PA 2,553,912
Kansas City, KS 2,743,034
Kearny, NE 990,603
Lehi, UT 1,495,438
Mitchell, SD 677,942
Owatonna, MN 703,107
Prairie du Chien, WI 731,323
Richfield, WI 2,305,307
Rogers, MN 1,424,517
Sidney, NE 501,021
Wheeling, WV 1,568,646
Average
1,495,752 per year
Explanation
of calculation
To arrive at the estimate above, we collected the data on what should
be one of the busiest Saturdays of the year (in the middle of hunting
season, approaching cold weather, near the beginning of Christmas shopping
season). We extrapolated the data from the four busiest hours of the day
and assumed it was that busy all weekend on both days. We assumed every
weekend day of the year is as busy as that weekend. We estimated weekdays
to attract 50% of the weekend number.
We believe this calculation is generous. In August 2006, we placed three
researchers at the Rogers, Minnesota, store and asked them to count every
car and individual for the entire day. The results, when extrapolating
that day to all 365 days of the year, yielded an estimate of 770,515 shoppers,
approximately 50% of the estimate we provide above.
Conclusions
- This study provides a snapshot
based on one day of data-gathering during a busy day of the year. Based
on our preliminary data, it appears that Cabela’s—and its
supporters’—statements regarding the number of visitors and
the percentage of out-of-state ‘tourists’ are exaggerated.
- Criticisms may be made of
the study. A statistically ‘satisfying’ study would be costly,
time-consuming and beyond the necessary scope of our efforts. This limited
study, based upon careful assumptions, should raise significant concerns
regarding the data that Cabela’s and others have used to support
requests for public funding.
- Our estimate shows an average
of fewer than 1.5 million visitors per store, far fewer than an average
Target, WalMart or Home Depot store. In the cases of those retailers,
they refer to their ‘visitors’ as ‘customers,’ not
‘tourists.’
- Our data contradicts the
myth being perpetuated that Cabela’s shoppers come from long distances
to shop. In fact, most of the shoppers on the day in question came from
the state in which the store was located. As Cabela’s makes progress
toward its publicly-stated goal of 100 or more stores, the ‘tourism
effect’ will continue to crumble.
- Given that Cabela’s
uses its data to solicit hundreds of millions of public dollars, the
company should be willing to provide full and accurate information.
We are aware of no other study conducted using empirical methods that
provides data to refute our study. If Cabela’s or others disagree
with our findings, they should commission a broad-based statistical
study using reputable experts.
_______
The above survey was done by a representative of Gander Mountain, another
outdoor retailer which builds without tax incentives and is actively lobbying
against the types of tax giveaways which Cabela’s gets, including
not having to pay sales taxes on Internet and catalog sales.
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