Cabela’s profit rises a record 62% in Q1
Sidney, Neb. — Cabela’s Inc. reported Thursday that net income for the first quarter rose a record 62% to $28.8 million, from $17.8 million last year.
Revenue increased 6.3% to $623.5 million, and same-store sales increased 4.2%.
"This strong performance gives us confidence our growth strategy is working and working well," said Tommy Millner, Cabela’s CEO.
Cold Aisle Syndrome: Refrigerated Cases With Doors Offer Shoppers Comfort and Save Energy Costs
By Sam Khalilieh, [email protected]
Study after study has concluded that adding doors to medium temperature coolers (MTC) is a great solution for a variety of issues that plague grocery retailers. Whether looking at energy use, operational costs, product safety, or consumer comfort, there is no down side to adding doors. So why do so many overlook this very basic approach? This question has been puzzling me for a long time.
Supermarkets have some of the most operationally complex and expensive building systems of all retailers. U.S. grocery retailers spend an average of $4.10 on electricity and 26 cents on natural gas per square foot annually. As much as 60% of the $4.10 goes toward refrigeration alone. Energy costs, especially those related to refrigeration, take a chunk out of their profits! (Consider this: Since energy expenditure is the same as profit margin for a typical grocery store ― about 1%-2%, a 10% reduction in energy cost can boost profit margins by as much as 6%-7%!)
An open display case consumes about 30% more energy than a doored display case. But everyone continues to value engineer their refrigeration systems and reduce their refrigerant charge, leaks, and carbon footprint, as they neglect a pretty basic solution to the problem.
The industry has dithered about adding doors to dairy, beer, lunch meat and bagged salad and other medium temperature coolers for years. Some say that open cases are necessary to convey the “fresh” concept. I question this. Most shoppers know that the first item in the case is never as cold or fresh as the one behind it, and you often see shoppers choosing an item from farther back in the case. With a doored cooler, shoppers feel completely comfortable grabbing the first item.
Another argument says that adding doors negatively impact sales. Here, there are plenty retailers who have experimented with doors, as well as quantitative research that supports making the change to doored coolers. As a matter of fact some grocery chains are adding doors to all their MTC in all their new stores and are also retrofitting existing one to add doors to their MTCs. An ASHRAE study entitled “Comparison of Vertical Display Cases: Energy and Productivity Impacts of Glass Doors Versus Open Vertical Display Cases” found that replacing an open refrigerated case line-up with a doored case line-up did not appear to negatively affect sales.
Doored cases also eliminate one of the biggest shopper turn-offs in supermarkets–freezing cold aisles created by cold air spillage from the cases. Who hasn’t fled the frozen foods aisles in an effort to conserve body heat! It’s common sense that shoppers spend more time shopping the aisle when they are comfortable, and the longer they spend shopping the aisle the more they buy.
In another ASHRAE study “Supermarkets, indoor climate, and energy efficiency — field measurements before and after installation of doors on refrigerated cases,” they analyzed the impact of doors on the customer experience in the supermarket. Customers found the store environment to be more comfortable after the doors were installed. The study also notes that doored cases improve food safety by reducing large variations in product temperatures that can be found in open cases.
The idea of adding doors on MTCs may or may not be applicable to every product and every store. With the proper door selection (using a minimal frame), LED lighting, Electronically Commutated Motors (ECM), tax incentives, the right product behind these doors and the proper messaging to consumers, it is a win-win-win for everyone. And for those retailers who pursuing LEED certification, they will be handsomely rewarded with LEED points. But most importantly, they will be able to back up their sustainability message with actions that truly make a difference.
Sam Khalilieh, PE, LEED AP, is senior VP architecture & engineering, WD Partners, Dublin, Ohio. He can be contacted at [email protected]
Online disadvantage is $23 billion and expanding
Following up on last week’s article (One area where Amazon.com doesn’t have an advantage), the extent of that advantage in the U.S. was on display in the nation’s capitol this week.
Offering testimony before the Senate Finance Committee was Katherine Lugar, EVP public affairs for the Retail Industry Leaders Association (RILA), on the subject of e-fairness and legislation known as the Main Street Fairness Act. The bill would close a loophole that has U.S. brick-and-mortar retailers at competitive disadvantage to online only companies. RILA supports passage of legislation that was introduced last year and could help states collect an estimated $23 billion in sales taxes that currently go unpaid because only retailers aren’t required to collect them on behalf of states.
“A sale is a sale is a sale. Whether it takes place online or at a local business, the same rules should apply online that apply on Main Street,” according to Lugar’s prepared testimony.
The trade group contends the current $23 billion in sales that that goes uncollected will only grow larger in the years ahead as e-commerce continues to grow. According to RILA, a pre-Internet loophole prevents states from enforcing their sales tax collection laws when purchases are made online. Consequently, while local retailers collect and remit sales taxes on purchases made in their stores, their out-of-state online competitors do not. The result is what RILA charitably referred to as a, “perceived price advantage of between 6% and 10%.”
For background on the issue and to read Lugar’s full testimony, click here.