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FTCs much ado about nothing over Bass Pro
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Bass Pro Shops wants to buy Cabela’s for $4.5 billion.
Uncle Sam’s henchmen at the Federal Trade Commission have a problem with the proposed deal.
While they’re not saying what the problem is, the FTC’s basic role in such cases is to make sure an acquisition doesn’t produce any anti-competitive concerns.
The Bass Pro-Cabela’s deal would create a firm with 180 plus stores including Manteca, employ 40,000 and account for more than 20 percent of the targeted national market that covers fishing, camping, and hunting. The industry as a whole generates $50 billion in annual sales.
So how uncompetitive has the presence of Bass Pro in Manteca since 2008 made the local outdoor sports retail market? Fisherman’s Warehouse is still standing and two new gun stores have opened both within two miles of the 900-pound gorilla of gun sales.
What the FTC — and everyone who believes mergers are bad because they are mergers — doesn’t get is the retail marketplace is much more fluid than it was back in the days of the robber barons where you had no choice but to shop at the store closest to your home. In the day of the automobile, Internet and same-day shipping by jet how can you corner a market and then hold onto it? — the “retailer” that is driving change across the board — has no qualms about intentionally selling items below cost to grab and solidify market share.
The anti-trust folks argue this is OK because they are not trying to drive competitors out of business. Really, so why would burn through investors’ cash to sell more and more widgets below cost if it wasn’t ultimately to control the widget retail market so they can profit?
If anyone — including FTC bureaucrats and those who prop them up — doesn’t think is going for the jugular they need to ask themselves this: Isn’t the bottom line of being in business to make a profit?
Granted, investors in could be complete suckers and Jeff Bezos a madman who just wants to keep driving prices down with no intention of ever turning massive profits.
The FTC which for decades has applied the philosophy “if it walks like a duck, quacks like a duck, then it must be a duck” to mergers that raise questions about being anti-competitive gets all google-eyed about new technology disrupting the marketplace.
It is true someone with a website and enough gamblers — I mean investors — who believe that they are going to hit the next Facebook jackpot instead of feed the 1,000 rabbit holes that go nowhere has the potential to chip away at just like small retailers can nibble away at Wal-Mart with the right combination of product, service, and personality.
Unlike most things sold at Wal-Mart or on, Bass Pro Shops and Cabela’s sell things that primarily focus around a person’s passion. It is why Bass Pro Shops could have every fishing rod manufactured on the planet at the lowest prices on earth and still have a difficult time cornering the market.
Don’t misunderstand that as a swipe against Bass Pro Shops. They have staffs that are filled with extremely knowledgeable and passionate people while at the same time function as a mass volume retailer.
The passion is why smaller retailers are always going to thrive when it comes to hunting, fishing, and camping. It is why and Wal-Mart don’t try to skim off more than they do. It’s not the same as selling 15 different brands of toilet paper.
It is why Bass Pro and Cabela’s stores have a healthy percentage of staff that aren’t simply retail workers but outdoor enthusiasts.
Bass Pro and Cabela’s combined aren’t likely to gain more market share at a faster rate than Bass Pro and Cabela’s going their separate ways. The Big Three of outdoors retail – the third is Gander Mountain — rely much more on a brick and mortar presence than they do an online presence to make sales.
The outdoors sector as a whole is riddled with niche markets.
Some call me an aggressive day hiker given the distance, elevation, and terrain I like to cover. I may pick up a few things for my passion at Bass Pro but REI is the place for me. You will find mountaineers who are of the weekend variety will hit REI but a more serious climber may stop at REI for a few things but will do business primarily with an even more specialized retailer.
Toilet paper is toilet paper. It’s one or two ply, colored or white, patterns or without, or (god knows why) scented or non-scented. Fishing gear is more than two choices for a rod, hook, or bait.
The private sector — unlike the federal regulatory bureaucracy — is always in flux. That’s how new products are created, new jobs added, retail costs lowered, and prosperity spread across the spectrum.
There is no reason to believe the FTC ultimately will prevent Bass Pro from hitching up with Cabela’s. That’s why you’ve got to wonder why we need an outdated FTC given that catalog purchases that used to take weeks to get to your door more often than not an arrive overnight if not sooner.
The tools of commerce have changed drastically. It’s time that regulatory agencies like the FTC change drastically as well.