Nebraska’s rural retail hub for outdoor gear is starting a second act online.
Two startups staffed by former Cabela’s employees are rolling out Internet stores from Sidney that offer hunters, fishers and campers a familiar blend of outdoor equipment. The local dream: rekindle the magic of Cabela’s catalog for the Internet age.
The startups so far have beat back legal challenges from Bass Pro Shops, the new owner of the Cabela’s brand. With each employing 11 people, the companies are a far cry from Cabela’s corporate peak of about 2,000 in the town six hours west of Omaha. But the pluck of these new businesses reminds some locals of the promise of Dick and Mary Cabela’s early days, when they sold fly-fishing equipment from a Nebraska garage.
And e-commerce experts say one or both new companies could grow into genuine competitors for Bass Pro Shops-Cabela’s. That is, if the startups’ owners emerge victorious in separate legal fights with Bass Pro. That company bought Cabela’s in 2017 for $5 billion and consolidated most of the workforce at Bass Pro headquarters in Missouri.
[From the archives: World-Herald coverage of the Cabela’s sale]
The first of Bass Pro’s online challengers launched its website and started selling this week. That group, Highby Outdoors, is run by the son of former Cabela’s Chief Executive Dennis Highby. The group won the first rounds of a Bass Pro legal effort to delay their launch.
“It was an easy decision,” said Matt Highby, owner of Highby Outdoors, of starting the business. “You love your home. You love the outdoors. You have to start something new.”
Matt Highby was a category manager of optics and cutlery at Cabela’s who had previously worked in Internet purchasing. Dennis Highby is not involved in the new company.
A second locally grown competitor, NexGen Outfitters, started by a group that includes a former Cabela’s merchandising manager, emerged from a similar legal challenge with a few more restrictions on how it can operate. It started a limited rollout this week and plans a wider one this month, said Ryan Wellman, one of its owners.
Bass Pro, operating under the Cabela’s name, sued the new businesses’ owners, including Matt Highby and Wellman. Bass Pro’s lawyers alleged breaches of severance agreements, including noncompete clauses as well as the use of proprietary information and vendor relationships built while the owners were Cabela’s employees, court document show.
Employers typically require employees to sign such agreements to receive payments or stock. Matt Highby’s agreement with Cabela’s, for example, prohibited him from going to work for a competitor for 18 months, documents show.
Today, those civil cases are in a bit of a holding pattern in federal and state courts in Delaware, where many out-of-state companies, including NexGen Outfitters, file articles of incorporation because of corporate-friendly laws there. Both await Bass Pro’s next move.
Bass Pro said in a statement to The World-Herald this week that it still believes that the companies are in violation of the separation agreements. A spokesman said Bass Pro intends to appeal the court’s preliminary decision that allowed the startups to operate through “to a fair and just resolution.”
Many of the unresolved legal questions hinge on whether such noncompete clauses can be enforced in Nebraska. Nebraska law limits the scope of activities that can be restricted by such agreements, said John Lenich, a law professor at the University of Nebraska-Lincoln. It also limits the length of time a person can be kept from entering a field and the region in which a person can be kept from competing, he said. And if a court invalidates any part of such an agreement, it typically voids all of it, Lenich said, which is uncommon among the states.
Other ongoing legal disputes concern whether the access many of the former employees had to information about Cabela’s previous sales and their relationships built at Cabela’s constitute a work product of Cabela’s.
Neither startup owner would discuss their legal arguments, citing advice from lawyers. In court documents, both have argued that they followed the law, at least one had discussed starting their business with Cabela’s and both said they should not be prohibited from using their skills to start businesses.
A federal judge sided with Highby Outdoors after Bass Pro pursued a preliminary injunction in federal court, saying that Nebraska law took precedence over Delaware’s. A state judge in Delaware required more restrictions on NexGen Outfitters, based on different legal arguments.
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“We are committed to complying with court orders, so we are making some changes with some vendors, but we will basically be going live to the world after next week,” Wellman said.
Barring any legal roadblocks, the two online stores could soon start fighting Bass Pro for customers of outdoor gear. Experts in modern retail and Internet disruption say Bass Pro, a “category killer” like Toys R Us and Barnes & Noble before it, has reasons to worry.
Americans now spend about 12 to 13 percent of their retail dollars online, a number that researchers expect to grow to 15 percent by 2020. Online retailers doing well right now include specialists in a single area or “vertical retailers,” said Phani Tej Adidam, a professor of marketing and entrepreneurship at the University of Nebraska at Omaha.
Customers, the professor explained, are less interested in touch and feel for many items than the best price delivered in the most efficient way.
“In the e-commerce space, it doesn’t matter if you are a David or a Goliath,” Adidam said.
Jaime Dykman, director of customer relations, product development and information for Highby Outdoors, said the new company will build its offerings over time.
Her goal is not to recreate Cabela’s or compete directly with Bass Pro. Her focus is customer service, customer experience and outdoor advocacy, she said. They’ll sell well if they give customers a good experience.
Wellman said his startup plans to apply more than 100 years of combined outdoor industry experience to serving customers online.
The companies are basically starting from scratch. They will sell many of the same products as any outdoor retailer, including guns, ammo, tents, coolers, lanterns and more. Some will be shipped from warehouses in Sidney. Others will be shipped by vendors or distributors direct to consumers, they said.
In Sidney, Mayor Roger Gallaway said, you can feel the excitement for the new ventures. That’s why the community set aside $500,000 in economic development funds over five years for Highby Outdoors and helped NexGen Outfitters secure 8 acres of land in a local industrial park.
Those investments will be paid back if Highby falls short of creating 25 new jobs over five years and $2 million in new payroll, the mayor said, or if NexGen falls short of creating 12 new jobs and $640,000 in new payroll.
The motivation for the local entrepreneurs, beyond hoping to write business success stories, is local, they said. Everywhere they shop around town, the hardware store, the restaurants, people are cheering them on.
It’s too soon to tell the long-term impact to Sidney of losing Cabela’s headquarters, but the city of about 6,600 people lost more than 300 people from 2015 through 2017, according to census estimates. Cheyenne County lost 400. The county unemployment rate remains a strong 2.7 percent, according to the Federal Reserve. But state and local economic development efforts have some heavy lifting to replace up to 2,000 corporate jobs.
Most of the corporate jobs at Cabela’s have either been eliminated or consolidated in Bass Pro’s hometown of Springfield, Missouri. A Bass Pro spokesman, Jack Wlezien, said he did not have an updated number of how many of those jobs remain in Sidney. Locals say it’s less than 300.
“It’s been pretty hard to watch the community go through what it’s gone through,” Highby said. “These are our roots, and we’ve got to take care of the family.”