Cabela's multichannel initiatives to eliminate tax break

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Cabela's will introduce several customer-service options next year that are designed to enhance its capabilities as a multichannel merchant. As a result, it will be required to collect sales tax on catalog and online sales in states with stores that receive the upgrades.

Beginning January 2008, the Sidney, NE-based outdoor gear merchant will offer in-store pickup locations for both Internet and catalog orders. This will enable customers to avoid shipping fees and to inspect products before they make their purchase. In addition, Internet kiosks and catalog order desks will be installed, giving retail shoppers access to Cabela's entire selection of hunting, fishing and outdoor gear when they are in stores.

"By creating the cross-promotional opportunities offered by integrating catalog, Internet and retail sales and marketing functions, we believe we can improve customer convenience and create an expanded customer base, deeper customer loyalty and operational efficiencies," Dennis Highby, Cabela's president/CEO said in a statement.

Cabela's has come under growing pressure recently regarding its efforts to seek tax breaks in states where it opens retail stores. In some states where Cabela's operates, it is exempt from collecting state sales taxes on catalog and Internet sales to customers who live in those states.

The exemption has been based on the argument that its retail and direct sales have been two completely separate operations. Other direct marketers without stores typically do not have to collect such taxes. However, now that Cabela's will be focusing on driving multichannel synergies, it will no longer be eligible for the same tax breaks in states with stores that receive these upgrades.

"We believe [these new enhancements] represent a significant opportunity to increase store productivity and create additional growth in the direct business," Mr. Highby said.

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