Outdoor Insight

s /UTDOOR )NSIGHT s *ULY outdoorinsightmag.com I n the world of outdoor specialty retailing, you don't get any more influential than REI. But in its case, influence doesn't just come from sales and number of stores. It is in the way that the co-op brings together its undisputed retail strength with its equally powerful member base to execute an omni-channel strategy that is second to none. With close to 150 stores in every corner of America where people go outside to play – that is to say, everywhere – to its more than six million co-op members (not to mention more than 12,000 employees), REI arguably brings the Great Outdoors to more Americans than any other retailer. It is its unique structure as a co-op – along with this unequalled brick-and-mortar and direct-to-consumer omni-channel strategy – that puts REI at the head of the pack. Indeed, its 2016 Stewardship Report reveals that annual revenues reached $2.56 billion in 2016, a 5.5 percent increase. Comparable store sales, which include direct-to-consumer sales, were up nearly four percent and digital sales grew by nearly 18 percent. The co-op invested a record $9.3 million in nonprofit partners in 2016 and opened the country's most sustainable distribution center. And, in a line item you won't find in many corporate reports, since 2008 REI's demand for energy from the grid has grown only four percent while sales have grown 78 percent. "There is no doubt that the current retail landscape is chal- lenging, but we had another good year," says REI CEO and president Jerry Stritzke. Other numbers are equally impressive in this time of retail stagnation. Its six million members received a record $193.7 million in annual dividends and credit card rebates. REI shared $57 million with employees through retirement and incentive program contributions and it made a record $9.3 million invest- ment in more than 300 non-profit partners. "I am grateful to our employees, our members and our custom- ers for their passion and commitment to the co-op community," Stritzke adds. "Together we can continue to keep the outdoors healthy and accessible for the next generation." No where is that co-operative effort more on display than at its high-profile opening last fall at the site of historic Washington Coliseum in Washington, D.C., a few blocks from the Capitol — a location some view as a bit ironic for a retailer in an industry often at odds with the new administration in town. The 51,000-square-foot space occupies the first floor of the venue that is also known as the Uline Arena. While the product assortment mirrors that of other urban-based REI stores across the country, the new location is indica- tive of an even more modern take on retailing — marrying local culture with high-tech flourishes. "In this store, you are really in store for an incredible experience," Becky Smith, GM for the D.C. flagship, says. "It's a place where we are actually able to bring you outdoors into our space little bit more." Among the store's features: an Adventure Station offered in partnership with the National Park Service; an outdoor courtyard featuring a fireplace; bike, ski and snowboard shop services; a community space with a schedule of classes for cycling, paddling, fitness, hiking and camping, climbing, snow sports, photography and wilderness medicine; and a collection of gear shops that blend into a commons area. The new stores are unquestionably successful, yet a chang- ing retail and outdoor customer landscape has posed equally unique challenges to REI leadership. First and foremost is maintaining its co-op structure and outdoor cred. That's because as REI grows it risks becoming less of a co-op whose members take pride in being a part of something unique, a company that places stewardship before profits. Its success makes it, gasp, almost like every other company. Stritzke is certainly aware of that challenge. "The co-op is passed from one generation of stewards to the next. Each generation is connected by a deep love of being in places full of life and wonder," he wrote in his message to REI co-op members last year. "REI has always been about the joy of a life lived outside. Our co-op model allows us to support that passion and to think beyond profit," he adds. On the e-commerce side of the business, REI took a major step late last year with the launch of REI Garage, which replaced REI Outlet as its off-price e-commerce site. REI Garage is described as a digital store "that of- fers a unique shopping experience for best-in-class, off-price products handpicked by co-op experts." The site features a focused product assortment of only the top closeout products and brands already familiar to its members. O 20 17 REI ALL TOGETHER BULLET POINTS For the 20th consecu- tive year REI was rec- ognized as in Fortune's 100 Best Companies to Work For. It ranked number 28 and is one of 12 companies to be included since the an- nual list began in 1998. REI isn't just about gear. Members can travel with REI Adven- tures, a global leader in active adventure travel that runs 170 custom- designed itineraries on every continent. At Interbike 2016 REI revealed a complete overhaul of its bike line for 2017. The former Novara bike and ap- parel line has been rebranded Co-op Cycles and product is more in line with REI's outdoor- and adventure-oriented market. The new Co-op Cycles line – with more than a dozen new mountain, road, city, and adventure bikes from $649 to $2299, as well as redesigned apparel – is aimed at current REI consumers. TRAIL MIX Headquarters Seattle, WA Stores 147 Stores in 36 States Website rei.com 2016 Sales $2.56 billion Co-op format seamlessly blends brick-and- mortar and e-commerce. REI'S stores are only one part of its successful omni- channel strategy.

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