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REI: The art of extreme retail
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October 1, 1998: 2:43 p.m. ET
Cooperative outdoor supply stores keep customers loyal by letting them participate
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NEW YORK (CNNfn) - Founded 60 years ago by a group of mountain climbers looking for an ax, cooperative sports retailer Recreational Equipment Inc. (REI) has always done things a little differently in pursuit of its primary mission: Take customers outside.
"It's inspiring, and it's a fun place to be, and it's a very nice retail environment," said Wally Smith, REI's president and chief executive officer.
It's also a retail environment unlike any other you're likely to see. For one thing, the Seattle-based co-op calls its customers "members," and wants them to try its merchandise before they buy. Members are encouraged to test all manner of foul-weather gear in the "rain room" [1M Quicktime movie], climb the walls or ride the bicycles to see whether they find the equipment satisfactory.
While REI's Seattle store wins kudos for its innovative space, the co-op has been winning awards for the way it does business almost since the start.
"In 1938, Lloyd Anderson and some of his climbing buddies here in the Northwest were hard-pressed to find ice axes that met their quality needs and would perform well for them in the field," said Smith. "And so, they pooled their money and sent off to Europe for a purchase of ice axes, and from that informal buying-club beginning sprang REI."
Today, there are 49 stores in 21 states bringing in record sales of $536 million last year. Because the company is a cooperative, profits are shared with customers.
"The big difference is what happens with the profits that we generate through the year, and at the end of the year the profitability goes back to our members in the form of a patron's rebate," explained Smith.
Outdoor-oriented sales staff
Some come for the rebates, but others swear by REI for the service.
"We've got 5,500 of the best outdoor-oriented recreation folks and business people to be found in the United States," said Smith. "Top-notch people who have made there avocation their vocation."
Analysts say what puts REI over the top is the way the co-op treats its employees.
"They have a real sense of community and family in their stores. Even if you're a part-time worker," said Joan Alvarez of Outdoor Retail Magazine.
Steve Edquist, mountain-gear salesman, agrees.
"We have a lot of old dogs that really do the sport and have been doing it for a long time, and can give you the right information that you're looking for," he said.
Smith said the company encouraged its "old dogs" to stay on the sales floor through a generous vacation program.
"We have a sabbatical program, which is fairly unusual throughout industry, but I think really unusual in the retail business where people who have been with us for 15 years begin to take a month off, and then up to two months off with longevity to get out and enjoy time away from work," said Smith.
Vacations aside, REI is still a competitive retailer, which means it's not exempt from work-world problems.
"The toughest thing is that, you know, we're a little bit lean on our marketing dollars, and we're pressed on our expense dollars across the board in order to run the business, so we've become a little bit of the world's best-kept secret," said Smith. 
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