REI
What I knew before
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REI is a national outdoor store chain that has a members program
Introduction and Expectations
I honestly expected very very little from the REI visit. I did not know what they would show us or tell us about that would be all that innovative or meaningful. Next to Tableau, REI was the biggest surprise to me.
REI has a co-op program, the largest in the US, with 16 million members that pay a fee to be a member. They are a private company that takes on no debt, and are committed to preserving the environment and having people go outside and explore nature. REI gives back to their members by paying them dividends at the end of their year based on their profitability.
REI also provides customers with opportunities to get involved in the outdoors, providing different paths and nature walks for their customers with the hope that these customers will return the favor by being loyal REI customers.
Visit Summary
The REI visit ended up being one of my favorite visits, in large part for hearing Paul Stewart speak. Paul was an extremely intelligent, very articulate guy who really did a good job of highlighting REI’s business model. While at REI, we learned about their immense revenues totalling $2.56 billion in 2016, with much of that revenue going back into the community. I never truly understood the benefits of a co-op business model, but learning about how they carry absolutely no debt, allow their members to vote on the board of directors, and all of the revenue they generate through the program, I was extremely impressed. The company has a real people culture, with a saying they like being, “a life lived outside is a life well lived.” The people who work there are all “outdoorsy” type people who seem to have a real passion for nature, the environment, and sustainability. More so than any any other company we visited, I felt like the REI employees really believed in their company vision and loved working for their company. This observation is backed up by the fact that REI has been on Fortune 500’s “100 Best Companies to Work For” list for the past 19 consecutive years.
A big problem for REI now is competing for their consumers time; with increased technology becoming mainstream in our society, it is increasingly difficult to get people to step away from their smartphones, computers, and televisions and take time to enjoy nature. They are trying to combat this issue with their marketing and company culture, trying to get the world to enjoy the outdoors.
Key Takeaways
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There is real value in having employees who are passionate about the company that they work for. While at REI, part of the reason that I was so impressed was that the employees seemed to really love REI and were bought in on their message. That really resonated with me, especially compared to a company like Intel, and made it seem like a better company just because of employee passion.
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REI has a very good business model that other companies could learn from. There is a lot of value in rethinking an ordinary business, and REI has utilized a unique model to become very profitable.
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Operating as a debt free company is not only very rare, but also extremely valuable .
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Post Visit Actions/ Thoughts
My overall perception of REI has totally changed. I used to think it was just a very overpriced outdoors store, but now I understand the business model and think that more companies could value from a similar model.