Essay Instructions: Instructors directions: Evaluate the product offerings at REI. Select a product category and review the product line at REI, then select a similar competitor and review its products for the same category. Take a close look at product features and benefits, distribution, promotion, and pricing. Then, review the direction and focus of REI from the Fickes article. After completing your analysis and comparison, how does REI compare with the competitors you have reviewed? Submit your review comments in the assignment area.
Product category is snowboards, competitor is Sports Authority.
Fickles article below:
REI Explores New HeightsResults NavigationFormat and Delivery OptionsView:Citation HTML Full Text Delivery
Title: REI Explores New Heights. By: Fickes, Michael, Sporting Goods Business, 01460889, 1/26/2001, Vol. 34, Issue 2
Database: Business Source CompleteHTML Full TextREI EXPLORES NEW HEIGHTS
Section: RetailTalk
UNDER NEW LEADERSHIP, REI PRESSED AHEAD DURING 2000, INCREASING ITS STORE COUNT FROM 54 TO 60, RAISING REVENUES BY MORE THAN 11 PERCENT, AND BOOSTING COMP STORE SALES BY NEARLY 7 PERCENT.
In his spare time, Dennis Madsen bicycles, backpacks, skis and sails. At work, he explores.
For 34 years, Madsen has explored every crevice of Recreational Equipment Inc. (REI), beginning as a salesperson and rising to president and CEO of the company in March of 2000.
During his 13-year tenure as COO, he championed the company's venture into e-commerce, investigated new retail store formats and supported the development of REI's flagship stores.
In his first year as president and CEO, Madsen tied those efforts together, and REI surged ahead. At the end of 1999, REI (Kent, WA) operated 54 stores with revenues of approximately $602 million. The company closed out 2000 with 60 stores generating approximately $670 million in revenues, an increase of more than 11 percent. Comp store sales rose by nearly 7 percent during 2000. "In today's retail environment, these are very good numbers," Madsen says.
REI opened six new stores during 2000, in Kennewick, WA; Fremont, CA; Missoula, MT; Grand Junction, CO; Troy, MI; and Tokyo.
The Tokyo flagship store, REI's first international effort, anchors the new Grandberry Mall and enhances the service available to nearly 80,000 Japanese members of the REI coop. REI has already been retailing in Japan for a number of years through mail-order catalogs and REI.co.jp.
REI also opened a flagship store in Denver during 2000, in a renovated 99-year-old brick power plant. The new flagship replaced an existing store too small for REI's sizable Denver market. The specialty retailer will open at least two more stores during 2001, in Corte Madera, CA, and St. Louis, MO.
Madsen attributes the company's continuing success to the strength of its roots. Founded in 1938 by a group of 23 Pacific Northwest mountaineers seeking climbing equipment, the REI consumer cooperative now boasts 1.7 million members, who receive rebates amounting to 10 percent of their yearly purchases, in return for a onetime $15 membership fee. "Our cooperative roots mean that we return profits to our members," Madsen says. "Over the years, we have taken that idea to the next level in terms of support for the communities around our stores."
Since 1976, REI has contributed more than $7.5 million to local outdoor recreation clubs and conservation groups. In addition, REI organizes annual service projects in each of its retail store markets, recruiting local members and volunteers to perform hands-on, community-based conservation work.
Madsen also credits REI employees for the retailer's success. "We're known for the expertise and quality of our staff," he says. "We are all passionate about outdoor recreation."
Where does Madsen plan to take the company? The seeds of his strategy lie in the new stores opened in 2000.
Traditionally, REI stores span 20,000 to 25,000 square feet. Three of the new stores -- in Kennewick, Missoula, and Grand Junction -- cover between 10,000 and 12,000 square feet. "Over the past few years, we've made several investments in systems centered around the Internet," Madsen says. "We have put Internet kiosks in all of our stores.
"And in our smaller format stores, the kiosks make a complete assortment available to customers -- even in markets where we can't inventory more than a small store," he adds. "The kiosks also make product available in our biggest stores, such as the Seattle flagship, which can only handle about half the inventory available online."
REI.com, which REI calls the Internet's biggest outdoor store, offers more than 78,000 items; a library of more than 45,000 pages of product information; expert gear advice and online clinics; an interactive community system; and a complete adventure travel service. REI also operates REI-Outlet.com and the REI Japan site.
As electronic retail has fallen largely into disarray, the REI strategy of combining bricks and clicks has done well. In 1999, REI's online sales topped $41 million.
But REI.com does more than sell. "About 80 percent of our in-store sales are made to members," says Michael Foley, an REI spokesperson. "Online, however, 50 percent of our sales are made to members and 50 percent are made to non-members. This suggests that our online system attracts new customers."
As REI consolidates its efforts to find new customers with smaller stores in smaller markets and online, Madsen has begun to explore the next phase of REI's development: building future markets for today's youth. "Kids have many more choices today than ever, from computer games to team sports," Madsen says. "Outdoor sports are one more choice. But young people are important to us as future customers, employees and advocates, and we have to search for ways to engage their interest."
That sounds like a good job for an explorer.
PHOTOS (COLOR): REI'S FLAGSHIP DENVER STORE OCCUPIES A 99-YEAR-OLD BRICK POWER PLANT. THE STORE REPLACED AN EXISTING ONE THAT WAS TOO SMALL FOR DENVER'S SIZABLE MARKET.
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Written by Michael Fickes
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