REI Rising Tide

A Rising Tide

$2.6 Billion in annual revenues – when the American outdoor retailer Recreational Equipment Inc. (REI) makes a move, the outdoor industry pays attention. Luckily, this giant is of the friendly variety.

REI has been on the Forbes’ list of the top 100 best companies to work for every year for the past 20 years, gives back nearly 70% of its profits to the outdoor community, and sources 100% renewable energy for its operations just to name a few examples from its stellar list of CSR achievements. Now, its latest initiative seeks nothing less than a quantum leap in the product sustainability of the entire outdoor industry. More about that in a bit. But first – what exactly is the deal with REI?

Looks can be deceiving

A visit to one of their stores might fool the uninitiated to think that REI is just a regular outdoor retailer, but the truth is outfitting people is only a part of what they do. Behind the retail focus on high-end outdoor performance gear lies an organizational structure that is truly unique in the business world: REI is not just a company, it’s a cooperative. Suston asked REI’s Product Sustainability Manager Greg Gausewitz to explain the strange origins and unfamiliar logic behind REI’s cooperative business model: “REI began 80 years ago with a group of 23 climbing buddies who started to import quality European climbing equipment that was in short supply in the States. Outdoor enthusiasts were able to sign up as members and buy the gear at reasonable prices. And so, the co-op was born.” Like a publicly traded company, whose loyalty lies with its shareholders, REI works in the best interests of its members who have paid a one-time $20 lifetime membership fee. But whereas a corporation defines their success in terms of profits, REI takes on a much broader definition: “As a co-op, acting in the interest of our members is fully integrated into our DNA. We believe that financial, social and environmental sustainability is in the best interest of our members. Therefore, we use a quadruple bottom line perspective in all our actions. We focus on business, members, employees, and society at large, including the communities where we operate, the environment and animals,” shares Greg Gausewitz. Being purpose-driven first and profit-driven second enables REI to take on CSR projects that a regular company could only dream of, which brings us back to their latest initiative, the Product Sustainability Standards.

New, comprehensive sustainability standards

As outdoor enthusiasts, REI’s members tend to hold stronger social and environmental convictions than the general population. Naturally, they want their gear to reflect these convictions. While REI is also focusing on promoting and educating members on so-called “preferred attributes,” certifications such as Fair Trade and bluesign®, it’s a huge ask to expect members to do their own research down the supply chain to uncover the products that don’t compromise their values. This is where their brand expectations come in, which seek to ensure that rigorous standards in animal welfare, land stewardship, chemicals management, fair and safe supply chains and environmental management are met by the brands they supply. Many of these expectations simply make previously informal expectations formal, and these are effective immediately. Others will take time to implement across supply chains, so REI is giving brands until Fall 2020 before the full weight of the initiative enters into force. New brands will also be given an 18 month transition period.
“We want our members to be able to walk into our stores and feel we have this covered. By working with the more than 1,000 brands we stock to meet our Product Sustainability Standards, we’re making it easier for members to shop their values at REI,” says Greg Gausewitz.

Many European brands among the leaders

Just how ambitious are these standards? As the most comprehensive sustainability standards within retail, anywhere, the short answer is ‘very ambitious.’ But REI didn’t just pull these standards out of a hat. Together with sustainability leaders and partner brands from the outdoor industry, REI was able to put together comprehensive best practices for all categories of products they carry. This means that with a little effort, they are all demonstrably and realistically achievable. “Some brands won’t need to do much. Many European brands, for example, are already leaders in sustainability and should be able to meet these standards more easily,” shares Greg Gausewitz, and continues:

“Others will have a ways to go, but we’re committed to taking a collaborative approach with these to help them meet the standards. But if a product still cannot meet them, we will transition to another one that can. Thus far, the response we’ve received from our brand partners is positive. With these standards, we’re actually helping make their businesses stronger.”

Lessons to be learned

Why the cooperative model hasn’t become more common within the outdoor community remains a mystery. Especially when it has clearly served REI so well. Its unwavering commitment to its members and over 80 years of slow and steady growth have made REI into the retail juggernaut it is today, impacting not only the American market but the bottom lines of countless other international producers as well. “As a co-op, we’re free from all the pressures from investors and shareholders. This allows us not only to think of our quadruple bottom line, but also to think long-term. Not just about the next annual report,” says Greg Gausewitz. But what about those who do care most about the next annual report? Can REI be dismissed as a curiosity? While many other retailers may not be able to fully identify with REI’s reality, Greg Gausewitz believes that they can still learn from REI’s Product Sustainability Standards initiative: “Consumers simply want to feel good about the products that they’re purchasing, and retailers need to take that seriously and support their customer’s values. We also believe that this model, where we act cooperatively with our brand partners and customers, will serve as an example for others in the retail industry,” says Greg Gausewitz. While the Product Sustainability Standards’ impacts remain to be seen, Greg Gausewitz is convinced that 1,000+ brands all taking a step towards sustainability together will undoubtedly have a huge impact on the outdoor industry as a whole: “We believe this will fundamentally raise the bar in product sustainability, not just at REI but across the outdoor sector. As they say, ‘a rising tide lifts all boats’.”

Jonathan Fraenkel-Eidse
jonathan.eidse@norragency.com