- 118 stores.
- $1.7 billion in sales in 2010.
- Over 10,000 employees.
- One of Fortune’s “100 Best Places to Work For” since 1998.
That’s the clout enjoyed by Recreation Equipment Inc. (REI) today, a national cooperative and one of the country’s largest outdoor apparel and gear manufacturers founded by a group of conscious mountaineers in 1938.
At last week’s Net Impact conference, REI CEO and President Sally Jewell took the stage to discuss how her company was faring amid Amazon’s recent expansion, whether a cooperative should be a viable option every entrepreneur should consider, and how sustainability is a team sport – and not a niche market anymore.
The Amazon Disadvantage…
Calling Amazon a “tough competitor” for brick and mortar stores, Jewell, who is a former commercial banker, took umbrage with Amazon’s policy of no taxation alleging that this discouraged new jobs. “Our business is doing well. Fair competition is always good, but unfair competition isn’t. By not charging taxes, Amazon is taking away much-needed state revenue” and sales from REI stores.
“Not being able to employ people is frustrating,” she added, emphasizing that while REI was doing well with stores having grown every year since 2008, hiring was definitely slower than the CEO would prefer.
…And The Sustainability Advantage
With sustainability making inroads into American consciousness at a very slow rate, does the environmental tag hurt REI?
“Sustainability is no longer as niche as some might think. The new generations really care about the environment and their communities,” Jewell emphasized. “The average age of our store employee is 32 years. They really care about the products and take pride in our commitment to the planet. This is what got us to No. 9 on Fortune’s Best Places to Work for last year,” she added.
In fact, while REI stores have steadily grown in number since 2008, she added, their footprint has remained lower than 2008 levels. The company has also doubled the number of stores that are using on site energy generation, Jewell informed a packed room.
Cooperative: The Right “C” for Entrepreneurs?
REI is one of few cooperatives in the country that has successfully provided its members with an economic model that is lucrative and works over the long-term. “There is no mission without margin. You have to run a healthy business to be sustainable. While we don’t have investors to worry about, we have a member community,” Jewell informed, warning that, “The founders [of REI] sacrificed a lot to protect the cooperative structure. Their family home was a distribution facility for 22 years. Their daughter was packaging stuff since the age of 5 years.”
“85 percent of our sales are from our members who get a yearly dividend. So the structure is successful but hard,” she said.
Responsible Capitalism: More Investment Options
Jewell also offered a new face of investment options, saying the market desperately needed to step away from thinking in the short term. “We need to suggest more robust federal regulations that put in a longer-term requirement from companies instead of a quarter or even a year. This change alone can transform the way we think, hire and help ensure many more businesses are successful,” she appealed.
While REI is certainly known for its innovative product line, environmentally- and socially-conscious supply chain, it has in no way perfected the dilemma of margins vs. fewer resources. How do we get away from random acts of kindness to systemic change? “It’s hard to get incentives [internally and externally] exactly right. Our employees are pulling the company forward,” she admitted, adding that, “Sustainability is a team sport that has the potential to create demand for recycling and working itself up the supply chain.”
The Power of Education
Since the conference attracts a majority of MBA students and recent graduates from the exemplary Net Impact chapters, interviewer Marc Gunther asked in closing: How can these students best help companies like REI?
“We need people who can make business sense out of sustainability. Help other companies see the benefit. Whatever we do for sustainability has to be good for business,” she pointed out. “This is what students with your experience, passion and understanding can help other businesses comprehend and implement,” the 54-year-old chief added.