Fast Company

Adventures in Retail

REI's dazzling superstore in downtown Seattle has all the gear you'll need -- 60,000 different items -- to conquer a mountain or run a river. But what it's really selling is a new model for the future of retail.

Niketown. Borders. Planet Hollywood. These days retailing is as much about performance as about product. What's for sale may be familiar: sneakers and boots, books and music, burgers and fries. But the way it's sold has become as extravagant as a Broadway musical.

At first glance, REI's flagship store in downtown Seattle looks like yet another form of entertainment retailing. It's huge. The 100,000-square-foot store stocks 60,000 different items and covers an entire city block; its 450 employees stay in touch through an internal cell-phone network. And it's built for adventure. The $30 million complex features a glass-enclosed, 65-foot-high climbing pinnacle (the world's tallest freestanding, indoor climbing structure) and a 470-foot-long biking trail. As a result, [text continued on p. 191] it rivals Pike Place Market and the Space Needle as one of Seattle's favorite tourist destinations: the store, which opened in September 1996, attracted 1.5 million visitors in its first year.

But there's more than fun and games to this cutting-edge outpost for outdoor gear. "Retail is moving toward capital-E environments," explains President and CEO Wally Smith. "For some people, that means Entertainment. For us, it means Education." Jerry Chevassus, 38, REI's director of retailing, led the team that created the new space. He says this educational mission is behind almost every feature in the store: "One of the basic filters that we ran each of our ideas through was, Does it teach customers something?"

Not that there's a conflict between making customers smarter and making the sales curve steeper. REI, which didn't open its first store outside Seattle until 1975, now has 49 stores in 21 states, 4,500 employees, and annual sales of nearly $500 million. The new Seattle store has exceeded its creators' most optimistic forecasts: "One of our concerns was, What if we build all these great features, what if we educate and entertain people and they don't buy anything?" says Chevassus. "We didn't have to worry. We're close to reaching our five-year projections in the first year. These features sell."

REI's success offers important lessons on three critical issues in retailing: what you sell, how you sell, and who sells.

Sell values, not products.

REI (Recreational Equipment Inc.) has never been just another company. It was created in 1938 by Lloyd and Mary Anderson, who wanted to offer top-flight climbing gear at reasonable prices. Rather than start a for-profit company, the Andersons organized REI as a cooperative. It is now the largest consumer cooperative in the United States. REI's 1.4 million members pay a $15 initiation fee. The fee entitles them to rebates (the company has paid out $240 million in "patronage refunds") and a voice in operations (members vote on REI's board of directors).

This voice shaped the Seattle store. Chevassus's team sent postcards to 34,000 local REI members. "We know who our customers are," he says. "So we asked them, How do you want us to spend your money?" The response was clear: the new store, however forward-looking it might be, had to reflect the company's long-held values.

Authenticity is embedded in even the smallest details. The store has door handles made of ice axes the first product ever sold by REI. The aisles between departments are designed to resemble hiking trails. The building features lots of solar energy and natural light. Countertops are made from composite materials incorporating soybeans and recycled newspaper.

Try before you buy.

The REI superstore is enthusiastically interactive. But you won't find flashy video screens, high-speed Internet connections, or any of the other all-too-familiar trappings of entertainment retailing. Here, interactivity takes the form of testing stations, where customers can use the products before committing to them. The store's climbing rock and bike track are its two most high-profile stations. There's also a Rain Room, where hikers test weather-resistant outerwear; a pool filled with brackish water, where campers test water purifiers; and an Illumination Station, where cyclists test lights.

"We tried to figure out which products were scary for people," Chevassus says. "Camping stoves were a high-return item. So were water filters. Most of the time, there was nothing wrong with the product. People just needed more knowledge about which one to buy and how to use it. We had to demystify some of what we sold."

Live what you sell.

REI's superstore is breathtaking to walk through. It's filled with more top-quality products in its primary categories -- camping, mountaineering, skiing, bicycling, kayaking, and canoeing -- than any rival store in the world. But there's another critical factor behind its success: who does the selling. REI's sales- people don't just work the aisles. They live the life.

"People at REI share the same values and the same pursuits," says Chevassus. "I used to interview people for the retail stores, and I'd ask questions like 'What's your favorite alpine lake? What fishing pole do you carry? What kind of tent do you use?' "

Those questions are apt. Stephen Edquist, 39, an 11-year company veteran, is a climbing fanatic. (That's him pictured on the opening page, atop the store's climbing pinnacle.) A product expert in camping and climbing, he has turned down more than one promotion. Why? So he can stay close to the activity he loves. Craig Undum, 33, a technician in the cycling department, is a world-class professional bike racer. "Our passion is our work, and our work is our passion," Undum says. "We live what we sell."

Such work-life integration makes for energized salespeople -- and a better store. "The buyers don't just say, 'Here's the gear,' " Edquist explains. "They see us as a resource: 'This guy has used every ice tool we sell. Is our selection where it needs to be?' " Diane Levy, 32, a sales specialist in the snowsport and paddling specialty shops, shares Edquist's perspective. "We've chased bad products out of here," she says. "That helps make us feel that this is our store."

Contributing editor Eric Ransdell ransdell@well.com wrote "IBM's Grassroots Revival" for the October:November 1997 issue of Fast Company.

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