As REI thrives, does it have members or merely shoppers? | Hacker News Reader

As REI thrives, does it have members or merely shoppers?

seattletimes.com

70 pointsjseliger54 comments

I had completely forgotten (or never knew) that voting was a part of REI membership, and I've been a member nearly 15 years.

Regarding their commercial success though, I think is attributable to several factors, including:

- They have tended to their brand really well. Their brand means the same thing (and more) to me as it did 20 years ago.

- As I have grown up, had a family, they have continued to provide things I want/need: I used to buy a lot of ski and camping gear there when I was younger, and now, it's one of the first places I look for kids' outer-wear and sports gear for all seasons. They are now far more than an outdoorman's outfitter (EDIT: but they haven't gotten so broad as to dilute the original reason I liked them).

- They have attached their brand to cultural symbols of the upper middle class, like ski vacations, environmentalism, etc. Therefore their clientele are people of reliable means, similar to Costco's customer demographics. In fact, In the Bay Area, I can think of 3 REI locations that are quite close to a Costco, FWIW. EDIT: Also, these cultural symbols are things I am very likely to teach my children - my very young kids already know that when we want gear, we go to REI.

One of the best advantages of buying at their markups is their return policy.

You pay more than at online outlet retailers, for sure, but lets say you bought a $200 sleeping bag and after a couple of seasons, you decide its not warm enough, you get to return it and get one more fitting to your needs.

Like the Nordstrom of outdoors goods.

REI, at least officially, now only allows returns for one year.

I'd add that people deciding after a couple of years that they don't really like what they originally bought is not a reasonable reason to return something.

>not a reasonable reason to return something.

I personally agree with you, but that's not the point.

If you're willing to pay a little premium over online outlets, and as long as everyone at REI is still getting paid, why shouldn't customers be allowed to return things for any reason?

First of all, some of REI's prices are good. Some are not so good. In my experience, there isn't a consistent premium.

>If you're willing to pay a little premium over online outlets, and as long as everyone at REI is still getting paid, why shouldn't customers be allowed to return things for any reason?

Because, someone has to pay for that not reasonable return, whether it's coop members and/or other customers who end up paying just a bit more.

> If you're willing to pay a little premium over online outlets, and as long as everyone at REI is still getting paid, why shouldn't customers be allowed to return things for any reason?

Because using it abusively means the privilege gets restricted. Their infinite return policy is now a one year return policy because of this abuse, and continued abuse will result in further loss of what was a really nice system.

I also agree with you, but let me say, that while I seldom return anything, but for size mistakes, having that option makes me prefer them as a vendor, if they take that option away, I'll simply go with the online retailer who sells for up to 40% off rei prices.

Also for many things unless they are broken (where warranty can kick in) they can make money on rentals

IMO, that's not a valid reason to return something, but it's just the tip of the iceberg on REI returns.

There's an outdoors forum I read, and one of the members there works part time for the REI in Boulder, and he's mentioned on several occasions that many people take advantage of the return policy in ways that nobody would find reasonable. He claims to have seen people return several year old hiking boots, worn out and falling apart, then walk into the store and buy a similar pair.

I suspect it was a small group of people who were taking advantage of it to that extreme, but they probably ruined it for everybody.

I think it is. I bought a 10f down sleeping bag from an online discount merchant, and I've been consistently disappointed with its performance. I wouldn't return it (because I don't need 10f performance), but it's barely capable of keeping me warm enough to sleep at 30f while wearing long underwear and a beanie to sleep. I'm not saying I'd return it, because I don't plan to sleep anywhere colder than 30f, but these are the kinds of things a coop can and should keep an eye on when selecting product and deciding what to continue carrying.

And yeah, some people ruined it for everyone. I saw a crashed mountain bike at REI that some dude returned.

My REI story was backpacking boots. I went back and forth on two sizes, and ultimately decided the larger size would probably have me sliding around too much. I had to wear them for 30 or 40 miles before it became clear that they were not going to work, and the other size would be better. It was well worth the extra $15 or whatever to buy from a retailer that was friendly about returns.

My complaint is more about the length of time in the OP's comment. Buying boots before a trip and then realizing on the trip that they're the wrong size is exactly what the return policy is for, but it shouldn't take two years of use to decide a sleeping bag isn't warm enough.

The return policy is at least as much about marketing as it is about customer service.[1]

We love them.

[1] https://www.washingtonpost.com/news/business/wp/2016/01/22/t...

I can think of 3 REI locations that are quite close to a Costco

Never thought of that. True, the one REI closest to my home in LA area is just a few blocks away from a Costco, which is pretty close being in LA.

I personally did not even know that my membership entitled me to vote on anything, so it's possible I am not the only one.

REI is a great example of how you can invest in long-term customer loyalty rather than short-term gains and win. I buy pretty much all of my camping/hiking/outdoor gear at REI because I know that even though I might save 10% elsewhere the people at REI will support my purchase forever and help me get the right gear. I know a lot of other people who make the same decision. It's one of the only shopping verticals where I don't aggressively price hunt because I am just so happy with the experience at REI.

I think we would see this type of corporate behavior in more industries if investors had the patience for it. You can massively increase customer LTV and reduce churn by spending some money to make people happy.

I've been a member since the 80's. I don't vote b/c I know nothing about the candidates other than what is written in the voting material. Either I'm being presented choices that don't really matter for the operation of the co-op, or I know so little I should abstain from choosing.

I shop at REI because the service when something goes wrong with gear is tremendous. In the early 90s I was a backpacking guide for the Boy Scouts (Ranger, Philmont Scout Ranch, 1992) and the sole came off my Vasque hiking boots. REI fedex'd me a new pair. That's how you win loyal customers.

A similar story was shared in the Wild book/movie.

IWGTP! '11

I've been a member since '83 or '84. I've undoubtedly gotten the my original money's worth out of my membership dozens of times over.

The article raises an interesting point. While I am quite loyal to REI - often choosing to buy there even though I pay sales tax and might be able to find it cheaper online, I don't pay that much attention to elections and other co-op stuff.

The primary benefit I see as a co-op member is their unparalleled customer service. I've lost count of the number of times one of their associates has gone out of their way to ensure that whatever issue I was having was taken care of appropriately.

It's interesting to compare this to a recent article about MEC, Canada's REI clone.

http://www.theglobeandmail.com/report-on-business/mec-govern...

Both co-ops seem to have similar issues developing from the change from small scale co-op to major national retailer.

As outdoorsy-oriented businesses in this general vein expand, there are also a lot of forces seeking to turn them into more or less general purpose retailers with the thinnest of outdoor activity veneers. Some seem to navigate this better than others. LL Bean, in my experience, still has solid customer service and seems to still have a pretty decent hunting/fishing department (although their hiking/camping is relatively week). But brands like Eddie Bauer are just, well, brands at this point. And, fun fact, Abercrombie & Fitch started out as a high-end outdoors store. REI seems to have threaded a reasonable path.

Eddie Bauer has been just a "brand" since at least 1994 when Ford released an "Eddie Bauer" Explorer/Expedition trim level (I saw one in '97).

I've been a member for years, I don't actually remember receiving ballots to vote.

However, I don't even know how I'd educate myself to cast an informed vote. Same thing with a timeshare I just got from my grandfather. I received a name, a title, and one or two paragraphs about the candidates. It's pretty daunting to try to extrapolate from that into a guess at who will be the best candidate.

Same thing with REI. I don't know their business, their challenges, and the qualifications or competency of the candidates well enough to have a meaningful say in who should be on the board. Do I?

The ballots come with your dividend notice, which I'm sure you remember. ;)

http://www.rei.com/shared/help/membership_join.html?storeId=...

I've been a member a long time, and never voted.

Shopping at REI is different from other retailers. When I shop at REI I don't check prices online. If I like it I will buy it.

Recently I was shopping for a sleeping bag at REI for my wife. I was ready to spend a couple hundred and get something fancy. The REI sales representative talked me down to a square synthetic bag since it would be more comfortable for her and could be used like a blanket.

Another time my bike pump broke, after using it often for years. I took it in intending to buy a replacement part. They got me one in a few days and wouldn't take my money.

I've been an REI member for longer than I can remember, but I've never voted in one of their elections.

Lately though, I've been questioning my loyalty to the brand. Their prices are substantially higher than some of their online competitors with differences that are too big to be accounted for by the dividend alone. And while I appreciate the service when buying something, their new return policy is a big step backwards. They've built tremendous loyalty around a return something any time policy that no longer exists.

I find most of the stuff I buy from REI is hit or miss whether I can find substantially better deals online. As for the return policy change though, that really surprised me when I heard about it relatively recently. Yeah, there are assholes who abuse this kind of thing but was it really so bad that they had to scrap it? Couldn't they just update their return policy to the effect of "This isn't intended to cover long-term wear and tear. At our discretion, we may reject returns that aren't the result of a defect. Just be reasonable."

[EDIT: With often relatively expensive gear that may not be used as much as I would like to use it, I've absolutely had parts break, leaks develop, etc. in things that had only been used maybe 10 times or so over more than a year. Recently, I returned for repair something to the manufacturer--which they fixed--because it was under their warranty but not REI's new one.]

REI began to worry it was getting a reputation as a sucker. Customers started giving it nicknames like "Rental Equipment Inc." "Rent Every Item" was another. Some called it "Return Every Item."

Two years ago, REI noticed that the number of people returning really old stuff was increasing. Some customers talked about their returns on social media, which led to even more people bringing in their old junk to get refunds. It was hurting profits.

http://www.npr.org/sections/money/2013/09/25/223787129/what-...

As for discretion, they don't talk about that in this article, but it's hard to be non-judgemental about returns yet also exercise discretion. In REI's (and also L.L.Bean's) case, non-judgemental seems clearly part of why the policy was so treasured.

It's just too bad. Maintaining these sort of policies effectively requires that most people follow some sort of social contract. If too many people make it about "me me me," well, you can't have nice things.

They could have fixed this problem with lifetime exchanges. My dad had an ancient Sears Craftsman ratcheting screwdriver. It would turn when you pressed the handle, and bits stored inside the handle. It broke. He took it back. They didn't even make anything exactly like it anymore but he walked out with the closest thing they had, no charge. Guaranteed forever. To this day if I think of quality hand tools I think Sears Craftsman.

But they don't give refunds for tools. They replace them. REI could offer lifetime exchanges. Strap break? Seam rip? Bring it in for replacement. They don't offer that. This "solution" is not narrowly tailored to the stated problem of abuse so I doubt this policy change was really a response to abuse.

Craftsman tools are total crap these days, but you're right about how it used to be, and this is a good way of doing things.

Came here to say the same thing. We bought a very expensive tent from them for very protection and they rescinded it only a few months before the tent got bent up in a wind storm. They tent itself was nice, but it wasn't really worth the price. I understood it as a form of insurance.

So yeah, I'm definitely letting my membership lapse this year.

Lapse? It's $20 for a lifetime membership.

If you have a legitimate gripe, take it back. REI store managers (still) have a broad discretion in the return policy. The new "1 year" policy is largely a social signal that they won't tolerate obvious abuses anymore. And expensive tent getting wrecked by wind is not an obvious abuse, unless you strapped it to a car on the highway maybe.

And many high end outdoor manufacturers provide lifetime warranties themselves. If your expensive tent is a North Face or Mountain Hardware and was really damaged by wind, it will probably get replaced no matter where you bought it.

I don't know the the number of customers who abused the return policy, but I have a feeling a strict return policy it's counter productive?

I don't know if REI, or even Costco realized just how much crap we bought from them that was only bought, because in the back of, at least my mind; I thought I would use the item. Of course, I never used the impulse purchase, but bought it.

Now--I only buy the essentials. (By the way, all those high end watches at Costco are not covered by any manufacture's warranty. Costco has someone, somewhere that services the watches. I bought a watch there, and found this out later. I will return the watch if it ever fails--just on principle. It's still keeping perfect time a decade later. Gotta love Omega Seamasters. Actually, all high end watches are not bought, they are rented. It breaks--you need to send it back to the factory. They all stopped selling parts to 3rd party watch repairers.)

These stores must have done studies on consumer buying habits? I'm just assuming they are making more profits with strict return policies?

I joined in 1985, when membership was free for the asking...they offered an REI Visa way back then, and I took them up on it...a couple of years ago it transitioned to a Mastercard...so, I've been carrying an REI endorsed and embossed credit card for 30 years, as well...

I buy almost all of my outdoor gear from them and have absolutely no complaints...although I'm actually more of a "customer", as the article points out, I feel the vast majority of my interactions with their staff leave me feeling like a "member"...the service is that great...

I love the co-op model and always look forward to my yearly dividend...one thing I really appreciate is that the company structure effectively discourages a buy-out, which the article mentions...

In the early days ballots were sent out and answered by mail around dividend time, if memory serves me...haven't voted since then, but follow co-op news in a few places...

Can't recommend them highly enough...

There was an interesting AMA on Reddit last year when the CEO came on to announce they were closing all their stores for Black Friday. The top voted question was from a former employee asking why they push membership sales so heavily. The CEO didn't answer that question until it became clear he had to and then came back on and was shocked! that membership sales was being used as a key metric.

http://www.geekwire.com/2015/reddit-ama-with-rei-ceo-spirals...

Same model as Costco or Amazon prime.

Not really. REI is a consumer co-op.

Membership sales are the profit centers

I've also been a member for years, though certainly not back to the 6-digit member number era. I do get the voting stuff in the mail, though I think I've only voted once - as noted elsewhere, there's not much information really available about the candidates, and there generally aren't many more candidates than there are positions. I'm familiar with that problem from my HOA (which I was on the board of for years) - 7 positions, 4 open for election, 3 candidates.

As far as the question of engagement, seems to me that (if they're not already) perhaps their local stores should be sure to get involved with other organizers of outdoor activities. How many outdoor groups organize through Meetup.com? And how many of those is REI involved with/sponsoring/providing meeting space for? Member engagement is going to have to come from the local level.

Members can no longer vote on anything meaningful. From the article: *"Likewise, in the 1998 election members voted on the first board pay raise in 15 years. But since 2002, the board sets its own compensation, a policy REI says is “consistent with companies of similar size and scope.”"

State Farm Mutual Insurance Company, which is owned by its policyholders, no longer lets its members vote on anything. There was a time when policyholders got an annual ballot, but it only had one choice for directors plus a write-in blank.

I don't know about REI in particular, but in my experience when many companies tell customers that they're "members", they don't mean it. They seem to want to create engagement ('you're part of something, part of our growing, exciting family / movement') and want their customers/members to sacrifice money or time, even volunteer, and to put up with bad service.

But when it comes to the benefits of membership - sharing in the profits as well as the sacrifices, or having some influence and communication - you're a customer, or at best a customer with a free branded t-shirt.

REI in particular is a member owned consumer cooperative.

I meant, I don't know if my description of some company's practices regarding their "members" applies to REI.

REI shares dividends, and the stores are full of some of the most helpful people I know. They're about as good as USAA.

... which is indistinguishable from a "shoppers' club card". I don't see any benefits beyond discounts and rebates. Voting is a rumor, and meaningless to most members. You're treated like a shopper, not an owner. I'm a happy REI customer with a card.

I've always been confused about this. REI has 12 million members, and annual revenue of $2.2B. If someone wanted to buy REI's business, who would they buy it from? A retailer like Target has $70B annual revenue and a market cap of $40B. So that would suggest that REI could be worth something like $1B. Would each of the 12M members get a check for $83?

From the article: "Another advantage of being a co-op: Since REI is technically owned by millions of members who’d get little cash from a takeover, it’d be very cumbersome for a rival to buy it out."

http://www.rei.com/stores/san-carlos.html

First thing you'll see when you Google your local REI store is paid and free classes available.

I was a big fan of REI. Used to buy mtb boots regularly, gradually climbing the price scale over time. Till I got to the top, full leather $300 on sale or so. I never price compared.

Then recently I had a fairly new pair, worn daily for months, but the tread was still near new. Minimal signs of wear, still clean. Keep in mind these are full leather hiking boots.

A major seam burst, when I mentioned it REI said, oh, you don't squat in them do you? I said not regularly. Then they denied the return and said buy another pair.

Pretty disappointing, I certainly won't be buying there again unless they have the best price.

I've been a member since last year. But I grew up in the Northwest, and shopped there many times with my family in the 80s and 90s (they had a membership, of course).

More recently, I've used my girlfriend-now-wife's membership, and only signed up for my own last year. I saw no urgency or reason to get my own, and I have never heard of voting on anything at REI, from my own membership or from my family's.

It's odd how pushy they are about employees selling memberships (I had a friend who worked there for a few years), when they clearly 'cost' the co-op more than they bring in over the long run.

I've been a member for a while, but mostly view that as a discount and not much more.

What I really wish we had in the US was Decathlon, which has cheap outdoor stuff that is "good enough". I wouldn't buy there for something I did a lot (cycling!), but for casual outdoor stuff (say, snowshoeing) I don't do much, their gear is often a really good deal, and not so cheap that it's going to fall apart on me or be unpleasant to use.

I always felt I was a member there until they changed the return policy. I always felt I could buy something, even paying more, knowing that I could return it if there was an issue. Not anymore. Now I go there after checking other stores first, it's a last resort for me now, not a first.

As far as I am concerned, REI is just another non-local retailer. The biggest issue I have with them is that money spent at REI does not stay in the community. Another minor issue that I have is the lack of competent staff. At our local climbing shop I would be able to talk with staff that I would also see when out in hiking/climbing. The staff at REI are just buffoons that could fill out a job application.

As a native Seattleite, REI was a local retailer, so I can't comment there. And I don't know what their outreach efforts are like in the communities where they base their stores.

That said, IMO your experience with the staff's education level is the exception rather than the rule. Certainly for specialty equipment you might be better off at a climbing shop where all of the employees know the gear, rather than making sure you get "the climbing guy" at your particular REI store. But not everyone can be an expert in everything, and they make efforts to train their employees on the gear they sell to a greater extent than most other non-specialty stores.

I will admit that I have experience with only one REI location. I live in a college town were labor is cheap and plentiful. Plus lots of young egos that will talk up all their "experience" to anyone that is willing to listen.

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