Kudos to REI for opting out of Black Friday and doubling down on their core values. For anyone that’s been an REI member and experienced the exceptional culture and practices of the 75+ year old retailer, this probably doesn’t come as a huge surprise as REI has always stood in a league of it’s own based on a retail experience that is nothing short of stellar; however, for the uninitiated the decision of a major national retailer which operates 140 retail stores, employing over 10,000 employees to shut down and pay their employees on one of the biggest shopping days of the year is curious at the very least.
How CAN they afford such a drastic move? The answer lies at the core of REI’s culture which is a unique corporate structure called a Consumer Cooperative (not to be confused with a retailers cooperative) which means the company is actually owned and operated by it’s members. In fact, REI is the largest Consumer Cooperative in the United States and one of the largest in the world. Without this unique structure, it would not be feasible for REI to simply opt out of Black Friday. Consumer Cooperatives are quite unique and complex but in short, while they sound great in theory they are extremely difficult to scale so it’s phenomenal that REI has been able to overcome many of the obstacles which typically prevent a consumer collective from becoming anything more then a local retail anomaly. Even more fascinating is that REI continues to offer its members extraordinary benefits including one of the most liberal return policies in the industry, as well as a 10% dividend on all purchases, even as it continues to grow and build more massive stores around the country. REI’s unique status as a Cooperative is what allows it to extend such progressive policies and how REI can make a bold move like opting out of Black Friday.
If REI were a publicly held corporation, or a private company beholden to investors it would be impossible for them to simply opt out of one of the largest shopping days of the year. Instead of opting out of Black Friday they’d be inventing new tributes to conspicuous consumerism and scheming for ways to get consumers lined up outside their stores earlier then the competition.
The genius of this move is that because REI was the first major retailer to opt out of Black Friday they are receiving major press and will continue to receive press throughout the holiday season. From a financial stand point, their decision should pay off handsomely as they will likely acquire new customers which they are very good at monetizing over the long term. In addition, if they inspire some of their existing customers to opt out of Black Friday, they operate a very successful web presence at REI.com which will allow them to monetize these customers without opening their stores.
Retail Pundits have been calling for the death of brick and mortar retail for years. In 2015, Brick and Mortar retail is not dead. Apple is one of the largest online retailers in the world but they also operate more then 450 retail stores worldwide and companies like Bonobos, Warby Parker & BirchBox are all examples of consumer brands which started out selling exclusively online and after tremendous success have branched out into the physical retail space. The reality is that uninspired retail is dead because consumers have simply too many options. To remain relevant, retailers must inspire consumers to earn their loyalty and to do this Retailers must project strong values and who reflect these values in everything they do.