1. Recreational Equipment, Inc.
Executive Report
Matthew Miller
Molly Dierdorff
Nick Fukuda
Patrick Lawler
RJ Prifach
Shayla Sevigny
Matthew Wilson
March 9, 2015

2. 1. Overview of Recreational Equipment, Inc.
A. Descriptionof the REI and reasonwhy it was selected
Recreational Equipment, Inc. (REI) is a privately held outdoor retail company that provides a
comprehensive assortment of outdoor recreation equipment, sporting goods, as well as men
and women’s clothing. In 2014, Jerry Stritzke took over as the company’s seventh CEO and
President. As of March 2015, REI has 140 locations in 34 states, with an average annual growth
of five stores. Additionally, REI operates two online stores and has three distribution centers. In
2013, REI broke $2 billion in annual revenue.
REI is unique from other national retailers is that REI is a cooperative organization (co-op). A co-
op is a type of organization where the company’s members are the owners, rather than
shareholders. Much like a publicly traded company, REI issues annual dividends consisting of
10% of their members’ purchases for the calendar year. REI stresses strong customer service to
its employees throughout the co-op, a value that is remarkably evident at every location.
REI was chosen for the following reasons:
 REI’s unique cooperative company structure.
 A mutual interest in the outdoors and outdoor recreation
 REI’s passionate customer service orientation
 REI is a Pacific Northwest company with a location in Eugene
B. REI’s history,backgroundand mission.Howis it organized, what does it
do, what markets does it operate in, who does it compete with
Lloyd and Mary Anderson founded the cooperative in 1938 as Recreational Equipment
Cooperative when they were unable to locate quality ice axes within the United States and
were forced to source them from Austria. By July of 1938, 23 members joined the cooperative
with a $1 lifetime membership. Their mission was to share quality outdoor gear with fellow
climbing enthusiasts. By 1956, the cooperative officially becomes Recreational Equipment, Inc.
and officially changes their mission statement to: “to inspire, educate and outfit for a lifetime of
outdoor adventure and stewardship”. Today, REI has now existed for 77 years, operates 140
stores across 34 states throughout the United States, has launched two online stores, and
currently has over five million active members.
The Eugene, OR location opened in 1992, has been expanded twice, has 50 employees, and
sustains approximately $9 million in annual revenue.

3. C. The core values and beliefs of REI and howthese are translatedinto
action
 Authenticity
 Quality
 Service
 Respect
 Integrity
 Balance
The above six values are heavily weighed and considered in all aspects of the company’s
decision-making at every level. REI employees are thoroughly trained in these values set forth
by the company and always carry these values out on a daily basis. Through the careful
implementation of REI’s core values, the company has been consistently ranked the 14th best
company to work for according to Forbes Magazine. This is arguably due to REI’s culture, which
is in many ways a direct result of REI’s core values. This culture, established through the co-op’s
core values has enabled REI to consistently maintain one of the lowest turnover rates in the
retail industry—an industry notoriously known for its very high turnover rate. Additionally, this
culture has resulted in 87% of REI employees noting that they are positively engaged in the
workplace according to REI’s annual employee survey.
REI’s mission to serve the needs of those wishing to venture outdoors is translated into action
through its provision of outdoor products, classes, and trips. Additionally, Stewardship is also
core to REI’s purpose. As such, REI works to ensure that the next generation has a connection
to nature and natural spaces. REI uses its business to find innovative solutions to some of the
most pressing challenges facing society today by operating the company with a sustainable
business approach.
REI’s focus on stewardship and sustainable business practices is enacted through:
 Hosting over 485 conservation projects
 Donating $33 million from 2003-2013 to outdoor nonprofits
 Building stores that are LEED Gold energy efficient
 Maintaining flat energy use while opening 36 new locations since 2008
 Equipping 25 locations and 1 distribution center with solar panels
 Developing over 300 eco-sensitive products
 Committing to using 100% bluesign®-certified fabrics in REI-brand products by 2018.
 Working with Fair Factories Clearinghouse to identify opportunities to improve
factory conditions for workers
In 2013, REI:
 Donated over $3 million to support more than 230 outdoor nonprofits
 Stewarded more than 11 sites, including the 550+ mile Bay Area Ridge Trail
 Supported 3 Colorado State Park Trail maintenance projects by funding 177
volunteers and their 1,284 hours of service

4. D. HowREI plans its activities including the planning process management
uses and some detail and examples on its strategic,tactical,and
operational plan.
REI plans its activities through all three major forms of planning. REI’s executives and board of
trusties strategically plan by setting a strategy for the company for the upcoming years. Once
strategy has been set, REI then submits an annual budget to the board of directors for approval.
Once approved, the budget is distributed to the 14 different Retail Directors, who in-turn
provides each individual store’s budget allocation to their respective store managers. At this
point, the planning has become tactical. Store budgets include fiscal goals such as annual sales
and membership goals, as well as budget allocations such as payroll, supplies, and other
expenses. Store budgets and goals are based on previous year-over-year fiscal results and
projections for the upcoming year. Additionally, to ensure service and performance are aligned
with the company’s mission and values, annual service goals are set through the form of
customer satisfaction surveys and an annual employee survey. At the individual store level,
there is very little direction given to the Store Manager by the Retail Director, offering
autonomy for the Store Manager to establish various additional annual store goals.
The primary form of operational-level planning for Store Managers is the determination of
labor scheduling. Often times, this is straightforward. However, it is not uncommon that in
order to meet the demands of a historically sales-heavy week, a Store Manager has to exceed
the annual labor budget to ensure that the store is able to operate at an efficient level.
E. HowREI is led including the attributes and leadershipstyles oftop
management and methods and techniques management employees to
motivate employees
REI is led with a strong sense of camaraderie and a large amount of autonomy. Top
management rarely gets involved with in operations at the retail store level. Due to the amount
of stores that each Retail Directors are responsible for, Retail Directors typically make store
visits on a quarterly basis. As such, most communication is through e-mail or over the phone.
This allows a large degree of autonomy and relies upon a large amount of delegation to ensure
operations are efficient.
At the individual store level, each Store Manager employs different approaches to their
leadership and management tactics. Specifically, the Store Manager of the Eugene location
Dacia Stockton utilizes an inclusive style of leadership. When delegating a task, Dacia will
describe her vision and then allows her team the autonomy to achieve the task as they see fit
within a specific timeline. She typically does usually not micromanage unless she feels it is
absolutely necessary. She describes this style of leadership as “empowerment through
delegation”. When an issue arises, Dacia will work diligently with her team to an acceptable
solution.

5. Dacia employs several techniques to motivate her employees such as:
 Transparency
 Maintaining a friendly work environment
 Making the workplace a fun atmosphere that is enjoyable for all
 Rotating team members to different departments in order to provide:
o New challenges
o The development of new skills
o Positive employee engagement
o A feeling of involvement
F. How REI is controlled including Key Performance Indicators
At the individual store level, REI has four primary Key Performance Indicators to help evaluate
the success of the company in achieving its organizational goals:
 Membership Conversions
o Lifetime Memberships cost a one-time fee of $20
o Measures growth in a quantitative manner
 Monthly service index
o Monthly email surveys sent to customers about their REI experience
 Sales
o Storewide
o Department
 Average Order Value
o The Average purchase amount made by customers over a period of time

6. 2. Recommendations for Improvement
REI is an established company with clear operation and management guidelines, as well as a
convincing track record. REI currently does not have any glaring management weaknesses at
the corporate or individual store level that demands drastic reform or improvement.
Creationof a Manager-in-Training Position
REI is a company that typically will promote from within. Although this is a very successful
management technique, it often causes two problems:
i. Promotion from within often vacates a position that can be difficult to fill in a
timely manner
ii. Promotions to a management role from an associate position often result in
being transferred to another store. At the Eugene location, this often is an issue
because employees do not want to leave Eugene and the Eugene store
Creating a Manager-in-Training position would help alleviate these issues by creating a 6-12
month temporary position with the understanding that once training is complete, the new
manager would take a position at another store. By not including this position in the labor
budget during this training period, scheduling would not be affected and the position would not
displace or threaten the security of other positions within the training location, thus reducing
turnover.
Creationof a Loss PreventionPositionat the Store Level
Much like other retail companies, REI maintains a Loss Prevention department that is
responsible for establishing policies and procedures to prevent the loss of inventory or monies.
However, this reach is limited to the corporate and district level, resulting in limited individual
store Loss Prevention training, monitoring, and experience.
Designing and implementing a Loss Prevention position would produce the following benefits:
 Access and ability to consistently train associates in Loss Prevention tactics
 Increased inventory accuracy due to reduced inventory shrinkage
 Reduction of point-of-sale theft
 Reduction of internal theft of inventory and monies
 Implementation of programs and procedures to reduce shrinkage of high-risk items
 Increased sales of REI’s new in-store fulfillment program due to increased inventory
accuracies

7. Creationof a Balanced Scheduling System and Performance Review
Membership growth is imperative to the growth of REI. It is one of the key metrics that the
company uses to quantitatively measure the health of the company and assist in determining
whether it is meeting the strategic goals set forth by top management. However, research
reveals that at the operational level, membership conversion sales are absolutely paramount to
one’s success with the company for employees at the individual store level. This is stressed
above all other forms of Key Performance Indicators, such as number of transactions, average
order value, total value of product sold, and customer service. This metric is the one significant
figure the company utilizes above all else to determine non-managerial line employee hours
and performance reviews. This means that there is an unbalanced focus on membership
conversions that has resulted in potential labor inefficiencies. This unbalanced approach and
does not align with the company’s mission and values and ultimately, affect the bottom line.
It is recommended that REI implement the following:
 Designing a more balanced approach to scheduling and reviews that focuses on a range
of Key Performance Indicators equally, in addition to membership sales. These could
include:
 Average Daily Sales Totals
 Average Daily Order Values
 Customer Service Feedback
 Product Expertise
Ultimately,placinglessof anaggressive emphasisonmembershipsalesshouldbe aprioritytoREI for
the followingreasons:
 A large majority of those who shop at REI on a consistent basis are already members.
 The company is privately held. Thus there are are no investors and shareholders who
would uphold such high expectations of annual membership growth

8. Works Cited
Stockton, Dacia. Personal Interview. 13 Feb. 2015.
“REI Named to FORTUNE’s ‘100 Best Companies to Work For’ List”. About REI—Newsroom.
Recreational Equipment, Inc. 16 Jan. 2014. Web. 03 Feb. 2015
“2009 Stewardship Report Brochure”. Stewardship at REI. Recreational Equipment, Inc.
2009. Web. 03 Feb. 2015
“2013 Stewardship Report”. Stewardship at REI. Recreational Equipment, Inc. 2013. Web.
01 Mar. 2015
“President’s Message”. About REI. Recreational Equipment, Inc. 2014. Web. 16 Jan. 2015
“REI Sales Top $2 Billion in 2013”. About REI—Newsroom. Recreational Equipment, Inc. 17
Mar. 2015. Web. 16 Jan. 2015.
“REI Company Overview”. About REI—Business. Recreational Equipment, Inc. Web. 16 Jan.
2015
“The REI Workplace”. REI Stewardship—Workplace. Recreational Equipment, Inc. Web. 16
Jan. 2015.
“REI Employee Reviews”. Glassdoor—Reviews. Glassdoor, Inc. Web. 10 Feb. 2015.