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REI’s boss challenges the bicycle industry to discuss the brutal truth about the business

Published April 14, 2016

MONTEREY, Calif. (BRAIN) — Jerry Stritzke called his leadership team together and challenged them to discuss the “Brutal Truths” about what was ailing REI’s business. A bold move for a relatively new leader at REI. And what were those Brutal Truths?

Stritzke boiled down what had been a complex and emotional discussion to a quick list that he shared with some 200 participants Thursday attending the Bicycle Leadership Conference.

The list included too many discounts, too many sales, lackluster stores, lagging membership, an aging membership and, he added, the bathrooms hadn’t been remodeled in years.

Stritzke took the reins at the cooperative in October 2013 and has been shaking up the co-op ever since. REI traces its roots back to 1938. Today, Stritzke is responsible for 15,000 employees working at 143 locations in 35 states. Last year REI generated $2.4 billion in sales as several of its competitors, EMS and Sports Chalet are struggling through a bankruptcy.

So taking a step back to seek out the Brutal Truths about the company’s performance and its future was a scary step for him and the staff, he said.

“I wanted to hear what the challenges were that we were facing and everyone new the brutal truths,” he said. Stritzke admits it was a tough moment, but it was apparent that everyone knew the issues yet no one had led a candid conversation about them.

Stritzke then turned his attention to the bicycle industry and asked: “Who in the bicycle industry is going to talk about the brutal truths? If this group doesn’t lead that discussion, then who will,” he asked the audience.

REI, with some six million members, is stepping up its role in the bicycle industry. Last year, the co-op brought in a high-end bicycle brand from Germany, Ghost, to improve its cycling section’s appeal to its members. “We had to change the way we do things. We wanted to move up the ladder as a brand (with Ghost),” he said.

But in what could be viewed as a warning to the industry’s traditional structure, REI employees taught more than 15,000 people the basics of bicycle maintenance last year. But more importantly, REI’s staff also taught more than 20,000 people how to ride a bike.

Those classes comprised some of the largest ever sponsored by the retailer and most signing up were in their 20s. “They wanted a bike to commute on, but many of them didn’t know how to ride,” he said. “We want to get as many people on bikes as we can,” he said.

But acknowledging what many IBDs would view as a threat, he pointed out that “a rising tide floats all boats.” And, he added, many of REI’s cycling customers tend to progress to IBDs as their interest in cycling grows.

Stritzke also discussed what was an unprecedented move last year to close its stores on Black Friday, the day after Thanksgiving and traditionally the biggest shopping day of the year.

The idea to shut down on Black Friday came from someone on his leadership team. “When I heard that I asked, ‘Are you shittin’ me?’” Stritzke said it took several months for that idea to percolate through staff. He also had to make the case to his board of directors.

The financial implications were daunting. Not only would the co-op forgo a day of sales, it would also pay its thousands of employees to take the day off. But he told the board that it was the right thing to do, noting that one employee told him he had never taken Black Friday off in 15 years at the co-op.

The decision, he said, would either be the “stupidest thing I’ve ever done or it was going to be really cool.” The night before he was to announce the decision, Stritzke went to bed in New York City fearing his decision was indeed stupid.

But the announcement went viral on social media, and ABC’s morning show wanted him at its studio to discuss it. As he fielded that call, ABC had already sent a limo to his hotel to pick him up. It was also a move that reverberated with customers. Some 1.4 million responded to REI#OPTOUTSIDE. And of those respondents, approximately 70 percent were under the age of 35.

Asked what the impact was financially, Stritzke was coy. “We were successful,” he said.

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