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Co-op: A Crunchy Business Model?
Friday, February 24, 2017 6:30 AM

Jon Knoll, VP Sales and Service, Credit Union Resources

Spring fever has set in; I am ready for winter to be done and for some consistency in our Texas weather. Recently, I was looking to purchase a fishing kayak to help with the fever. Several friends bought their fishing kayaks last year, and, apparently, the fish just jump in the boat.

Buying a kayak these days is tough business. I was surprised by all the options, brands, and accessories; the trend of kayak fishing is going through the roof. It has been a challenging task to shop for a kayak, and I took a full month to figure out which kind of fishing kayak was the best for my purposes.

REIIt wasn't long before I found myself in the Plano REI outdoor store, hoping they could special order a kayak that did not appear on their website or in their store. I haven’t set foot in an REI store since, well, I can’t remember.

I guess I didn't pay attention to the signage before walking in; it had changed since the last time I was there. In fact, it had changed in 2014 and 2015 during their major re-branding campaign. The signage now shows REI CO-OP. 

The Plano store is beautiful, with amazing displays of mountain bikes, shoes, clothing, accessories for hiking, paddling, optics, camping gear, and the list goes on. I also kept seeing signs for “membership” and special “membership offers.” I finally realized, to my surprise, that REI is a co-op.

I researched further and asked one of the employees about becoming a member. His face lit up, and he let me know that for $20 I could become a lifetime member. I would have special access to outdoor education and trips and could receive a dividend every year based on how much I spent online or at the store. He did a great job sharing that many of their profits go back into the outdoor community and conservation. And just think, I only wanted a kayak, but I could also save a stream, river, and lake. Sound familiar?

When I looked further into their business model, I felt like I was looking at a credit union, although it's an outdoor store with a mission of helping consumers explore the outdoors. One of the company’s goals is to create a sustainable operation, which means to them that they will be “green” and "no waste" by 2020.

There's more to their sustainable operations goal. Here is a link to their “Who We Are” section of the website: REI isn't shy about this goal; they made it a big part of their rebranding strategy.

I can’t recall the number of credit unions I have walked into over the years that have gone to an optical storage system, and have made great strides in becoming paperless. These efforts were to save money, save space, save the environment, and "save trees," as I have heard many times in discussions with credit unions. They're reiterating a great message about sharing our operational goals and successes with our current and future members. 

Since I didn’t recall REI being a co-op, I Googled, "When did REI become a co-op? The answer? When they were founded, in 1938. What? 1938? This store has been around since near the Credit Union Act? At some point in their history, they dropped CO-OP from their name. Since the rebranding, here are their results, as posted on their website. The 2016 numbers are not available, likely released in March 2017.

  • Membership grew by 1 million in 2015, and ended the year at 6 million-plus;
  • In 2015, 72 percent of profits went back to their members, employees, and nonprofit partners;
  • In 2015, the co-op had record annual sales revenue of $2.4B, 7 percent growth in stores, and 23 percent growth digitally;
  • At close of 2015, REI had 143 stores and 12,000 employees;
  • It ranks consistently in the Top 100 Places to Work, Fortune magazine;
  • They're closed on Black Friday so employees and customers can enjoy the outdoors (they actually promote state and national parks events in coordination with state and national park agencies);
  • REI also has a CO-OP line of clothing that has been really popular; and
  • They began a popular travel and event portal for members, providing outdoor destination trips and education events.

The Takeaways:

  • Profits and growth are not the company’s priority.
  •  They strive to help their outdoor community by:
    • Promoting outdoor stewardship;
    • Being a great place for their employees to work;
    • Providing member dividends; and
    • Promising the REI CO-OP Difference, 100 percent satisfaction, gear and advice you can trust, and a 10 percent member dividend.

A Bloomberg article included lots of buried treasure and insight to a co-op and REI's rebranding strategy. "It’s a strange and kind of crunchy way to do business, a model that would seem to make more sense in the 1960s or in 1938, when REI was formed. But in an age of increasingly crafty retail tactics—from dynamic pricing to data mining—co-ops are resonating with weary consumers."

“The word I would hone in on is ‘community,’” says REI Chief Executive Officer Jerry Stritzke. “It’s inherently local, and it involves trust. You see a trend of companies trying to tap into that, and the truth is, we’re really the definition of that.”

In summary, I didn’t buy the kayak from REI CO-OP, but it will definitely be a place for the paddling/fishing journey I will embark upon. Isn’t that interesting? I started the article that I wanted to buy a kayak, now it is a paddling/fishing journey, and REI is a part of it. The trip to REI CO-OP breathed life into my view of our own co-op experience, the Credit Union Movement. They found success in reinvigorating their co-op business model, and they outpaced many retailers in the country as a result. They did this by the philosophy that credit unions live every day:

  • Help members achieve financial success;
  • Help members achieve financial literacy;
  • Give back to the communities we serve; and
  • Provide a great place to work for our employees.

About Credit Union Resources
At Credit Union Resources, our goal is to be the leading provider of business solutions to the credit union community. To accomplish this, we offer a wide variety of products and services, designed to help your credit union gain greater efficiency and effectiveness in better serving your members.

Whether you're looking for an effective advertising campaign, sales materials, new lending products, technology solutions, auditing services, a hands-on compliance partner, strategic planning assistance, a shared branching presence, or staffing and operational support; we have what you need, at a price you can afford. Simply put, we have the resources your credit union can count on. Learn more at

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