The target group of REI is people between 28 and 45 years. The average income of the customers is between 150.000 and 200.000 dollar.
Formula of REI
REI is a corporation with members. These members pay $ 20,- for becoming a member. When they are a member they get several discounts and a cheque which is 10% of the amount that the member has bought at REI. When there are a certain amount of members in the area, they try to build a store for them. So REI can build more stores when the amount of members increases. There are around 4.000.000 people who are a member of REI. In the city and surroundings of Phoenix alone there are approximately 50.000 members.
REI isn’t the cheapest company in the outdoor industry. They try to sell high quality products with a high level of service. With their service they are trying to be different then there competitors. Also the have their own brand. The qualities of this brand are even good or even better then the highly rated brands. They also test their own brand and other brands to insure that the quality of the product is as high as can be. The profitability of their own brand is much higher, due to the fact that they don’t have to pay for big name. So they try to have top of the line products, a highly rated service and try to get a higher profitability by selling their own brand.
Also they have an outlet centre. They have created this department because they want to sell their products that couldn’t be sold at their shops. So it’s like their junkyard, but a lot of people will buy their old products at this outlet centre.
Location
The first store was in Seattle. From there REI started to get bigger and bigger. Now 72 years later, you can find stores all over the world. The next step that they want to take is open 3 new stores in New York. They’re going to build a REI store there, in a parking lot. So al the shopping public can visit them easily.
REI tried to open a store somewhere else then USA. They tried that more than 12 years ago in Japan.
REI started with just one store, and it wasn’t a success. They spend $30mil, just to get the business started, and after 18 months it became a failure. The reason is the wrong location that they picket, and to start just with one store. After the 18 months they quitted in Japan, and just to get out of there, they had to spend another $30mil. So, for starting just one new company, they lost over $60mil, and it took REI 10 years to recover from that.
