REI Reaps Rewards By Putting Purpose Before Profit

As we approach the holidays, retail businesses are in high gear preparing for their most profitable season. For many companies, the holiday season largely determines their outcome for the year. The fate of leaders during this season has a profound effect on their careers. Miss your targets and your job may be in jeopardy. Resulting pressure often translates into a focus on inventory, margins, promotions and discounts. While these are essential aspects of a profitable business it is also vital to stay true to deeper purpose, meaning and values in achieving success. Let’s look at how one retail company took a holiday risk and reaped rewards.

REI’s Approach

REI is an outdoor recreation company that not only understands the link between purpose and profit, they also understand that steadfast commitment to purpose doesn’t necessarily require sacrificing profit. In 2015, REI made the gutsy hiking-with-purposedecision to close all of their retail stores on Black Friday rather than capitalize on the commercial frenzy of the day after Thanksgiving. In staying true to the company purpose of  “work[ing] to inspire, educate and outfit for a lifetime of outdoor adventure and stewardship”, REI urged each of their 12,000 employees to spend Black Friday outside with family and friends through its #OptOutside initiative.

The business world thought they were crazy. Why give competitors an advantage on the busiest shopping day of the year?

President and CEO Jerry Stritzke made it clear how highly he values the company purpose:

“As a member-owned co-op, our definition of success goes beyond money. We believe that a life lived outdoors is a life well lived and we aspire to be stewards of our great outdoors. We think that Black Friday has gotten out of hand and so we are choosing to invest in helping people get outside with loved ones this holiday season, over spending it in the aisles.”

A bold and risky strategy for sure! Did the focus on purpose over profit pay off in the cutthroat world of retail?

The Rewards of Purpose Over Profit

Indeed, REI’s emphasis on their company purpose reaped great rewards in business results. According to a June 2016 Fast Company article, over one million social media followers responded to the #OptOutside initiative by spending time outdoors rather than in stores that Friday. Online visitors to rose by 26%. In 2016, REI gained one million new members and posted their highest revenue to date of $2.4B. I doubt that REI decided to close their stores as a stunt to increase revenue. Rather, they stayed true to their purpose and let the outcomes take care of themselves. For more on this topic and approach see: Understanding Process & Outcome.

REI recently announced they will remain closed on Black Friday this year and the Chicago Tribune reported that the company is partnering with over 200 other organizations to further the impact of their initiative. The 2015 decision wasn’t a one-time publicity stunt but rather demonstrated an ongoing commitment to purpose and values. There also appears to be an increasing movement for many prominent retailers to close on Thanksgiving Day to show their respect for employees and their families. As a result of staying true to purpose, REI appears to be significantly influencing the landscape of the retail industry.

How Does the REI Story Apply To Me?

In life, we are all performers in some respect. We perform in our work, our relationships, our service and our lives. We also want to achieve the best possible outcomes for ourselves, our families, our teams and our communities. Meaningful outcomes cannot be achieved without meaningful purpose. I’ve written before about most companies undertaking meaningless exercises in creating mission statements rather than creating true purpose: Don’t Waste Your Time With Mission Statements. The same principle holds true if you are a team leader, community leader or family leader. If you want to achieve great things you must begin by establishing meaningful purpose. This serves as the litmus test for driving all important decisions as you pursue sustainable excellence. Absent purpose you are a boat without a rudder–falling prey to the waves in your life and reacting to them. Staying true to purpose worked for REI and it will work for you too!

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