Meeting REI's CEO

Meeting REI's CEO.

If I believed in a God, I'd have to start thinking that she's a geek and looking out for me. Why do I say that? Because Alaska Airlines' reservation system keeps putting me next to the most interesting people.

Last night, for instance, I sat next to (and chatted with) the President/CEO of REI, Dennis Madsen. We sat next to each other on the way from Oakland to Seattle — he was on the way back from visiting stores in Colorado. He wants to revolutionize the way you shop for outdoor equipment. How's he gonna do it? Technology and great employees.

First, Dennis is the real deal. He has only worked at REI during his career. Started there in high school and has been there for more than 35 years. “I've never been offered anything more fun,” he told me. He's proud of his employees — REI was named as one of the 100 best companies to work for, and loves that he gets paid to do things like ski Aspen and try out different gear. In 2002 sales were $735 million and they have about 7000 employees working in 70 stores. The REI website claims that is the Internet's largest outdoor store, offering about 50,000 items. Dennis tells me that all wouldn't fit in a million-square-foot brick-and-mortar store.

We talked about a variety of things. Here's a selection.

He thinks the next five years are going to see large changes in retailing. Why? Because he sees the trends of low-cost plasma screens. Databases. Product-tracking mechanisms. Combined online and offline shopping experiences. He told me that they are already working on a “REI future store” concept because these things, while being too expensive to implement today, will radically change retailing and if REI waits, their competitors will invest before they do, and will take market share away from them. Did I say I like how Dennis thinks? It's exactly our message about Longhorn.

Here's what I remember from our two-hour conversation (he knew I was going to write about our conversation, and asked me to keep one or two things off the record). Here's a quick rundown:

Technology. “It's too complicated.”

Challenges to his business. “Complacency.”

Tablet PC. “Have one.” (He liked the demo of Tablet PC 2004 that I showed him).

Favorite retailers. “Whole Foods. Starbucks.” They make something seemingly routine, like buying a cup of coffee, almost magical, he says.

Attitude toward employees. “Any employee can anonymously ask me a question and I'll answer it on our intranet within 48 hours,” he said.

New service they are working on? New gift registry. Connects online, instore. All 70 stores nationwide will have it. Took 18 months to develop. Turns on in two weeks.

Would he let his employees weblog? Yes. They already are participating in online conversations and he's all for expanding that conversation.

RSS? “What's that?” He took extensive notes as I explained it to him and says he “gets it.”

Email? Spam is horrible.

Longhorn? He says he could use better file search technology right now “I lose documents on my Tablet PC,” he says, which really makes him mad. He's looking forward to using newer technology in his “store of the future” initiatives that his team is working on.

OK, more in depth. About stores, he's seeing that plasma and touch screens will change the retail experience quite a bit. Brick and mortar stores aren't going away, he says. Do note that 15% of REI's business is currently coming in online, though, and those sales are increasing.

Also, he expects that within two to five years everything will be tagged with RFID, which will let his IT teams build new kinds of shopping experiences. For instance, you could grab a camping stove off of a shelf, hold it near an RFID scanner, and you could get a demo on how to properly use it. Or, you could see other things that work with that stove. Or, you could enter that into your gift registry for your wedding. Or…well, you get the idea.

Also, he thinks pricing will change quite a bit in the future. He expects to see “virtual pricing” where the price of something could change based on supply and demand. Pricing would be displayed on electronic monitors underneath each product. Or, you could see the price of something with an RFID scanner. They have 50,000 items available on their online store and three to four thousand in a typical REI store. Imagine repricing your inventory for seasonal changes? That takes a lot of employee time that could be better used to give better service to customers.  [The Scobleizer]

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