One unlikely sporting goods store is thriving as retailers blow up everywhere

REIThe retail industry has been something of a bloodbath lately.Gap Inc. and J. Crew have been floundering. Formerly beloved teen retailers like Aeropostale and PacSun have filed for bankruptcy. Sports Authority did, too – and now it’s shuttering all of its stores.

 

Standouts in this environment are worth taking note of. One of them is sporting goods retailer R.E.I.

 

The company reported record sales, of $2.4 billion for 2015, and said same-store sales rose 7%. It’s a stark comparison to Sports Authority, and also better than results from Dick’s Sporting Goods, which saw same-store sales decline last year. 

 
 

There are, of course, reasons for Sports Authority’s decline that are singular to it: at a recent roundtable of industry executives, it was brought up that the golf boom imploded, and, as Matt Powell from market researcher NPD Group pointed out, Sports Authority was crippled with debt. REI isn’t burdened with that. 

 

 

But there are four other distinct reasons why REI is thriving when other retailers aren’t: 

 

1. These products contribute to an experience

 

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This has been said over and over again: millennials love experiences. They’ll buy a pizza, but they probably won’t buy your shirt. If they can’t Instagram it, they don’t want it – and that statement packs extra weight when it’s Gen Z.

 

Camping and hiking are experience. (And highly Instagrammable ones, too.) In order to complete those tasks, you need the equipment…which in turn, makes it a necessary purchase. This isn’t typical of apparel companies.

 

2. People will be willing to pay a premium for a high quality product

 

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Most people don’t want to shell out lots of money for apparel; they’ve been conditioned to never shop at a premium. However, most high quality products do demand a steeper price tag. Even though some consumers cannot grasp that concept – you’d be hard pressed to find someone who’d disagree with the fact that it’s worth it to buy a quality backpack or hiking boots if he or she going for a walk in the woods.

 

3. It doesn’t sell brands you can get anywhere

 

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Daniel Hoverman, director of Houlihan Lokey, pointed out that Sports Authority had a major problem: you could buy its core brands – Adidas, Nike, Under Armour – anywhere. It doesn’t give you a need to go into the store specifically. He also pointed to how direct-to-consumer business ended up it hurting it, as well.

 

This is a problem that retailers who aren’t specialty retailers could face: if they don’t give consumers a real reason to go into the store, they’ll just go elsewhere.

 

4. It has created a community – which is marketing gold

 

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REI prides itself on its strong community, namely, its “co-op,” which offers hiking and camping classes, various outings and trips, and events for its adventure-seeking consumers – thereby cultivating a sense of connection between shoppers, making it more than just a store to them.

 

And it’s true that companies who do this are often very successful. Many extremely successful brands, such as SoulCycle and Harley Davidson, have cultivated such strong communities, that they’ve been labeled “cult like brands.”

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