REI is a sporting good company that specializes in quality outdoor gear. The company started in 1938 as a gear co-op, and has grown to include more than 3.5 million active members, which it serves through 30 stores, as well as catalog and Internet operations. REI has successfully built a competitive advantage through the four generic building blocks of efficiency, quality, innovation and customer responsiveness. REI has a distinct competitive advantage, relying on economy of scale to offer members a 10 percent annual refund on all purchases. It also runs an extremely efficient operation. All customer transactions are stored in the computer system to facilitate returns and exchanges, as well as track purchases. This allows REI to understand their customers better and target advertising appropriately. Also, the company has consolidated its' distribution and logistics to source products more efficiently and economically. The company has two "500,000+ square foot Distribution Centers located in Sumner, Washington and Bedford, Pennsylvania" (www.REI.com) which are state of the art facilities, fully automated to take advantage of cost savings. REI is unique among the sporting good companies in not offering discounted prices or weekly sales. It does periodically send 20 percent off coupons to members but it primarily generates sales by developing customer loyalty, unique product offerings, and a sense of community. This lack of discounted pricing and mass-market product offerings could be seen as a competitive disadvantage by some. REI is known for quality among outdoor enthusiasts. The company offers quality and innovative private label product under the REI and Novara brands, in addition to top quality national brands. The private label brands are priced lower; yet develop more profit margin than the national brands. They also practice environmental stewardship, donating money through corporate giving, as well as employees volunteering to protect...
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