REI may be one of the best companies at turning shopping into an experience and turning customers into devoted patrons. And store layout is the quintessential REI design skill. It's in the stores that REI customers come to know the cooperative.

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The most creative companies in the world understand that design is about creating experiences that consumers crave. In a new book, “Design Is How It Works: How Smart Companies Turn Products Into Icons,” former Seattle Times and BusinessWeek reporter Jay Greene explains how several companies, including Kent-based REI, use design to address needs consumers never knew they had. Here’s an excerpt:

I’m about halfway up the Pinnacle. It’s my second climb on this Seattle spring morning. Truth be told, it’s my second time rock climbing in nearly a decade. Down below, some 30 or 40 feet, Day Frostenson has me on belay; that is, he’s holding the other end of the rope that’s attached to my harness. If I fall, he’s going to make sure I don’t drop too far.

I flash back nearly three decades. Back then, I was a teenager enamored with rock and ice climbing. I’d scaled some sheer rock walls on upstate New York’s Shawangunk Ridge, and in the summer of 1980, I’d learned to use an ice ax and crampons. By August, I’d picked my way to the top of Glacier Peak in Washington state.

There’s a terrific sense of accomplishment summiting a peak, particularly a 10,541-foot one such as Glacier Peak. You become part of an exclusive club.

As a 16-year-old kid, I gave little thought to design. Like most consumers, I was a shopper, not a student of business strategy. I had become a mountaineer and, when I went to buy gear, I shopped at Recreational Equipment Inc.

Why there? Looking back, I realize that REI gave me something I didn’t know I wanted. The outdoor outfitter didn’t just sell me gear; it offered authenticity. It was a place where customers could trade stories with the staff or ask for advice, knowing they’d get a valuable opinion. Just like summiting Glacier Peak, shopping at REI placed me among a group of people with whom I wanted to be identified.

REI may be one of the best companies at turning shopping into an experience and turning customers into devoted patrons. That’s because REI isn’t merely a place to pick up parkas, tents, or bikes. It’s a store where customers can go to learn how to use a GPS device on a trail, figure out which local waterways offer the best kayaking for beginners, and discover what to pack for a summit attempt on a 14,000-foot peak. It’s a place where outdoor enthusiasts go to be inspired.

Store layout is the quintessential REI design skill. It’s in the stores that REI customers come to know the cooperative. And the stores have come a long way from the 1930s, when the co-op was not much more than a shelf at a farmers’ market.

The Pinnacle, the indoor, free-standing climbing structure in the cooperative’s flagship Seattle store, was once a key piece of REI’s efforts to bring the climbing experience to its customers. But these days, it’s more of a tourist destination than anything else. “We probably won’t build a lot more Pinnacles,” says Dean Iwata, REI director of store development. “When we first started, it was totally unique.” Now it’s not unusual to see climbing walls in hotels, schools and health clubs.

So REI is prototyping a new store design, and doing it on a grand scale. The process began in 2005 by imagining what the cooperative’s stores might look like in 10 years.

When it came time for REI to ponder what its future stores should look like, it started with a whiteboard exercise, jotting down words that represent REI’s brand. Entertainment was a word that came up, but it was dispatched pretty quickly. The words that resonated most were community and interaction.

“We kept coming back to, how do the stores integrate into the community?” Iwata explains. “How do they inspire people?” Then, as now, customers came to REI not just for gear but for advice, education and ideas. It’s something that separates REI from its rivals, and Iwata wanted to bring it front and center.

REI took the bold step of creating a working prototype — a 41,000-square-foot store in Boulder, Colo., that opened in 2007. The store gets much recognition for its environmental friendliness, having earned a Leadership in Energy and Environmental Design, or LEED, gold certification from the U.S. Green Building Council.

As important as that is to REI customers, who expect the cooperative to be as green as the Cascade Mountains in which it was born, it’s the community center that was the most daring addition.

Many REI stores have community rooms already. But often, as with the huge space almost hidden on the second floor of its Seattle location, the room is tucked out of sight. When REI offers an avalanche clinic or a lecture from a renowned mountaineer at the Seattle store, it goes largely unnoticed by shoppers. In Boulder, the cooperative built a 1,000-square-foot community room right in the middle of the store and visible throughout.

With the prototype, REI realized it didn’t get the community center quite right. Designers had elevated the community room 4 feet above the rest of the store, figuring it would highlight the space, luring customers to it. But it made the room less approachable. Shoppers often hesitate before going up the stairs, unsure if the space is meant for employees only. “Instead of being a welcoming environment, it was an intimidating one,” REI President and Chief Executive Sally Jewell says.

Missteps, of course, are the whole point of a prototype. “If you don’t make some mistakes, you’re probably not doing your job,” Iwata says. “You’re not reaching for the boundaries.”

When REI opened its second prototype store in Round Rock, Texas, in 2008, it had a multifloor layout to work with. There, it put the 750-square-foot community center at the mezzanine level, between the two floors of retail space, forcing shoppers to walk through the center as they moved upstairs.

The cooperative won’t disclose the cost of the prototype stores. And the Round Rock store is still too new to gain any meaningful insight from its sales data.

But REI executives say that sales from the Boulder store are ahead of projections.

Is that because of the new store design? It’s hard to tell. But there are some other indications that suggest the effort is worth the cost.

Without disclosing specific figures, REI says that a larger percentage of customers are signing up for the $20 lifetime REI membership at the Boulder store than at the average REI outlet. And it has found that members are visiting the Boulder location more frequently than they did prior to the redesign. They’re becoming part of that exclusive club.

Excerpted from Jay Greene’s “Design Is How It Works: How Smart Companies Turn Products Into Icons,” by arrangement with Portfolio, a member of Penguin Group (USA),

Copyright (c) Jay Greene, 2010.