SEATTLE, Wash. (BRAIN) — REI Co-op says it's targeting the bike category for growth with the addition of Cannondale bikes and parts & accessories from the Trek-owned Bontrager brand at all 154 of its U.S. locations and online this year.
"We have identified cycling as a disproportionate growth opportunity for REI," Ben Johns, REI's general merchandising manager, told BRAIN.
"Our members tell us that they ride ... but REI is not as well known for cycling (as it is for other outdoor sports products). So we see an opportunity to up our game in cycling so it is consistent with what we offer our members in other categories."
Besides the addition of Cannondale and Bontrager, this year the member-owned co-op is expanding its Co-op Cycles line to include full-suspension mountain bikes, increasing staff training, and adding bike demo and rental programs and a used-bike trade-in program. It's also doubling the number of multi-day bike trips offered by its REI Adventures travel division.
REI has long sought a major bike brand that it could offer in all locations. However, no major brands have been willing to risk the ire of their independent dealers in proximity to REI locations.
Instead, REI offered its house brand Novara, which was replaced with the Co-op Cycles brand in 2016. REI has been the exclusive U.S. retailer for Accell Group's Ghost brand since 2014.
REI has long sought a major bike brand that it could offer in all locations.
REI has supplemented its house brands with a variety of other brands, including Cannondale, in some stores but not chain-wide. At one point, REI sold Scott bikes at 55 of its locations, but ended its agreement with Scott in 2015.
REI also was an Electra dealer since before Trek bought that brand in 2014. The Electra connection is what led to the Bontrager agreement, said Trek's Eric Bjorling.
"For us, REI's been a good Electra retailer for a long time. When we purchased Electra we made Bontrager available to all Electra retailers and REI is no different," Bjorling said. He said there are no plans to sell Trek bikes through REI.
Bontrager parts & accessories will be available at REI starting March 14.
REI and Cannondale have been steadily increasing their relationship in recent years, and Cannondales were being offered in 71 REI locations prior to this announcement. Cannondales have already begun rolling out to some of the remaining locations.
REI will have access to the full Cannondale bike line and will tailor its offering for individual stores, Johns said. Cannondale bikes will be sold online for pickup at REI locations, but not for direct shipment to consumers. Some stores also sell saddles from Fabric, the P&A brand that is part of Dorel's Cycling Sports Group along with Cannondale.
Nick Hage, Cannondale's general manager, said, “Cannondale has been partnering with REI for over 25 years and we have always appreciated the role they have played in supporting the bike industry. We are excited for our future with REI and how they will continue to bring our brand and products to their Co-op members.”
Johns said REI will honor all brands' pricing plans, including minimum advertised price policies. "REI absolutely respects the authority of brands to control their pricing and we applaud keeping a level playing field. We do everything in our power to support that," he said.
IBDs in the same market as an REI store will be quick to point out that REI members receive annual dividends on full-price purchases that amount to a discount below MAP levels. Member purchases of discounted products are not included in the purchase history that determines the dividend amount.
Increased staff training
Nate Nielsen, REI's director of action sports operations, said the co-op has made an increased effort in recent years to improve staff training in its bike departments.
"We definitely recognized a couple years ago that we had an opportunity to up our game in service shop and improve the consistency of experience that we provide our members," Nielsen told BRAIN.
He said that this year key employees in the bike departments in all stores will receive an average of 54 hours of technical training, including product, service and bike fit training. The chain also is expanding its bike demo program across 25 stores this year, in part to give REI staff access to the bikes sold in the stores and the nearby riding conditions.
He said all stores have at least one technician who has received basic or master-level certification from Barnett Bicycle Institute. Last year REI also added seven marketing shop coordinators, who work with stores to ensure consistent service skills.
E-bike strategy
Johns said REI expects more growth in e-bikes in coming years. The company currently offers e-bikes from Ghost, Cannondale, Stromer, Tern and Electra.
He said REI's initial experience with e-bikes was not a success.
"We were an early adopter, and we didn't have the technical sales and service training to support it," he said.
"It was a blood bath. We had folks come back with questions about a technical issue and we were not prepared to do the service, so what would you do? People returned the bikes. So we pulled back and we got the training work done by Nate (Nielsen) in place, and he's been very deliberate in rolling out the technical training at stores and now our return rate on e-bikes is actually lower than on standard bikes. So we are not only selling them effectively, we are keeping folks on the bikes, which is wonderful."
'Opportunity for the marketplace'
Johns has a background in bike shops — he worked at stores in Chico and Sacramento, California, before joining REI.
"REI has a deep belief in the ability for the specialty bicycle market to grow. In my heart of hearts, the motivation for this is we believe that there is a disproportionate growth opportunity for REI in bikes ... if we can be a competitive stimulus for the market to grow that would be the best thing that could happen. We are doing everything we can to be a good participant in this market," he said.
In announcing its renewed focus on the bike segment, REI noted that in the last 10 years it has donated close to $1.5 million to bike safety, infrastructure and trails, including support of PeopleForBikes, IMBA and local nonprofits.
