Corporate Social Responsibility / Organizational Strategy

REI Does the “Right Thing” While Staying Profitable

This holiday season, many retailers have decided to let employees stay home on Thanksgiving. Other retailers, like Walmart, are opening earlier than ever to beat sales from last year. One major retailer, however, has distinguished itself from the rest during this hectic retail season. In response to employee requests and customer protests, Recreational Equipment Inc. (REI) will not only be closed on Thanksgiving but remain closed on Black Friday, the most important shopping day of the year. Furthermore, REI employees will receive pay for both of these days. REI’s CEO, Jerry Strizke, says that REI gains more customers through its membership structure and specialty status than it does from Black Friday discounts. The Wall Street Journal has described REI as being “lucky” in this regard. REI is “lucky” that it doesn’t lose much money by staying closed on Black Friday as the company’s business tends to pick up more in the spring.[1] REI’s decision to close may be admirable, but it is also financially convenient.

Other articles on REI’s decision frame it differently than the Wall Street Journal does. USA Today frames REI’s decision as a demonstration of corporate social responsibility. REI has assigned the hashtag “#OptOutside” to accompany Black Friday. The company suggests employees and customers share what they do outdoors on Black Friday on social media, such as hiking or biking. Strizke says, “The thing that is powerful to me is this clearly is not a financially self serving act…It’s an act where we’re really making a clear statement about a set of values.”[2] Here the CEO implies that the bottom line has not affected this decision. REI has turned the money-focused day that is Black Friday into an opportunity to exhibit its corporate values. Hopefully, proof of the company’s mission increases loyalty in current customers and attracts new ones.

Strizke says that closing for Black Friday is not financially self-serving. However, numerous details suggest otherwise. REI is a co-op, in which 5.5 million members pay a one-time fee for a share in the business. This makes up 80% of REI’s sales. Additionally, sales tend to increase in the spring. Combined, these elements make it easier for REI to “do the right thing” and close its stores on Black Friday while paying employees. One wonders if Strizke would make this same decision if Black Friday represented a more significant loss of revenue. In a managerial ethics class this fall, a case study about Shell was discussed. The case reviews how Shell decided to stay in New Orleans after Hurricane Katrina instead of relocating its headquarters The company showcased its values by staying in its hometown and helped rebuild the city. Shell had analyzed the benefits and costs of staying in the devastated city, but, in the end, it ignored its bottom line analysis and simply “did the right thing” by staying.

REI is also trying to exhibit their values. However, if REI was not run as a co-op, or if its sales were not seasonally weighted in the spring, it would most likely hold out on paying employees on their day off or even stay open on Black Friday. While REI’s decision is admirable and favorable, it also seems that the company has converted its financial situation into an advantageous demonstration of social responsibility. This is not necessarily a bad thing. The retail industry as a whole needs to take this first step away from society’s frenzied approach to Black Friday and the holiday season. REI’s decision should encourage other financially stable retailers to follow its lead, adjusting their holiday working hours in favor of employees and organizing a campaign to match their core values. Currently, no major American retailers have done so. In the United Kingdom, however, the Walmart-owned supermarket Asda, who helped introduce Black Friday to the UK in 2013, will remain closed on Black Friday this year. Asda decided to spread out savings across the entire holiday season instead of cramming it into one day. Asda is encouraging a steadier holiday season this year to avoid the chaos and violence that it had experienced in the past. CEO Andy Clarke states that the decision is to put the customers first, as Asda always has.[3] Here, another financially stable retailer has decided to close on Black Friday and has presented that decision and the company as socially responsible. Just as REI is encouraging its members to go outside and do something active, Asda also frames its decision to be for its customers’ overall well being. Regardless of REI’s “lucky” financial situation, the company’s demonstration of social responsibility will hopefully set the stage for other companies to do so as well during future holiday shopping seasons.

Naomi Kliger

 

 

[1] Fitzgerald, Drew. “Some Retailers Step Back From Black Friday Frenzy.” WSJ. Wall Street Journal, 29 Oct. 2015. Web. 09 Nov. 2015. <http://www.wsj.com/articles/some-retailers-step-back-from-black-friday-frenzy-1446111003?alg=y&gt;.

 

[2] Malcolm, Hadley. “REI Closing on Black Friday for 1st Time in Push to #OptOutside.” USA Today. Gannett, 27 Oct. 2015. Web. 09 Nov. 2015. <http://www.usatoday.com/story/money/2015/10/26/rei-closing-on-black-friday-forfirst-time-in-its-history/74627872/&gt;.

 

[3] Balise, Julie. “British Retailer Joins REI in Saying ‘no’ to Black Friday.”SFGate . N.p., 11 Nov. 2015. Web. 16 Nov. 2015. <http://www.sfgate.com/business/article/British-retailer-joins-REI-in-saying-no-to-6623406.php&gt;.

 

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