REI is going remote and selling its corporate headquarters

Discussion
REI’s rendering of its then proposed Bellevue, WA campus, March, 2017
Aug 13, 2020
Tom Ryan

REI Co-op has announced plans to sell its newly completed corporate campus in Bellevue, WA. Instead of the central location, the co-op will embrace a new HQ set-up of multiple satellite campuses and “lean into remote working as an engrained, supported and normalized model.”

The first reason given for the move are the proceeds from the sale of the building and land. The funds will shore up REI’S balance sheet in the wake of COVID-19 and enable investments in growth initiatives as well as commitments to nonprofits and carbon goals.

The second is increased confidence in the benefits of remote working, including being able to recruit outside of the Puget Sound region and offering more flexible work schedules and less commuting time for existing staff. The decision comes after REI’s headquarters successfully transitioned to nearly 100 percent remote work in early March.

“We learned that collaboration doesn’t have to be tied to a single location,” Ben Steele, REI’s EVP and chief customer officer, told RetailWire. “We learned that mobile working tools and technology are pretty effective, and we learned that the benefits of flexibility to the individual employee are pretty profound.”

REI so far has plans for three satellite locations in the Seattle area to provide space for in-person collaboration. Mr. Steele noted that REI’s corporate team continues to work largely from home due to local guidelines and is finding ways to adapt to the changes, such as having fewer casual brainstorming sessions and the difficulty building camaraderie and integrating new employees.

In a memo to employees, REI CEO Eric Artz also acknowledged that working from home has “its own set of unique challenges” and will be an adjustment for some. He noted that some employees may already be missing hallway conversations, in-person work-sessions and “incredible cultural moments” such as REI’s Anderson Awards peer recognition program. He’s confident “innovation, collaboration and imagination” will solve any shortfalls.

Mr. Artz concluded, “This year has shown us our home is not a building. Our home is wherever we find ourselves doing our best work, pursuing our outdoor passions, serving our communities. Serving each other.”

DISCUSSION QUESTIONS: What steps will be critical for REI to ensure the shift to remote working and multiple satellite campuses proves effective? Do you think the move will prove successful for REI and do you expect other retailers to take similar action?

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Braintrust
"If they can make this work then they will be at the forefront of a model that I am sure many others will follow in the coming years."
"This is a bold move that will be met with challenges."
"While everyone is still learning, it has become clear that the traditional office environment will forever change."

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39 Comments on "REI is going remote and selling its corporate headquarters"


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Mark Ryski
BrainTrust

REI’s decision to shift to work from home and abandon their new campus is a dramatic example of the kind of decisions many businesses are grappling with. All companies need to find ways to cut expenses and operate their businesses – as drastic as this move by REI may seem, we’ll be seeing a lot more of it in the months to come. This is far from over.

David Naumann
BrainTrust

The pandemic has forced many companies to adapt to a remote workforce for several months and it has proved to be a successful test with positive results. We will see more companies scale back their office space and allow more employees the option to work from home. Keeping some office space for occasional team meetings is a smart strategy and it is imperative that companies provide remote employees with all the necessary equipment, including office furniture in some cases. This is going to have a huge negative impact on commercial real estate.

Zel Bianco
BrainTrust

If retailers can save money by doing this and put those savings towards remote working tools I believe it will prove to be successful. We have been working this way for over four months now and I feel that productivity has been as good if not better than when we were all in the office. Stand up meetings are critical to getting priorities for the day set and tools like Teams for communicating via chat during the course of the day have also proven to be very effective. Retailers and suppliers must embrace this new way of working as it will be here for some time and maybe forever more. I found the latest mini white paper from McKinsey on what CPG sales organizations need to change to compete very helpful and informative.

Dave Bruno
BrainTrust

This move by REI is likely just the first shoe to drop in a long line of companies significantly downsizing their facilities. I applaud REI for their bold move, having recently completed the new headquarters, and I think their strong culture will make the permanent transition to a remote model work. It sounds like REI is not underestimating the challenges that remote cultures present, and we should continue to watch their progress closely to gain lessons from how they overcome those challenges. I suspect the many more retailers that will likely follow their lead will have a lot to learn. And as an aside, watch for the (massive) crisis looming in commercial real estate…

Neil Saunders
BrainTrust

Let’s be honest: REI is selling the HQ because it needs the cash and also needs to reduce expenses to be viable over the longer term. However a lot of companies have quickly found that new ways of working during the pandemic have advantages and are, therefore, keen to keep some of those methods even as we move into recovery. In my view the future will be blended: a lot of firms will have more working from home, but will mix this up with days on-site and away days where people meet face-to-face. Social gatherings for work purposes are still essential and have a key role to play – it’s just that they don’t necessarily need to take place at a big, fancy HQ.

Scott Norris
Guest

This can also be an opportunity for REI to dynamically put its teams in more direct contact with users and environments — use the products, interact with customers and suppliers, learn from experience and take that back into the organization. I’d expect to see more business travel, not less, from this strategy, but if done well, it will be a better investment than fixed real estate.

Georganne Bender
BrainTrust

It’s also easier to sell a corporate headquarters that you never moved into in the first place. Less baggage. Some company will get a brand new, never been used campus.

Shep Hyken
BrainTrust

The second reason for REI’s sale of their campus is exactly what REI is about. They are focusing on their employees. Going to smaller “satellite” locations still gives people a place to meet, but their reasons to go remote are a lot about lifestyle for employees. This fits into their culture. As a consumer, when I go to REI, most of their sales people on the floor are outdoor enthusiasts. These aren’t randomly hired team members. The last paragraph of this article sums it up nicely: Mr. Artz concluded, “This year has shown us our home is not a building. Our home is wherever we find ourselves doing our best work, pursuing our outdoor passions, serving our communities. Serving each other.”

Richard Hernandez
BrainTrust

This is not a surprise and as this pandemic continues, you will see a lot more companies focusing on remote working and smaller campuses.
We have been discussing remote working for years, but the pandemic has really made companies look at it as a sustainable options to getting the day to day done.

Bob Amster
BrainTrust

The sale of the new corporate office building appears to be a good, calculated move, influenced by the pandemic. REI now has had five months of hands on experience with remote working environments and, most likely, honing the process to enhance productivity all along. Now that REI has had this experience, recovering the expense of their new building and permanently reducing the required office space are strong incentives toward selling the building. Many retailers will follow in REI’s footsteps and, at a minimum, reduce the office space footprint permanently.

Raj B. Shroff
BrainTrust

One of the important steps will be to align on expectations. In an office, it is easy to expect back to back calls, meetings, etc. When working from home, while those used to it can be disciplined, for many it’s not so easy. Ensuring some flexibility and scheduling simplicity will be important and there will be consideration of adjusting the work week – we are built around an antiquated factory model of 8 to 5. Of equal importance will still be in-person collaboration to build bonds that are difficult, though not impossible, to build online.

I think in the short-term REI and others can be successful. However until better collaboration tools are built, I think the longing for physical connection will be too strong to overcome. In-person, remote hybrids will be most realistic, similar to what’s happening in many schools this Fall.

Brett Busconi
Guest

REI is a company with a reputation for strong culture — and a critical component of moving to a more remote office setup will be to capitalize and build further on that existing culture. The move to do this before many other companies fits with this culture and I think it shows strength in their leadership.

In a year, virtual companies will be just another way to describe the new working environments. Retail may have some challenges from the corporate perspective which necessitate more in-person planning/sharing, but I would not expect retailers to stand apart from what I think is the immediate future of corporate office structure change in America.

Oliver Guy
BrainTrust

Huge and dramatic. This is the first example of this I have heard of in any industry and it could well become an example and a watershed moment.
There has been a lot of talk about how this type of working opens up larger talent pools because you are no longer constrained by geography. However this could also mean that certain roles could be done from lower cost economies. The whole world is changing in front of our eyes.

Phil Chang
BrainTrust

The pandemic has showed us that we can take down old paradigms whenever we want (or, some would argue, when we must). This is a great paradigm to take down.

It removes costs from the cost model and allows *most* employees to be happier in their own happy places. Maybe I’m naive but I’d like to think that translates to better retail and hopefully flat to slightly cheaper retail.

I think I’d want to see REI and other retailers/companies take the next step which is to help with changing zoning laws so those great big buildings become mixed usage locations.

Stephen Rector
BrainTrust

Other companies are going to follow and the commercial real estate sector is going to be the next area that gets crushed due to the pandemic. The winners will be those who can figure out how to convert this unused space into something that can be a positive for the local communities where they are located.

Ben Ball
BrainTrust
This is going to be a lot messier than current enthusiasm for remote work would lead us to believe — and I am a long-time proponent of remote work in the right circumstances. But companies are going to be pressed to do this that shouldn’t. The short-term success of the experiment during COVID-19 will drive corporate peer pressure to realize similar cost savings and to appear equally progressive in the press and in boardrooms. Activist investors will push for the short term boost to the balance sheet of real estate sales and the expected long-term cost savings of remote work. Employees who have discovered the comfort of working in their bunny slippers with their favorite coffee mug in hand will resist going back to the office. None of this is driven by the core benefits of remote work, which can be substantial. It will be knee-jerk reaction and executive FOMO. Buy the dip in commercial real estate REITs. Many of those companies will be looking for office space again in a few years. At least,… Read more »
toddcohen
Guest

EXACTLY.

Andrew Blatherwick
BrainTrust

There is a lot to be said for more flexible working and working from home. However a company has to make sure they do not lose the benefits of collaboration between employees and within departments. There has been evidence over the last few months that some employees really thrive working from home while others miss the social interaction with other employees and the spark they get from getting and sharing ideas and are also experiencing mental pressure and stress.

If REI splits departments across the three satellite offices they could fall into deeper departmental silos which is very dangerous, particularly from a supply chain point of view. It takes greater management to ensure that departmental interaction takes place and internal communications need to be increased. If they can make this work then they will be at the forefront of a model that I am sure many others will follow in the coming years.

Lisa Goller
BrainTrust

REI’s bold move typifies our flexible future of work. Committing to remote workspaces will help REI win with cost savings, employee comfort and creative collegiality.

Critical steps to ensure effectiveness include investments in:

  • Tech: Reinvest property gains into a robust technology infrastructure to maximize productivity and minimize IT glitches;
  • Collaboration: Schedule frequent team and all-staff communications to increase employee engagement and visibility;
  • Morale: Use satellite offices and online events to help employees feel valued and connected. Celebrate wins to express gratitude and unity to enhance motivation and retention.

Given the nature of REI’s business, the company could encourage employees to use the time savings from no commuting to spend more time enjoying outdoor activities to promote total well-being. After all, happy, healthy workers are productive workers.

Other retailers will watch REI to weigh the costs and benefits of foregoing their own expensive commercial real estate.

Xavier Lederer
BrainTrust

This is a bold move that will be met with challenges. Employees are divided on the question: PwC’s Remote Work Survey about a post-COVID-19 world recently found that, while only 32 percent of employees want to work remotely full-time, 51 percent want a mix of office and remote work. Only 17 percent want to go back full-time (or close to full-time) to the office. I notice with my clients that companies with strong values that employees live by on a day-to-day basis, crystal clear goals and priorities, and a healthy management team that shows their members’ vulnerabilities (i.e. the exact opposite of superheroes), have the highest chances of making remote work a success.

Evan Snively
BrainTrust
  1. That is a giant and undoubtedly very unique space – I am curious who the buyer is.
  2. I do think that REI will be successful in their efforts. The move is in line with their cultural values and so I would expect most employees to support and embrace the move. As for the success of other retailers, it really is going to be a case by case basis and prior company culture will certainly play a role in each brand’s success.
Cathy Hotka
BrainTrust

Welcome to the new normal, with no end in sight to the pandemic. Remote teams have done groundbreaking work in the past months, and there seems to be no appetite to crowd back into offices. Congrats to REI for seeing into the future.

Brandon Rael
BrainTrust

This is not a surprising development, as retailers especially are focusing on cash conservation as well as creative ways of being productive without a fancy centralized corporate headquarters. REI’s move to a more regionalized satellite office structure or a hybrid model that includes a remote workforce operating model may be the wave of the immediate future.

The workforce has resiliently adapted to working remotely and keeping productive. While remote happy hours, workshops, webinars, and Zoom calls are a poor substitute for in-person camaraderie, these are a necessity in our unprecedented COVID-19 world. Until there is a degree of safety, security, certainty, and stability, the workforce will not be so quick to return to large corporate campuses or city-based office towers.

Paula Rosenblum
BrainTrust

Jeez — I feel like we were pioneers. RSR has been a virtual company for 13 years. It’s just important to see each other face to face a couple times a year to keep the connection real, but we definitely figured out the collaboration part early.

Brandon Rael
BrainTrust

Not only pioneers but visionaries! Well done!

Rick Moss
Staff

We’re with you Paula. We’ve been working remotely since 2002. My advice:

1. Hire people who can think for themselves.
2. As much as you can, structure job profiles based on completing project or task objectives vs. putting in set hours.

When you can’t be there to watch your people work, you learn to judge them based on the quality of their output when they do the work, then the way in which they do it becomes less material.

So hire accordingly.

Georganne Bender
BrainTrust

Having been a retail buyer, I have to disagree. Companies like ours can live remotely but retail buyers need space to see vendors, put lines together (those samples stack up), set planograms (even when they are done virtually someone still needs to take the photos), and more. Not everything can be done well virtually. Offices do a lot more than house people.

Georganne Bender
BrainTrust

I agree with Neil that REI could be selling its corporate offices because it needs to reduce expenses to be viable over the longer term. Rich, my business partner, always says isolation creates dysfunction. FOMO is real. Ben makes a great point when he says many companies that dissolve their headquarters could be looking for office space again in a few years. We’ll have to wait this one out to see what happens.

Bindu Gupta
BrainTrust

Remote work has saved precious commuting time, given people the flexibility to work and manage things at home and enabled them to get creative in terms of different ways to collaborate as well as try to get some of the office fun culture back through virtual happy hours, etc. REI is on the right track and I anticipate a lot of other retailers following suit. However it is absolutely essential to ensure employees are given the right tools/set-up to get their work done effectively as many of you have already mentioned. In addition to that, retailers also need to get creative with ways to bring the “office culture” virtually.

Adrian Weidmann
BrainTrust

COVID-19 has created a seismic shift in the way we live. It has forced us to function in ways we never imagined. The changes have been so drastic and sustained that there will no going back to a pre-COVID-19 normal. While everyone is still learning, it has become clear that the traditional office environment will forever change. Office space and infrastructure are expensive. I’ve had a home office since 1988 and I am far more efficient, focused, and productive now than being in a traditional office environment.

Ken Morris
BrainTrust

I have been virtual for 16 years. The myth surrounding onsite work is that one can’t collaborate, but that isn’t true with today’s technologies. The value of fielding a virtual team is that you can recruit the best people for the job regardless of geography. Zoom, Microsoft Teams, Go to Meeting, etc. allow a collaboration effect you don’t really get in face to face interaction. Frequently in large onsite meetings you can’t see the face of the person on either side of you or at the other end of the conference room table nor can you collaborate with colleagues in real time.

These collaborative technologies enable a different form of communication. Is it better? Maybe not, but it is different and I believe the pandemic has forced us to examine what the nature of work is and will alter it forever.

Suzanne Crettol
Guest

People have been asking for a more flexible work environment for a while. By strategically opening satellite offices in desirable areas (where the talent lives or wants to live) and/or by allowing remote work this can make all the difference in attracting and RETAINING talent.

Brent Biddulph
BrainTrust

A sign of the times — the decline of brick and mortar (stores, malls, and HQs). Boundaries no longer relevant in a retail tech revolution driven by dramatically shifting consumer expectations. On the flip side, expansion of brick and mortar real estate is underway via warehouses and micro-fulfillment centers required to better serve consumer delivery expectations.

Jeff Sward
BrainTrust

It’s hard to understand the real magnitude of what is really happening here. REI was already on the progressive end of the scale. But to go from investing in and building a new headquarters to selling it in favor of a whole new satellite-office/home-office model is extraordinary.

Would they be doing it if they didn’t need the money? I’m betting they would.

The lessons learned from the pandemic are real. REI isn’t waiting for somebody else’s new normal, they are creating their own new normal. They LEARNED from the pandemic and all of the new processes that simply had to be embraced and implemented. Resisting and fighting forced change is only natural sometimes. Turns out that learning from forced change can lead to pretty powerful steps forward.

Peter Charness
BrainTrust

Have you sat in the traffic in Seattle, particularly going from the north end which is where that new campus was located south to say the airport or points below? Pure pleasure … hours and hours of it. And for IT resources, hiring in Seattle is tough as the market is very competitive and expensive.

I think the future business model will be more tempered than “all in, or all remote.” Satellite offices where people can still gather together, connected with better VC than just Zoom may be the model. Remote some, but not all days.

This will allow companies to set up simply and inexpensively to bring on teams anywhere the talent is, which will tend to take some of the air out of the cost/expense of some of the really expensive centers like Silicon Valley, NYC and others. All in all not a bad thing to support a better quality of life and work balance.

Rich Kizer
BrainTrust

Remote has turned into a verb. Right now it is working for many companies and I suspect will grow larger in the next few years. We can’t instantly put staff back to onsite work places unless we have the facilities. That being said, remote works. However, what will be really important will be corporate gatherings at least quarterly to give a sense of the bigger picture everyone is striving to accomplish, birthing collaboration groups that can communicate in remote environments without the fear of politics, and very importantly, to establish the visions and purpose of the whole, giving the staff members a clear picture of what they are striving for, and how their contribution benefits the whole.

Craig Sundstrom
Guest

I don’t think I would see this as specifically (or even primarily) a “retailer issue.” Most retailers, at least the ones we talk about here on RW, are already highly decentralized, with HQs accounting for only a tiny fraction of the employee count.

Back to REI: how well this works for them is something they and we will just have to find out. Whether it works or not, I’m hesitant to say the experiment should/shouldn’t be applied more broadly. And despite the nomenclature (of multiple, presumably equal “satellites”) the fact that the memo came from the CEO himself emphasizes the old adage: the head of the table is where the President sits.

Brad Eckhart
Guest

The COVID pandemic has forced all retailers to adapt to not only the current state, but more importantly, it requires the need to rethink their business models for tomorrow and beyond. This includes what the physical office space looks like in the future and how collaborative tools can enhance the remote working experience.

I believe REI’s approach to satellite campuses is a smart move. Even with the best collaborative tools, there are certain functions, particularly in the merchandising and marketing departments, that require face to face discussions and touching and feeling the product.

toddcohen
Guest
There is so much behind this. Retail is in trouble, and REI needed to find ways to save money and cut. They built a HUGE building at the wrong time. COVID gave them an excuse to sell it and couch it as “the power of remote work.” Well, you can look at work in two ways. One: As long as my employees get their job done, then I don’t care where they are. That means they look at work as a checklist, and very one dimensional. Technology does not replace what human interaction provides. BUT — how are they feeling? Two: People need people, and culture creation is not a virtual experience. People are social creatures. The watercooler effect is powerful. Also, not everyone WANTS to be in their house 24×7. UGH. People need a BREAK. I see this as a cost move — short-term gain — and later, it will have an impact. Managing people remotely is VERY hard, and not everyone is good at it. People are very clear that at best, a… Read more »
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Braintrust
"If they can make this work then they will be at the forefront of a model that I am sure many others will follow in the coming years."
"This is a bold move that will be met with challenges."
"While everyone is still learning, it has become clear that the traditional office environment will forever change."

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