Trek and REI (Recreational Equipment Incorporated) announced today that all REI stores and its online store will be authorized to sell all Bontrager parts and accessories starting March 14, 2019. REI will also be selling Cannondale bicycles in all of its stores. This is just part of a major push REI is making in expanding its cycling business.



REI, based in Seattle, Washington, operates 154 retail stores in 36 states and also has an online storefront where consumers can order products to be delivered to their homes. The store sells a variety of outdoor recreation equipment for all different levels ranging from beginner to experienced. REI also has a large role in working to build community and advocacy in outdoor recreation.



Bontrager, a brand under the Trek umbrella, has historically been sold mostly in bike shops. The brand is also available to Electra dealers as part of their dealer agreement. Electra is also a Trek brand and sold in many of their stores. REI is also an Electra dealer.I had the opportunity to get on a call with several people from REI along with a representative from Trek/Bontrager to talk about how the partnership came to be and to clarify a few questions I had that I was assuming others would have as well.Present on the call were: Ben Johns, REI's General Merchandising Manager for Action Sports; Rene Costales, REI's Senior Category Merchandising Manager for Action Sports; Nate Neilson, REI's Director of Action Sports Operations; Courtney Gearheart, REI's Earned Media Program Manager, REI Brand Stewardship & Impact; and Eric Bjorling, Brand Director at Trek/Bontrager.

How did the Bontrager and REI partnership come to be?

REI:

REI took a step back three to four years ago to examine its bike business. It recognized there was a lot of headroom and need for clarity, expertise, and solid financial performance internally to create something we would want to scale. We have spent the last three to four years taking that business apart and putting it back together, with a lot of eyes from an objective standpoint.We recognized that as REI being on-brand was important. We've made the pivot and shift to focus on the idea of being trail first, which has had an impact on the assortment of products going into our stores and online. The second piece is pushing into an objective and local relevance. We're big with the number of locations we have and a handful of years ago, you could rightfully say that REI was acting like a big box store, but we've been taking the steps to design assortments of products that are relevant locally.For example, if you look at the design of the bicycle mix in one store, there may be regional similarities, but they're really highly tuned to what is relevant to our members in those specific locations.The third thing is that we've taken a hard look as to where we were at in an expertise standpoint in our stores. We wanted that aligned to the product we were going to sell. Whether it's e-bikes or full suspension, whatever that was, we wanted the level of expertise matched to that and have been taking the steps over the last several years to make that happen.We want the best brands in our stores so that we're competitive in the marketplace. We want brands that not only represent authenticity but are mindful around distribution, especially with what's going on with Amazon, from a competitive standpoint. We have to earn the right to sell those brands. What we're looking at today in terms of this announcement is the culmination of REI's readiness and our partnership on both the Cannondale side and the side with Electra, and now Bontrager, to have earned the right to have this level of distribution with these brands.

Is the full Bontrager line of products going to be offered through REI in its stores and online?

REI:

Like any brand, we don't purchase and sell every last SKU. There's not a restriction per-say in any of the categories, but we sat down with the Bontrager team together to determine what to specifically carry and where to carry it. There will be a broader assortment accessible on REI.com. There will be a more fine-tuned assortment available locally in stores.

What about wheels, stems, etc. Are those going to be available as well?

REI:

The biggest categories you will see are going to be helmets, shoes, lights, apparel, and little accessories like bottle cages, pumps, that kind of stuff. There will be wheels, as I understand it, and I believe stems. There will be some components but it's mostly focused on the accessories side.

With REI's return policy, how does that work with Bontrager items?

REI:

If purchased at REI, we'll take it back in our standard return policy time frame. It's no different.

Brand image and knowledge has always been a high priority for both Trek, Bontrager, and REI. There's a lot of training that goes on with Trek employees. Are REI employees going to be receiving the same training as employees at Trek dealers who sell Bontrager do and are they going to be held to the same standards?

REI:

We spent a lot of time talking with our members, brands, and employees as to what they expect in service on our floor and have been working diligently towards that. We're investing more in training our floor and shop staff. Our key staff on the floor are going to receive an additional 50 hours of training on top of what we've already invested in. It is a combination of vendor partnership training, in house training, and industry training.

REI members receive a 10% dividend refund at the end of the year on what they spend at the store. How is that going to impact bicycle retailers?

REI:

REI has been in business for a long time and does business in a myriad of different categories, and the business model is no different from one to the other. We co-exist very well with specialty retailers in all of those models.

With many retailers and brands, there is usually some bit of geographic territorial protection. Studies show that sales decrease for a business when there are multiple stores within close proximity selling the same product at the same price point. There are certainly places where there's an REI and a Trek store within close proximity to each other. Will those stores be excluded, or are there any protections in place for stores in those situations?

Trek/Bontrager:

We're not restricting any of the REIs from having the ability to carry the brand. Our view is that REI an Electra retailer and as an Electra retailer they are allowed to also carry the Bontrager brand if they commit to it at a certain level. This just an extension of that, as REI being an Electra retailer. There won't be any geographic restrictions.For example, REI store "X" already pre-exists. Cycling already exists as a category at that store, we're already selling bike lighting, bike tires out of that store. It's a function of the brand mix is just going to shift in that case.

Just to clarify, if there's an REI at a location and a Trek dealer across the road, both businesses will be able to sell Bontrager products?

Trek/Bontrager:

That is true, yes.

What's the next phase of this partnership? Will we eventually see Trek being sold at REI as well?

Trek/Bontrager:

REI:

We have no plans for that right now, it's not being discussed and is not on the table. We have no plans for that.While the idea of carrying Trek isn't on the table, we're super excited about the expansion of Cannondale to all stores. We were in 71 stores in 2018 and now we're in a position consistent with the reasoning as to why it makes sense for us to step into the Bontrager relationship. With Cannondale, having worked thru many of the issues we have had with our expertise and confidence, we believe that we are going to be able to service the bikes at the level they deserve at our stores so we're excited with that expansion in 2019.

Will you be carrying all models of Cannondale at all stores? Obviously, not on the floor, but will the bikes be able to be ordered in?

REI:

We're not going to be purchasing inventory in every SKU but the maximum assortment will be available online. The selection will be further refined in each store for a local selection and then the broader set online. People will be able to order specialty bikes into stores if it's something we don't carry, but it will take longer because it will come directly from Cannondale.

Your bike rental and demo program is expanding as well, correct?

REI:

Yes, we're expanding our demo program to at least 25 stores this year and then rentals will be expanding out to more stores as well.

What's the difference in the rental and demo programs?

REI:

PRESS RELEASE: REI



REI Co-op is launching a major expansion of its cycling business in 2019. This year, the co-op will offer Bontrager premium accessories and apparel, and has expanded on its long-standing relationship with Cannondale to make the brand available at all REI locations. The co-op also adds full-suspension mountain bikes to its in-house Co-op Cycles line and additional bicycle services and experiences for customers through an expanded bike rental program and pilot trade-in program.



This spring, REI will offer Bontrager brand cycling apparel and accessories including, helmets, shoes, lighting and other components and accessories to its stores and REI.com.



Over the past few years, the co-op has expanded access to several premium brands nationwide, including Cannondale, Ghost, Salsa, Co-op Cycles and now Bontrager, among others.



New full-suspension Co-op Cycles bikes



Co-op Cycles, REI’s in-house bike line, is designed with help from REI’s most passionate cyclists to deliver versatile, capable bikes that can be used for mixed-terrain adventures, both on and off pavement. This year the co-op adds the DRT 3.1 ($2,199) and 3.2 ($2,799) full-suspension mountain bike to its collection.



“Our members love Co-op Cycles and continue to ask for more options to progress their riding within the brand.” Says Paul Calandrella, REI Co-op Brands general manager. “We’re thrilled to bring them our first full-suspension bikes, which are an excellent build upon our very well-received plus hardtail mountain bikes.”



The bikes, both 6061 aluminum trail bikes, offer a full complement of components in a playful, yet capable, mid-travel platform. The higher-end DRT 3.2 specs include: Air-sprung RockShox Revelation RC front suspension and RockShox Monarch R Solo Air rear with external rebound, SRAM NX Eagle 1x 12 drivetrain, X-Fusion Manic dropper seat post, Shimano hydraulic disc brakes, and tubeless ready 40mm wide wheels with 26 x 2.8 tires on sizes extra-small, small, and 27.5 x 2.8 for medium through extra- large.



Looking ahead The co-op will expand its rentals program to include bikes in key markets later this spring, as well as piloting a bike trade-in program to allow REI customers to exchange a qualifying bike for store credit that can be used toward the purchase of a new bike.



Demos are much more focused on higher end full suspension and e-bike and providing customers access to bikes they may be interested in purchasing, while the rental program is focused on providing customers the use of a quality product for their recreational needs.So that should explain a lot of what the REI-Bontrager-Cannondale partnership is and hopefully answer some questions about it. The press release is below: