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10 iS t o c k ; A lmi C an d oi t / Ve c t o r s P oin t / N o un P r oje c t B C B U S I N E S S . C A S E P T E M B E R 2 0 24 ON THE RADAR There were some positives. Bankruptcy protection allowed MEC room to streamline its op- erations, renegotiate with ven- dors and cut costs. Kingswood provided enough money for MEC to pay its debts. But it was still a scramble to redevelop the private label. "Which was a good thing," Roy says, "because it gave us no choice but to focus on what is important." In general, there were too many products and not enough focus on the shoppers who drove MEC's brand, if not its actual sales, explains David Ian Gray, a retail strategist who has worked with MEC CEOs in the past. He says MEC relies on two types of consumers: the experts and backcountry campers and the more dab- bling daytrippers or frontcoun- try recreationalists. " MEC needs the hardcore enthusiasts to say they approve of their products to create the brand cachet that tells the frontcountry enthusiasts it's okay to shop there," says Gray, the principal at DIG360. "The frontcountry shoppers subsi- dize the core membership." On the private label side, Roy eliminated 25 percent of the products. He likens the outcome to a restaurant that refines its menu from 10 pages down to one. "You go from being overwhelmed by choice to, 'Okay, I know exactly what these guys do,'" he says. To that point, in Octo- ber 2021 MEC brought the mountain back to its logo with a full rebranding. Roy says the move signalled to MEC's core market that the company was returning to its roots as a provider of high-quality outdoor clothing and gear at an affordable price. By 2023 the accumulation of changes was paying off. MEC won't share financial informa- tion, but Roy says the company was profitable last year. It topped the 2023 Gustavson Brand Trust Index. And the company opened a new store in Moncton, New Brunswick— its first expansion since the acquisition—and another in Whitby, Ontario, earlier this year. There are now 23 MEC stores in Canada, three of them in B.C. Last fall, CEO Peter Hlynsky said the plan is to increase the store count to about 40 by 2028. The company says the next new store will be in B.C., likely in Nanaimo. Hlynsky notes that opening stores in new markets tends to also increase online sales, which already account for a third of MEC's business. The turnaround is par- ticularly impressive when compared to the larger outdoor industry. After record revenues during the pan- demic, in 2023 many of MEC's suppliers and competitors posted financial losses and announced layoffs. REI, MEC's American doppel gänger, is closing stores and laying off staff at the head office. MEC is also up against more competition than ever before. Decathlon, an outdoor sport- ing retailer with 1,700 stores in 70 countries, has opened 20 stores across Canada in the last few years, including its newest in Metrotown, a short drive from MEC's head office. Decathlon mostly focuses on entry-level products at rela- tively low prices. Roy says that's a point of differentiation. MEC products tend to be higher quality and more specialty focused. And its sales staff have expertise and knowledge the staff at Decath- lon can't match. "I think we sit perfectly be- tween the high-end Arc'teryx and the disposable Woods and Decathlon," he says. David Ian Gray thinks there's still more MEC can do to carve out its niche. The new private label products are too high- or low-end and are not in MEC's sweet spot, he says. And, even more importantly, the company desperately needs to invest in technology—every- thing from supply chain to customer-facing solutions. He's not sure if Kingswood is ready to make that level of investment, especially in these challenging times. At MEC's head office, Roy remains upbeat. He knows the co-op got lost in the woods, but he's equally confident that the company is now back on the path. "I know consumers have more options than ever for outdoor gear," he says. "It's my job to make sure we offer compelling options they can't find anywhere else." That was the vision when a few University of British Columbia students founded MEC back in 1971. But it's not yet clear if that's enough for the Mountain Equipment Company to survive the next 50 years. SOURCE: STATISTA, STATISTICS CANADA, DISTRICT OF SQUAMISH LEADING ONLINE STORES IN THE SPORTS EQUIPMENT SEGMENT IN CANADA IN 2023, BY E-COMMERCE NET SALES (IN MILLIONS OF U.S. DOLLARS): Walmart: $208.7 Amazon: $200.2 Nike: $115.7 Costco: $69.1 Bestbuy: $49.4 MEC: $32.5 In 2021, 78% of households in Canada reported participating in outdoor activities close to home, up from 77% in 2019 and 75% in 2011. Squamish alone has 188 businesses in the recreation technology sector. They employ 364 local workers.

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